Goyal says FTA talks in progress with Mexico, Brazil and Africa nations
Minister of Commerce and Industry Piyush Goyal has called upon the leather and footwear industry to target at least US$15 billion in exports over the next five to six years, or even earlier, and aim for a three-fold increase in its export performance by leveraging new Free Trade Agreements (FTAs), diversifying markets and strengthening quality, design, branding, sustainability and scale.
Addressing the Council for Leather Exports National Export Excellence Awards for 2024-25 in New Delhi, Goyal said the sector, currently exporting goods worth around US$4-4.5 billion, has the potential to achieve tremendous transformation. He urged the industry to set ambitious targets for the coming years.
“If I was in your shoes, or in your leather shoes, if I may say so, I would not aspire for anything less than a 3x outcome in the next five to seven years,” he said, adding that the industry could target US$15 billion in exports.
Enabling conditions had been created for the sector to achieve much bigger outcomes, said the Minister, noting that India today has high-quality products, highly experienced artisans, cobblers and workers, and industry leaders with the experience and ability to think big, dream big and achieve big.
Goyal said the FTAs finalised by India were opening the doors to 38 developed countries and creating significant new opportunities for the leather and footwear sector. He said the UK FTA would come into force on 15 July. Referring to the EU FTA, he said he had held a very good conversation with his counterpart in the European Union in Brussels on 5 July and that both sides were working together to complete the legal scrub within the next 15-20 days.
He pointed out that the Government had already begun marketing Indian products, goods and services and taking business delegations abroad to ensure that the country and its industry were future-ready.
Goyal said the industry must be ready to derive the maximum benefit from the FTAs India has finalised and from the new markets in developed countries that have opened up for the sector. He said the time was right for the industry to aim big and aspire for much greater achievements.
Calling for diversification of export destinations, the Minister said 77 per cent of India’s leather exports currently go to only 15 countries. He said the time had come to diversify across the world. Apart from the 38 developed countries whose markets had been opened up, India already has FTAs with the 10 ASEAN countries, Japan and Korea, taking the number to 50 countries, he said.
Goyal said India was in dialogue with Canada and expressed the hope that this could be concluded by the end of the year, taking the number to 51. In the Gulf Cooperation Council region, India already has FTAs with Oman and the UAE and is negotiating with a six-country bloc, which could add four more countries and take the number to 55.
India is also talking to Mexico, which would take the number to 56, and to Brazil and three other countries associated with it, taking the number to 60, he said.
The Minister also referred to engagement with the SACU region, including South Africa and neighbouring countries, as well as Israel, Eurasia, Central Asia, Russia and Chile. He said many countries wanted to enter into FTAs and comprehensive economic partnerships with India, adding that Ministers from Ecuador had also expressed interest in an FTA. Countries across the world, he said, were today excited to do business with India.
Goyal urged the industry not to focus only on large markets such as the USA, UK, Germany and Italy, while acknowledging the huge potential in these countries. He said exporters must also look at smaller developed countries, where consumers buy and replace footwear and where designer brands have a market. Indian designer brands, he said, should be introduced in these countries.
The Minister said the potential extended far beyond footwear to bags, wallets, horse saddles, jackets, clothing and apparel. He said there were few industries with as wide a range of applications as leather, noting that leather was used in almost every aspect of life.
He cited applications ranging from operating theatres in hospitals to sports, including cricket, football and hockey grounds and stadiums. He also referred to boots, wallets, belts, watches, watch straps and caps, saying the list of applications was endless.
Goyal further highlighted the use of leather in upholstery, including furniture and high-end wall coverings, and said the industry catered to a vast range of products and price points, from around Rs.100-200 to US$100 upholstery products. “The sky is the limit when it comes to the potential of your industry,” he said.
The Minister said the Export Promotion Mission was willing to extend every possible assistance required by the industry, including support for taking delegations across the world and organising exhibitions internationally. Noting that the industry had an exhibition in India in September, he urged it to plan an exhibition every month in one or another developed country and seek to capture markets across the world.
