‘Euro Zone crisis considerably affected Indian leather industry’

Sai Nikesh | The Dollar Business

A decline in value of Euro followed by the crisis in Euro Zone is likely to have negative effect on India’s exports to European region, which accounts for around 18%-19% of India’s total exports. The exports from key areas like Leather and Gems & Jewellery, which hold a major contribution in India’s total exports to the region were said to have witnessed a negative effect in the initial months of the current fiscal due to the Euro Zone crisis. Speaking to The Dollar Business, M Rafeeque Ahmed, Chairman, Council for Leather Exports (CLE), Ministry of Commerce, Government of India, said, “European Union accounts for a significant share (65%) of leather exports from India. But, the Euro Zone Crisis has considerably affected the Indian leather industry.” Exports from Indian leather sector were registering an appreciable growth of more than 15% in Dollar Terms during the first seven months of 2014-15, but, eventually ended with a moderate growth of 9.37% during the fiscal 2014-15, primarily due to the crisis in Euro Zone, he added. He went on to say that the data in first two months of 2015-16 is showing continuing decline in exports from Indian leather sector to most of the major European markets including Germany, Italy, France, Spain, among others, with only UK registering an increase in exports in respect of value added leather products and footwear. "Though we are expecting a growth in exports to EU zone in the coming months, the EU crisis has certainly affected our objective of achieving export growth of 20% and more on year-on-year basis," said the CLE chairman further, adding, 'the Indian leather industry is trying its best to consolidate its market share in the EU market through aggressive marketing and buyer outreach efforts'. “In this hour of crisis, we have also sought the support of the Government through extending benefits of Merchandising Exports from India Scheme (MEIS) for export of finished leather, shoe uppers and certain footwear components to EU countries,” he noted. Meanwhile, speaking on the effect of decline in euro currency on Gems & Jewelry (G&J) industry, Sabyasachi Ray, ED, Gems & Jewelry Export Council (GJEPC), said, “Euro zone is a significant market to the Indian Gems & Jewellery industry. The declining value of Euro has no major impact on the Gems & Jewelry industry as of now.” "If you look at the overall export figures in last three months of the current fiscal i.e April-June period, there has been a decline of 5.46% compared to the corresponding period of the previous year," he added. Considering exports to Euro zone, the decline in exports would be very negligible. Moreover, the impact has been cushioned to an extent since many buyers from Europe still prefer to trade in dollars, he said. Earlier speaking to The Dollar Business, S C Ralhan, president, Federation of Indian Export Organisations (FIEO), had also said, “Greece crisis is definitely a bad situation for India, especially in terms of exports. Engineering exports, Textile exports, are among other major sectors that will get affected more due to the crisis.” Suranjan Gupta, Additional Executive Director, Engineering Export Promotion Council (EEPC) of India had also said, “Greek crisis will definitely have negative impact on India’s engineering exports to Europe, in view of the fact that the region accounts for around 20% of India’s total engineering exports.” India’s engineering exports to Europe have already witnessed a 10% decline in the first two months of current financial year and at this juncture, the crises in Greece, other countries of Euro zone like Portugal, Ireland and Spain and a further spread of the same, will further weaken Indian engineering exports to Europe, he noted. Going by all these views, it is evident that Indian industry, especially in case of exports, is likely to get affected due to crisis situation in Euro Zone, but, the government continues to say that the crisis situation in Euro Zone will have limited impact on Indian industry.    

July 14, 2015 | 7:04 pm IST.