Contemporary cow politics results in a dip in Bangalore leather exports.
Bangalore, January 23, 2018: Leather exporters in the city are struggling with a ban on cow slaughter, a stagnant market and unpaid duty drawback rates.
Nayeem, exporter and owner of Royal Leathers, Bangalore, said, “The export business has reduced by 50 to 60 per cent. Foreign buyers are shifting to other countries like Bangladesh, China and Pakistan. They are uncertain about the future of this industry in India. The sourcing of leather from North India especially Kanpur has been affected due to cow slaughter ban.”
The reduced supply of hide has led to an increase in prices of raw material. Mohammad Asim, an exporter and owner of Metro Leather, Bangalore, said, “The daily supply has reduced and whatever is available, it is at such a high price. The future is really bleak. The exports have reduced by 60 per cent. I am just hoping the government lifts the ban.”
Shumair Anwar, a leather manufacturer who runs Super Tannery Limited in Kanpur, over a phone conversation told the Softcopy, “The number of cattle available for butchery has almost halved. Uttar Pradesh unfortunately was hit quite hard after Adityanath’s rise to power. I laid-off 30 per cent of my staff last year.”
Kanpur, an industrial city in Uttar Pradesh, has been the leading producer of leather and leather goods since the 1980s. But the industry has been suffering since 2014 primarily due to cow slaughter ban.
Also, the city is situated on the banks of River Ganga, where the National Green Tribunal (NGT) ordered the closure of about a hundred tanneries in a bid to save the river.
This has had a cascading effect on exports of leather products such as footwear. Arshad Nafis, exporter of leather footwear and owner of Leather Mart, Bangalore, said, “Leather merchandise is now so expensive that our share in the global market has come down. Countries such as US and UK now prefer buying from Pakistan and Brazil as it is cheaper.”
Statistics show a reduction in value of leather exports from the southern region of the country. In 2014-15, the value was $1902.41 million which reduced to $1671.78 million in 2015-16 and eventually to $1233.64 million in 2016-17.
Notably, it is not just contemporary cow politics which has impacted leather businesses; a delay in refunds of duty drawback benefits have made a dent too.
Mohammad Sharjeel, owner of Hafeez Sons Tannery Pvt. Ltd., Kanpur, told the Softcopy, “Manufacturers are suffering due to increase in taxes and even though the government increased the drawback rates for us, we have not yet received those benefits in the form of refunds.” He mentioned that cow vigilantism had not affected him since he used leather sourced from buffalo. He added that buffalo slaughter too is banned but the crackdown is mostly focused on cows.
Ali Ahmed, Regional Director, Council of Leather Exports, said demand for leather products from the European Union has diminished as prices have increased in India.
Dr. S P Sharma, Chief Economist, PHD Chamber of Commerce and Industry, explained, “The bans badly hit labour in tanneries manufacturing shoes, bags and belts in states following similar decision like Uttar Pradesh. Much of India’s leather trade takes place in the informal economy. Exporter’s dependence has increased on expensive imported inputs as domestic raw materials are experiencing a slump. Thus with increased prices Indian exports have become less competitive in the world market.”
He further explained, “Being labour intensive, this sector has reeled under stress post the currency crunch in demonetization. Wages and purchase of raw materials depressed in case of migrant workers (40-50 per cent) not part of formal banking channel. With 90 per cent of the leather units as SME’s the impact is humungous since last year. Against these two policies many units even had to lay off employees due to lack of finances as reported by many studies.(sic)”
However, he said that optimism has been restored with the introduction of a package worth Rs 2,600-crore by the government in 2017 to help small and medium entrepreneurs to tide over the crisis which dampened the leather industry in the last one year.
Indian leather industry is among the top five in the world’s leather market.