Goyal said the industry should use the Export Promotion Mission for warehousing, better and more frequent delegations and exhibitions in major markets. He called upon exporters to take delegations to every country in the world and assured them that such initiatives would be approved. He said micro and small units would also be supported in participating in these efforts.
The Minister urged the industry to come forward with new ideas on how the Government and industry could work together to take Indian businesses and products to the rest of the world. He said the sector could explore warehouses similar to Bharat Mart in Dubai and hire warehouses in other developed countries to facilitate just-in-time delivery.
Goyal identified better quality, an even greater focus on standards, finishing, designing, packaging and brand building as the areas that would define the sector’s future. He specifically requested the industry to begin focusing strongly on brand building and to pursue better design and larger scale so that enterprises could enjoy the benefits of economies of scale.
The Minister urged the sector to identify and use the best testing equipment. He said he had been urging industry in every engagement to identify the best equipment and laboratories near their clusters, whether those were BIS, NTA or other government laboratories or university facilities.
Goyal said the industry should not settle for anything second-best and should seek the best laboratory and testing equipment to help certify Indian leather products for the rest of the world. He added that Indian consumers deserved no less and should also benefit from very high-quality products made by the industry.
The Minister said the sector already employs more than four million people and asked whether this could rise to one crore. He said it was possible and added that as the sector grew in economic size, it would also benefit from economies of scale.
Goyal referred to his earlier suggestion that the industry should take a close look at India’s leather institutes and development centres. Noting that many companies were exporting goods worth Rs.200 crore or Rs.300 crore, he asked why each large unit could not take responsibility for one of the country’s 12 leather development centres or campuses.
He said the Government was willing to hand over the management of these centres fully to the industry for training workers. Alternatively, he suggested that the industry consider reducing the number of centres from 12 to three or four so that they could function efficiently. He said limited resources had been spread too thinly, making the centres irrelevant and inefficient.
The Minister said these decisions should be taken by the industry because the Government was a listening government and wanted stakeholders to participate in decision-making. He said the Government, in fact, wanted the industry to take these decisions because the centres existed for the sector.
Goyal said the Government could only play a hand-holding and enabling role, while the industry ultimately had to derive the maximum benefit from the centres. He urged the industry either to take them up or merge them, identify which centres were useful, consult other stakeholders, both big and small, and increase student enrolment so that the campuses could provide better talent to businesses.
The Minister urged the industry to tie up with the National Institute of Design (NID) for design, the Indian Institute of Packaging for packaging, the Quality Council of India (QCI) for better quality output and improved testing laboratories, and the Bureau of Indian Standards (BIS) to improve product standards.
He said Indian products sold globally and domestically should meet the same high-quality standards. Workers, he said, should be certified and trained for the best output, while factories should have the best equipment for large-scale, modern and high-quality production, provide a safe working environment and give prominence to safety.
Goyal also urged the industry to focus on sustainability to obtain better value for its products. He called for recycling waste, water and effluents and treating them appropriately so that Indian leather products could gain greater value as sustainably manufactured goods.
Goyal said the industry today operated in an age of robotics and Artificial Intelligence and could learn significantly from both. He said AI could be used to study designs from the past, noting that fashion trends often return every 10-15 years.
The Minister said robotics, when used in critical functions requiring high precision, did not take away jobs but added jobs. If precision improved and markets grew, more jobs would be created, he said. He added that technology could improve demand forecasting and design, and reiterated that better demand forecasting could significantly help the industry.
Goyal said products manufactured using renewable energy could command greater value in international markets through sustainability certification.
The Minister said the world was looking towards Indian exporters and that FTAs involved two-way trade. Partner countries, he said, were equally keen to trade with India and engage with the country. They saw India as a trusted partner and were looking to Indian businesses to meet their requirements for high-quality, sustainable and safely produced goods that benefited from economies of scale and were available at competitive and affordable prices. Fiinews.com
