What comes to mind when we talk about imported leather goods? Coach bags, Gucci shoes and Burberry jackets, isn’t it? Although European and American brands have won the perception battle, when it comes to India’s leather goods imports, it’s all about the mass produced, low-priced varieties made in China. And this, implies an all-weather opportunity to Indian importers!
Most of us love bags, watches and jackets. And our love for them multiply manifold, if they are made of leather. What if they are imported as well? That would be the icing on the cake, isn’t it? Not really. Although difficult to believe, the fact is that the per unit price of India’s leather goods imports is over 40% lower than that of leather goods exports! This, despite India itself being the world’s fourth biggest exporter of leather goods
Like most things in life, the world of leather goods is also divided between the classes and the masses – Italy and France being the source of choice for the classes and China being the same for the masses. And given the demographics, India’s ‘mass’ imports dwarf its ‘class’ imports by a country mile – in FY2014, combined value of leather goods imports from Italy and France was not even a fifth of that from China.
Neeta Bulchandani, Creative Director, Bulchee, said, “There is no synchronised market for such products in India. The pricing of these European brands is very high. It does not cater to the average Indian consumer. There is a very small niche market for these brands.
“When the market opened up, people thronged to China to import goods. They had just one thing in mind – getting the product at a cheaper price. So, if you ask for very cheap products, the manufacturer has no choice but compromise on the quality of the raw material. Breaking the myth around Chinese goods further, Singh said, “Factories in China cater to almost all the top brands in the world. Almost 90% of sport shoes of brands like Nike and Adidas are ‘Made in China’. Even Apple’s products are manufactured in China. So, it is not that they cannot manufacture good quality stuff. What matters is where you source your products from. It depends on what you are looking for and what price you are ready to pay for it.”
Tectonic shift
The Indian leather goods industry has gone through a lot of changes over the last decade. While exports have risen at a CAGR of 8.9% (from $999.9 million in FY2004 to $2,354.5 million in FY2014), imports have exploded at a CAGR of 35.6% (from just $13.3 million in FY2004 to $278.7 million in FY2014). Similarly, although a decade back, in FY2005, the average per unit price of imported leather goods was higher than that of exported leather goods ($4.5 versus $4.2), in FY2014 it was way lower ($4.4 versus $7.4). This means that although we are importing much more than what we were importing a decade back, we have moved from importing higher value items to importing lower value items. And the reasons for this are two pronged – (a) in India, leather goods imports are subjected to a countervailing duty of 12% (6% for leather gloves); and (b) brands like Woodland have started offering high quality products, manufactured in India, to the country’s upmarket, quality conscious buyers. Speaking about this, Singh said, “Our stores are normally located in metro cities, primarily on a high street road or good malls. Pricing has never been an issue, but we do have price brackets, which is different at a store in Vasant Kunj, New Delhi, from that at a store in Meerut or any other smaller town.”
For Aam Aadmi
With the affluent and the upper-middle class gone into the pockets of companies like Woodland, lower-value imported leather goods have found their way to the middle and lower-middle classes. Just spend a couple of hours at Palika Bazaar in New Delhi or at any of the hordes of shops in Sion-Dharavi in Mumbai, and you could buy a Gucci lookalike jacket or a Woodland lookalike pair of gloves, all ‘Made in China’ at less than 10% of what the branded products would be selling at. Buy and use the products and you would be surprised by their quality. If imported ≠ good, then cheap ≠ bad.
Considering that owning anything imported is still a matter of great pride in India, coupled with the fact that affordability hasn’t really kept pace with rising urbanisation and aspirations (and, not to say, that leather goods manufacturers in India are not likely to have it easy under the new government), leather is certainly a product, the value of imports of which are bound to keep heading northwards in the foreseeable future. So, are you ready to import some leather?