Leather industry to discuss impact of economic recession

Special Correspondent

Fears of small scale units turning unviable

Business orders from West down to a trickle

Uncertainty over what’s in store in winter months

CHENNAI: Faced with declining markets in Europe and the US, India’s export-leaning leather industry gathers here for a two-day meeting on Thursday amid fears of large-scale job losses and prospects of small scale units turning unviable.

‘LERIG 2009’, a joint initiative of leather industry associates, Council for Leather Exports (CLRE) and the Central Leather Research Institute (CLRI) in Chennai, will discuss the impact of economic recession on the livelihood of an estimated three lakh workers, predominantly women from low income strata, and the viability of tanneries and other leather-based manufacturing units.

Industry representatives told a press briefing that tanning industries, most of them in Tamil Nadu, were among the first casualties of the decline in Western markets. Production levels in most of these units had plunged from about 80 per cent of the capacity to 50 per cent or less.

The industry needs to focus on technology and skill upgrades and innovation in designs, Asit Baran Mandal, CLRI Director, said. “We are also lobbying with the government for releasing more aid packages.”

Already, business orders from the West are down to a trickle and uncertainty looms over what is in store for the second season in the winter months of December-January.

What offers a sliver of hope is that while the markets in the US, UK and Europe are witnessing deserted malls, Indian consumers have only postponed “big ticket purchases,” and continue to shop for lifestyle accessories, said Habib Hussain, CLRE chairman.

According to industry leaders, while the full scale of the crisis is yet to unfold, export-based units are bracing up for a 20 per cent dip in production levels, volume of orders and costing for the next six months.

The Indian leather industry sustains in equal measure on domestic consumption and exports.

“A dip in the range of about 40 per cent can send the sector into a tailspin,” said Rafeeque Ahmed, managing director, Farida Group. In such an eventuality, an estimated 3 lakh jobs would be at stake. Nearly 65 per cent of the workforce in the sector were women.

The CLRE chairman urged the Centre and State government to take serious note of the crisis in the leather industry and take a leaf out of China, where the government was pumping in substantial rescue packages to help the industry tide over the situation.

Mr. Mandal called upon the industry to leverage the craftsmanship available in India and to compete more on value and less on pricing.

The industry also urged the Tamil Nadu government to evaluate the crisis in the State, which is home to about 71 per cent of the 542 tanneries targeted for a Rs.64-crore modernisation plan during the Eleventh Plan that continues up to March 2012.

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