Indian Footwear Industry an Overview

Reliance MET invites all major players in the footwear industry to set up their manufacturing plant at Reliance Industrial Plots in NCR. The Haryana government has approved the Model Economic Township (MET) project in Jhajjar, which is located along the western border of Delhi in Haryana. The project is envisioned as an 8250-acre fully integrated industrial township with all the benefits of domestic tariff areas, special economic zones, industrial park clusters with logistics hub support infrastructure, and social infrastructure including residential, commercial, recreational, and institutional development.

Footwear Park at Reliance Industrial Plots is one of the dedicated clusters in an identified zone for the Footwear and Leather industry, within the overall framework layout of the mega MET Project, spanning 400 acres.

The footwear industry in India is a very important segment of the leather industry; in fact, it is the engine of growth for the entire Indian leather industry.

After China, India is the world’s second largest footwear producer, accounting for 13% of global footwear production of 16 billion pairs. India produces 2065 million pairs of footwear in various categories (leather footwear – 909 million pairs, leather shoe uppers – 100 million pairs and non-leather footwear – 1056 million pairs). India exports approximately 115 million pairs. As a result, nearly 95% of its output is used to meet domestic demand.

Chennai, Ranipet, and Ambur in Tamil Nadu, Mumbai in Maharashtra, Kanpur in Uttar Pradesh, Jalandhar in Punjab, Agra, Delhi, Karnal, Ludhiana, Sonepat, Faridabad, Pune, Kolkata, Calicut, and Ernakulam are the major production centres in India. The footwear manufacturing industry employs approximately 1.10 million people.

Dress Shoes, Casuals, Moccasins, Sport Shoes, Horrachies, Sandals, Ballerinas, Boots, Sandals, and Chappals made of rubber, plastic, P.V.C., and other materials are among the footwear exported from India.

The footwear sector has now been de-licensed and de-reserved, allowing for capacity expansion on modern lines with cutting-edge machinery. To aid this process, the government has authorised 100% Foreign Direct Investment in the footwear sector via the automatic route.

A favourable investment climate for attracting foreign investment and increasing cost competitiveness. The Government of India is constructing a dedicated Footwear Complex and Footwear Components Part, which will house footwear clusters.

Footwear - Global Scenario and India's Contribution

The global import of Footwear (both made of leather as well as non-leather) increased from US$ 124.43 billion in 2013 to US$ 134.943 billion in 2017, growing at a CAGR of 2.1%. During 2017, India’s share in global imports is 2%.

Source :ITC, Geneva & DGCI &S, Kolkata

India’s Export of Different categories of Footwear

Footwear is the engine of growth of the leather industry in India. India’s export of Footwear touched US$ 1933.13 million in 2016-17, accounting for a share of 45 % in India’s total export from the leather sector of US$ 5739.93 million.

India’s export of leather footwear had increased from US$ 2018.18 million in 2012-13 to US$ 1933.13 million in 2016-17.

India’s export of footwear components had increased from US$ 320 million in 2012- 13 to US$ 335.24 million in 2016-17.
India’s export of non-leather footwear has increased from US$ 202.06 million in 2012- 13 to US$ 296.68 million in 2016-17.

Major Markets

During 2016-17, the top markets for Indian footwear were the United States (14.6%), the United Kingdom (14.4%), Germany (12.2%), France (6.4%), Italy (4.8%), Poland (4.4%), the United Arab Emirates (3.7%), Spain (3.3%), Belgium (3.2%), and the Netherlands (2.5%). These ten countries account for 80.53% of India’s total footwear exports.

Nearly 90% of India’s footwear exports are to European countries and the United States. The future growth of Indian footwear in India will be market driven. The European Union and the United States are major consumers of Indian footwear.

Future Developments:

Considering its past performance, current global trade trends, the industry’s inherent strengths, and growth prospects, the footwear industry intends to increase production, thereby increasing exports from the current level of US$ 1.73 billion.

India's Domestic Footwear Industry

The domestic footwear industry in India is valued at approximately US$ 3200 million, with annual growth projected at 11-12%.
Organized retail accounts for 25% of total sales and is growing at a rate of 35-40% per year.
Footwear retailing accounts for approximately 9% of the total consumer market.
Men’s footwear accounts for roughly half of the market.

Branded footwear (including store labels) accounts for roughly half of the market, with the men’s footwear market driving the growth.
Ladies and children’s footwear, as well as sports footwear, have a lot of potential in the domestic market.

Footwear preference - Source: DMG Consulting Pvt Ltd, Noida

Consumers buy footwear all year and there is no set period or time when they do so. However, the beginning of an academic session appears to be a peak time for footwear purchases.

The majority of consumers (more than 75% in metro and non-metro urban areas) preferred indigenous footwear, while approximately 17% preferred neither indigenous nor imported footwear. Surprisingly, more than 10% of consumers in non-metro towns preferred imported footwear, compared to only 6% in metro cities.
About 55 percent of those polled preferred leather footwear, while 45 percent preferred non-leather footwear. In non-metros town, however, more than 70% of consumers preferred leather footwear and less than 30% preferred non-leather footwear.

Consumer preference:

A little more than 53% of consumers indicated a preference for branded footwear, while around 27% preferred non-branded footwear and 10% were found to be brand neutral. Surprisingly, the preference for branded footwear was higher in non-metropolitan areas, with as many as 62 percent of consumers polled indicating a preference for branded footwear.
Contrary to popular belief, the cost of footwear did not appear to be a major factor in influencing consumer preference. The majority of consumers (60 percent) prefer high-quality footwear.

Although a significant 42 percent of consumers valued fashion and design of footwear, the majority of consumers (58 percent) showed a distinct preference for comfortable and durable footwear.

Competitiveness of Indian footwear vis-à-vis imported footwear:

The natural advantage of the Indian footwear industry in terms of factor endowments such as the availability of leather and cheap labour does not appear to have translated into a comparative advantage in production. In recent years, import growth has tended to outpace growth in footwear exports, which may reflect, at least in part, a loss of export competitiveness. Using the unit value of exports and imports of some items as proxies for prices, it is discovered that the unit value of imports in the majority of footwear items, whether leather or non-leather, is lower than the unit value of exports of these items.

The Indian footwear industry is poised for expansion:

Ndia has cutting-edge manufacturing facilities. The footwear industry has progressed from manual footwear manufacturing methods to automated footwear manufacturing systems. World-class machines are installed in footwear production units. These machines, manned by skilled technicians, aid in the realisation of any new innovative idea. The footwear industry has benefited greatly from the sector’s support systems. The footwear component manufacturing industry in India is well developed. The future growth of the Indian footwear industry will be market-driven and oriented toward the EU and US markets. With advancements in technology and footwear quality year after year, the Indian footwear industry is stamping its class and expertise in the global footwear trade.

Source: Indian Trade Fair

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