VELLORE: The prolonged lockdown and continuing uncertainty over its duration is likely to spell doom for leather exporters in the country as they are not able to commit to orders by clients.
Being the second largest exporter of leather goods in the world, the value of India’s annual exports is 6 billion dollars.
Most clients from overseas had cancelled the orders they had placed following the outbreak of COVID-19. However, after assessing the situation, some clients have fallen back on Indian exporters. But exporters are not able to commit to the orders due to the freeze on industrial activities.
“Initially, our clients cancelled all the orders following the coronavirus outbreak. But now, we have begun to get 30 per cent of orders back from them. The underlying problem is that we cannot commit to them as the uncertainty over the lockdown period continues,” Israr Ahmed, regional chairman of the Council for Leather Exports (CLE), told The New Indian Express.
With other leather goods producers, particularly in China and Vietnam, luring clients, Indian exporters may lose out to them.
“Leather manufacturing firms in China and Vietnam are fully operational. If we fail to accept orders, clients will prefer these two countries,” he said.
The lockdown has led to a whopping financial loss of about Rs 3,800 crore per month for exporters in the country. Imported raw hides are also rotting in containers in ports.
Israr Ahmed noted, “If we send the samples now, we will get orders shortly. For finishing the production and shipping of the goods, we need six months from the date of receiving orders.”
The prolonged lockdown is also having an adverse impact on the workforce of the leather goods sector which provides employment to 4.42 million people.
Ambur, Vaniyambadi, Pernambut and Ranipet located in the combined Vellore district have clusters of leather processing and leather goods producing firms. Tamil Nadu's contribution to India’s leather industry amounts to 37 per cent.
Partial easing of the lockdown restrictions will help the bleeding exporters to resume business at least with a productivity of 10 to 15 per cent before gradually improving. The industry captains have already made representations to the Tamil Nadu government.
Speaking to Express, Tamil Nadu Minister for Industries MC Sampath said, “We have constituted a committee headed by Finance Secretary Krishnan to look into the issue of industries. Based on the recommendations of the committee, the Chief Minister will take a decision on allowing industrial units to resume operations.”