It’s the first half of a sunny day, in the Jajmau area of Kanpur, hundreds of labours are flocking to the shoe manufacturing factories and tanneries, where raw hides are converted into leather. The leather industry is witnessing a boom post pandemic, but at the same time is confronted with the twin challenge of hardening of commodity prices because of the ongoing Russia-Ukraine war and the supply chain disruption because of the stringent lockdown imposed in China.
According to one industry insider, the city of Kanpur contributes approximately 30 per cent to the leather trade in India and the city alone accounts roughly Rs 6,000 crore of leather exports from India to UK, USA, China, Gulf and many other countries. But one of the leather hubs of India is reeling under distress because of steep rise in commodity prices, and sharp jump in the shipping company’s prices.
Homera Tanning Industries Pvt. Ltd with 3 tanneries and 2 manufacturing units, exports safety and casual shoes to China, Italy, France, US, Germany. Ashraf Rizwan, one of the founders of the industry, told BT, “Due to hardening of commodity prices, and because of the lockdown in China, we are grappling with a lot of problems, we are not able to get our accessories order on time.”
RK Jalan of AFPL Global Limited, sitting in his Jainpur shoe manufacturing unit from where they export cowboy boots and comfort footwear to countries across the world, said, “ It is because of Russia-Ukraine crisis and Chinese lockdown that we are facing trouble in sending consignments as the prices of shipping has risen many folds.”
According to him, prices from Maersk and MSC shipping companies now are on a steep rise, with the price per container now having risen from $1000 per container for UK to $9000 per container. Another saddlery manufacturing unit owner from Raipurwa area of Kanpur is of the opinion that the situation has worsened to an extent that he is not able to find containers for sending consignments to many countries.
Homera Tanneries’ Rizwan, throwing light on the prices of containers which has risen exponentially, points out: “The container prices have jumped substantially since last 2-3 years, now it has increased further, for Chile the charges for one container has risen by 6 times from $6000 to $24000 now, similarly for USA, the prices have risen by 4 times, from $3000 to $12000.” Similarly, the prices of commodities have also risen sharply, for example, the prices of the adhesives have jumped from Rs 170 per litre to Rs 200 per litre. Similarly, the price of the latex has risen from Rs 78 per litre to 93 per litre due to the ongoing geopolitical tension.
Adding to the woes, the supply chain disruption because of lockdown in China has also increased the delivery time for accessories to reach India from China, as leather industry imports many things from China as they are cheaper and are of good quality.
The industry imports lining from Taiwan, chemicals and raw hides from Europe and toe caps and insoles from China, and adhesives from Italy and Germany. In the current situation, when the Chinese city Shanghai is under stringent lockdown, supplying components from China and India has been impacted badly and that has made it difficult for the industry to fulfill order on time.
Trims and embellishment are imported from China at $360 per kg within 5-6 weeks, which is quite fast. But in current situation, sometimes industry people are defaulting on the delivery dates because of the delay in getting components from other countries.
“Due to the ongoing tensions, one of our deliveries got delayed and now the client is asking us to share the Air freight cost which will be a big blow to our margins,” one industry source told BT on the condition of anonymity.
Mukhtraul Amin, managing director of Superhouse Group in Kanpur, believes that leather industry in India is very important, but it also is dependent on many other countries for raw material. The industry will get a boost only if we will invest in consolidating the component industry.
“Currently, we import a lot of things from China that takes a lot of time to reach India, since china has well established component industry thus the turnaround time is very less for China in comparison to Indian industry.”
The leather industry is witnessing a boom but certain problems are posing a formidable challenge in front of it.
"If we want to become an export hub these problems have to be ironed out," says RK Jalan.
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