Export industry, especially leather, feels US recession chill

The economic slowdown in US and Europe has hit the state8217;s leather industry hard. In spite of a cheaper rupee, the demand is falling, leaving the exporters petrified.

The economic slowdown in US and Europe has hit the state8217;s leather industry hard. In spite of a cheaper rupee, the demand is falling, leaving the exporters petrified.

So far, the leather industry, concentrated in Kanpur and Agra, had an annual revenue of Rs 4,500 crore and enjoyed an annual growth of 18 to 20 per cent. But this year, there is an altogether a different story with the industry sliding down.

Maqsood Alam, proprieter of Model Tanners India P Ltd, blamed the global recession behind it.

Kanpur has around 100 leather units of which 95 per cent are small and medium entrepreneurs and the rest are big leather industries. 8220;But now the work in many factories are coming to a halt,8221; said Alam. Many foreign buyers have asked the factories to stop the supply.

8220;We are facing 10 per cent losses on goods we have already shipped, as these were booked at the rate when the one dollar was equal to Rs 40 or 42. In many cases, goods are lying at ports and the buyers are not releasing the consignments,8221; he added.

The sudden drop in demand has led to accumulation of stocks which can8217;t be sold. The products are made according to standards and specifications in Europe and America, of which there is not much demand in India.

8220;I am waiting for Diwali when I will give my labourers bonus and request them to return to their homes and join work only when I would be able to call them,8221; Alam said, underlining his desperation. Iftikhar-ul-Amin of UP Leather Industries Association said that appreciation of the dollar did not because the orders were drying up. 8220;What has caused the situation is the uncertainty about the future in general,8221; Amin said.

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Another leather product exporter, Farooq Omar of Riding Home, said, 8220;This is the worst period that the leather export industry has faced in the last 15 to 20 years.8221;

Other export industries of Uttar Pradesh like silk, carpets and brassware are also facing a similar situation, said Rajiv Agarwal, president of the Eastern UP Exporters8217; Association. The carpet belt of Bhadohi and Khamaria, which has an annual turnover of Rs 4,000 to 5,000 crore, is going through severe crisis, Aggarwal said.

Hardly any buyer at Noida Expo Mart
Many exporters of the state, who are not taking part in India Expo Mart being held in Noida, are already getting the taste of market slump. 8220;There used be over 1,500 big buyers from the US every time to this event, but this year the number has gone down to around 50,8221; said Rikesh Kumar, president of the Export Promotion Council for Handicrafts. This handicraft fair is held in the state twice a year to provide a platform to the manufacturers in the state to hold direct interaction with buyers. Incidentally, 65 per cent of the total handicraft export of India is from UP. In the last four days, the fair has attracted only one-fourth of buyers that it usually witnesses, said an industrialist. 8220;The situation is especially bad for luxury items,8221; said Kumar, adding, 8220;The export industry is going through hibernation where everyone wants to maintain a status quo because of uncertainty8221;.