Leather exports from India, already on the decline last fiscal, could face more hurdles if the crackdown on "illegal" slaughterhouses in Uttar Pradesh spreads to other states. The country's leather exports fell 4.37 percent to $5,132 million for April 2016 to February 2017 in comparison to $5,366.70 million in the corresponding period for 2015-16.
Uttar Pradesh, Punjab, Bihar and West Bengal are the major sources of raw material for the billion-dollar leather export industry.
India requires about 3 billion square feet of raw leather every year to support its $12 billion industry and a short supply would force manufacturers to resort to imports for raw material, raising costs.
"A blanket ban on slaughterhouses would nudge manufacturers to depend more on imported raw materials, which are costly. If the imports go up, that will add to the cost of Indian leather products and we will lose our competitiveness in the world market. Thus, the Make in India programme could be impacted," news agency IANS had quoted Tapan Nandi, convenor chairman for German Investment in India of the Council of Leather Export, as saying.
"The crackdown on illegal slaughterhouses by the Uttar Pradesh government cannot be questioned, but a blanket ban will affect the domestic supply of raw material. Since illegal units were in the supply chain, some amount of short supply is expected," he added.
India has around 21 percent of the world's cattle and 11 percent of goat and sheep population, making it an ideal hub for the leather industry that employs about 3.09 million, according to the Council of Leather Exports, government of India.
The leather industry in India accounts for almost 13 percent of the world's production of hides and skins.
India's top markets for leather exports are the US, Germany, the UK and Italy; the four countries accounted for about 45 percent of total exports that was valued at $5.92 billion in 2015-16. Finished leather and footwear form a significant component of the product range, followed by leather garments and footwear components.
Leather production units are located in Chennai, Ambur, Ranipet, Vaniyambadi, Vellore, Pernambut, Trichy, Dindigul and Erode in Tamil Nadu; Kanpur, Agra, Noida and Saharanpur in Uttar Pradesh, and other parts of Karnataka, West Bengal, Haryana, Maharashtra and Punjab.
For the 11-month period ended February 2017, India's exports gained 2.52 percent to $245.41 billion YoY, , raising hopes of ending the fiscal with $270 billion. Imports fell 3.67 percent to $340.69 billion. The provisional data for March and for the full year 2016-17 will be published later this week.
