Factors Affecting the Leather Industry in India
Background facts on India’s leather industry
India is the second largest producer of leather garments and footwear in the world and its leather industry has grown substantially in the past decades. Between 2011 and 2014, the estimated growth rate of this industry was 8.5% and analysts predict better figures in the near future.
The main factors affecting India’s leather industry
As one of the top ten contributors to India’s GDP, the leather industry rakes in 7.5 billion dollars annually and the country has thus invested heavily in it. There are many factors that have affected the growth of the leather industry in India.
- Availability of raw materials. According to experts, 11% of sheep and goats in the world are found in India. This number almost double for buffalos and cattle with an estimated 21% of this population thriving in India. There is therefore a huge supply of hides and skins which are necessary raw materials in the leather industry. India has a comparative advantage in this industry because of the ready supply of these raw materials hence the growth of the industry.
- Presence of human capital. The leather industry is highly capital intensive. In India it employs more than 2.5 million people with an estimated 30% of the female population being absorbed in the industry. India’s high population and readily available cheap human resource has been instrumental in propelling forward the leather industry. It has encouraged both local and foreign investors to put their stakes in this industry.
- Support industries. There are several support industries which have helped the leather industry to grow. Industries such as chemical, machinery and tool industries have played a major role in the growth of the leather industry. Since chemicals, machinery and tools have been readily available, the leather industry is able to run more efficiently. There are also other support services such as transport, telecommunications and distribution services which have also enhanced the growth of the leather industry.
- Research and development investment. There have been major changes in the leather industry in India over the past decade. The quality of shoes has improved because of these design and manufacturing changes. This is due to varied investments in the research and development areas. These have resulted in new developments and more efficient methods of production. There are also many up and coming designers who have invented better designs for shoes that are more cost effective to make. Additionally, the industry is embracing new trends and this has increased its European market.
- Huge market. India’s leather industry accounts for 3% in the global market. This industry has a huge market is comprised of both domestic and foreign consumers. It is estimated that around 95% of all the shoes manufactured in India are purchased locally. Besides China, India is the second largest supplier of shoes in the world. There are also several leather articles that cater for both the local and foreign markets. India thus supplies articles such as saddles, gloves, jackets and bags to both foreign and local consumers. According to statistics, the major foreign destinations for India’s leather products include European Union (64%), USA (9%), Hong Kong (7%), UAE (2% and Africa (1%). Ultimately the leather industry in India has grown steadily due to this market.
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