A
government crackdown on Muslim-dominated abattoirs and the trade of cattle
dragged down India's exports of leather shoes by more than 13 per cent in June,
as leading global brands turned to China, Bangladesh, Indonesia and Pakistan to
secure supplies.
The
drop in exports of shoes and leather garments comes as a setback for Prime
Minister Narendra Modi, who has sought to create millions of jobs by more than
doubling the leather industry's revenues to $27 billion by 2020.
Emboldened
by the victory of the Bharatiya Janata Party (BJP) in the 2014 general
election, Hindu hard-liners became more assertive in their calls for a
clamp-down on both the meat and leather industries, which are largely run by
Muslims, who make up 14 per cent of the population.
"The
writing was already on the wall," Nazir Ahmed, CEO of shoemaker Park
Exports, told Reuters by phone from the shoe-making hub of Agra. "We have
killed the goose that laid the golden egg."
India,
the world's second-biggest supplier of shoes and leather garments, exports
nearly half its leather goods, with overseas sales estimated at $5.7 billion in
the 2016/17 fiscal year to March, down 3.2 per cent from a year earlier.
Footwear exports fell more than 4 per cent in April-June, to $674 million.
In
March, after being appointed chief minister of Uttar Pradesh, India's most
populous state and a major leather exporter, Yogi Adityanath, a firebrand Hindu
monk, ordered a closure of abattoirs operating without licenses. Hindus
consider cows as sacred.
Slaughterhouse
owners complain that much of India's meat and leather trade takes place in the
informal sector, and it is hard to get licenses, especially for smaller units.
In
May, citing cruelty to animals, the central government banned the trade of
cattle for slaughter, and restricted livestock sales only for agricultural
purposes such as ploughing and dairy production.
But
the Supreme Court overturned that order, citing the hardship the ban had caused.
That has not brought relief as repeated attacks on trucks carrying cattle still
rankle the leather trade.
"The
Supreme Court has allowed the resumption of trade for cattle, but the ground
reality is that cow vigilante groups continue to be active and no one wants to
risk his life by transporting cattle," Ahmed said.
Deterred
by a clutch of measures that squeezed the supply of leather, a key raw
material, brands like H&M, Inditex-owned Zara and Clarks, cut back their
orders to India, said M Rafeeque Ahmed, a leading shoe exporter from Chennai
and former president of the Federation of Indian Export Organisations.
"We
lost orders because our buyers were sceptical of our ability to meet their
requirements. Instead, most buyers moved to rival suppliers in Asia and
southeast Asia," he said. A spokesman for the Trade Ministry declined to
comment.
Earlier
this year, a Finance Ministry report said India should sign more free trade agreements,
make tax, and labour reforms to drive leather exports, which offer “tremendous
opportunities for (the) creation of jobs
The
industry is also grappling with the national Goods and Services Tax, introduced
in July, which has pushed up production costs by 6-7 per cent, exporters said.
The
crackdown also hurt day-workers employed at shoe and garment making units and
hit leather supplies, forcing manufacturers to import hides from the United
States, Australia, and some European nations, raising the cost of production
and squeezing margins.
Many
tanneries, as a result, have run out of leather. "My business has come to
a standstill because I don't have any inventory at all. Most large shoemakers
are importing hides now," said a tannery owner, who asked not to be named
so as to avoid retaliation from cow vigilante groups.
Nearly
a third of the roughly 3 million-strong workforce, mostly lowly-paid casual
workers employed in the leather sector, have lost their jobs in the past six
months, according to six shoemakers and two tannery owners interviewed by
Reuters for this article.
Since
most states have outlawed cow slaughter, the supply of leather largely comes
from the legal slaughter of buffaloes whose skins are used in many leather
goods.
"Everyone
must abide by the rule on cow slaughter and respect sentiments, but by choking
the supply of other animal hides, we have nearly killed a thriving
industry," said Ahmed of Park Exports.
© Thomson
Reuters 2017
Source: NDTV - Click link here - October 4, 2017
