China’s loss in footwear biz may turn in India's favour

Indian footwear industry may gain with its major rival in China losing its hold on the business. While China’s export share stands at more than 70 per cent in volume terms, with the country selling almost three out of every four pairs of footwear exported worldwide, India’s share is merely 1.9 per cent in value at the moment. However, China’s exports are dominated by non-leather footwear.

With labour costs in China on the rise, and the country gradually moving towards manufacturing of value-added goods, leading importing countries are now shifting their sourcing low cost countries like Vietnam, Philippines and India.

Rohit Inamdar, Senior VP and Co-Head, corporate sector ratings, ICRA, just a two per cent decline in China’s exports can lead to India gaining almost 50 to 60 per cent. And with retailers like Walmart and Tesco now exploring other sourcing destinations, India can take advantage of the situation. Indian government’s steps to raise foreign capital, establishing of various supporting institutions and de-reservation of industry from small scale industry and proposed setting up of industrial parks for footwear as well as duty concessions under the Foreign Trade Policy can further assist in improving exports from the country.

Despite a bright long-term outlook, footwear export in FY16 is expected to witness single digit growth, according to ICRA. The footwear exports from India, which witnessed a healthy year-on-year growth of 36.2 per cent and 36.0 per cent in the FY14 and first half of FY15 respectively, ended FY15 with a much lower growth of 17.6 per cent in rupee terms on the back of lower demand from Europe and depreciation of Euro against Rupee since India is heavily dependent on Europe, which accounts for 75 per cent of its exports.