Footwear needs ecosystem to scale up, reduce imports TAMING

While China is gradually exiting the footwear business due to rising labour cost, India is unable to take advantage of it, as the industry is still dependent on China for components. Large footwear companies collaborating with small component suppliers and creating an ecosystem can help in large-scale manufacturing, finds industry.

Increasing factory wages has seen footwear manufacturing gradually shifting from China to countries like Vietnam, Indonesia and Cambodia. Post-Covid-19, international brands will further look at diversifying production to avoid risk of concentration.

Though Indian footwear industry has natural advantages like availability of leather and cheap labour, it could not convert them into a comparative advantage in production. While China produces 13.5 billion pairs of footwear, India’s production is just 2 billion pairs.

India still imports components and finished goods from overseas. China accounts for nearly 70 per

cent of the footwear and footwear component imports by India followed by Vietnam, Hong Kong, Cambodia and Indonesia.

"International brands prefer China as it has the scale of manufacturing and the entire ecosystem to support footwear production, including components, leather as well as skilled labour. Even those who buy processed leather from us, want it to be sent to China for production of footwear and other articles," said Rafeeq Ahmed, president of All-India Skin and Hide Tanners and Merchants Associa-tion. Further, India is still lagging behind in ladies footwear and high fashion leather products.

The components keep changing in footwear manufacturing and the industry has to be in tune with the changing trends in the fashion world. The government is working on a Phased Manufacturing Programme to build an ecosystem of components for footwear and leather products to curb imports.

"Generally, the government increases duties to curb imports and to promote domestic manufacturing. In the case of footwear, a sudden hike in duties of components will be counter-productive. We need to build the ecosystem gradually and till it fully develops, duties have to be retained at current levels,” he said.