Leather Industry is categorized into segments such as finished leather, Footwear, Leather Garments, and Goods & Accessories sector including Saddlery & Harness. India is second largest producer in both leather footwear and leather garments sectors while in exports the Country stands third in leather garments and fifth in leather goods & accessories sectors.

India continues to stand at eighth place in the world leather exports with 3% of part in the total export earnings. China and Italy enjoys the largest market share of about 28% and 14% in world exports respectively followed by Hong Kong, Germany, France, Brazil and Belgium.

The aggregate of 13 leather /leather products companies reported aggregate net sales of Rs 1228 crore, high by 7% during the quarter ended March 2012 on y-o-y basis. On increased sales on one hand and reduction in raw material costs which constitutes on an average of 40-42% of total adjusted sales and ease in other expenditure heads led the OPM to improve by 200 bps to 13.4%. As a result, the operating profit rose by 25% to Rs 165 crore. PBIDT grew by 24% on flat other income of Rs 8 crore. The PBT increased by 27% to Rs 104 crore restricted on increased interest and depreciation costs. Interest costs increased by 15% to Rs 38 crore while provision for depreciation rose by 24% to Rs 31 crore. Finally PAT grew by 28% to Rs 73 crore though moderated on increase in provision for taxation by 24% to Rs 31 crore.

In the fiscal year ended 2012, the production of tanned skins & leathers improved by 15%, leather garments by 9%, leather bags, purses and wallets by 22%, leather gloves by 2% while leather shoes and footwear (except leather) production remained flat amidst shoe uppers production dropped by 10% when compared to the corresponding period of last year.

The Indian leather & leather products is in demand for its quality, finish and designs. Further, the demand is expected to grow considering the change in life style and affordability for the Indian leather industry. The demand is contingent to the disposable income of the individuals in the country. Players that regularly review their product range and adapt to changing requirements of the customers are better placed. Value engineering, improving productivity & capacity besides reducing operating cost are the key.

As per officially notified DGCI&S monthly export data, the leather and leather products exports for the first ten months ended FY12, i.e., April-January 2012 touched USD 4106.63 million as against the export of USD 3162.46 million in the corresponding period last year, registering a positive growth of around 30%. In rupee terms, the exports touched Rs 195306.53 million during April-November 2011 against the previous year's performance of Rs 144310.46 million, registering a positive growth of around 35%. The on going sovereign debt crisis in EU in general and Spain, Greece etc can depress the growth of the Indian leather exports into these regions in the short to medium term. But thanks to sharp depreciation of Indian rupee, the damage can be contained. The sector is poised for medium term growth, considering its initiatives to move up the value chain, and its plans to expand its geographical reach.