Leather manufacturing is a leading industry in India. It employs the largest number of skilled, semi-skilled workers and is also the largest foreign exchange earner. It is used in various industries like garments, upholstery, saddles, harnesses, footwear etc., and the market is only thriving each year for more leather products. In this article, we look at how to start a leather export business in India and all the details around it.
What is leather?
Leather is an extremely flexible and durable material manufactured by processing animal skin, e.g. cow, buffalo, sheep, goats, crocodiles, mink etc. Leather has been developed since ancient times, and with the advancement of technology and through scientific research, it has now become a regular feature of the market. High grain leather is one of the most premium and original types of leather and also the most sought after in the market.
Leather products are used in footwear, garments, upholstery, accessories, harnesses, tannery etc. India is one of the leading producers of leather and is the 4th largest leather goods exporter globally.
So if you are also interested in exporting leather products, do know that you’ve already selected a winning prospect here. In the following sections, let's take a look at how to start a leather export business.
What to export?
Leather is one of the most sought after products in fashion and footwear, and despite many competitive and alternative materials out there, leather has never gone out of style. Owning a leather jacket or premium leather made shoes are always the sought after pieces in every person’s closet. Leather has a variety of types, from premium quality high grain leather to split fragile leather. Suede leather has a raw texture and gives a different look when used in apparel. Suede and Verona - both find a wide appeal in domestic products and are the most popular choices of leather in the market.
Patent leather is glossy due to the plastic coating applied to it and finds wide use across industries. Let's quickly take a look at the most popular products exported from India if you want to start a leather export business.
1. Leather garments: Leather is most popularly used in the garment industry. With each passing year, more fashion trends are evolving across the globe. India is the second-largest exporter of leather garments across the world. If you’re interested in fashion, this can be a great avenue to pursue in business.
You can study the fashion trends at international festivals, create a detailed import-export business plan and plunge into exporting leather garments. Although it is a very competitive market, if you produce high-quality leather, there are better chances of making a profit as you will always find takers.
Another winning strategy can be to create expertise in a particular category of leather garments and specialise in it. This way the production cost can be reduced, and you can have a steady flow of sales due to the expertise in your area.
2. Leather footwear: Footwear is primarily produced in Tamil Nadu, West Bengal, Uttar Pradesh, Maharashtra. India exports dress shoes, moccasins, Horrachies, Sandals, Ballerinas, Boots and Sandals etc. India produces 2065 million pairs of shoes, of which 95% are for domestic needs. There are plenty of opportunities listed online for Leather footwear, and if you have an interest in footwear, then this is a great prospect to delve into.
3. Leather upholstery: Leather upholstered furniture is known for its regal look, comfort, durability and quality. If you’re interested in export, you must decide on a specialised area in this business. Several businesses within this domain using only exotic leather or some that use different styles of upholstered furniture. This is a wide avenue to delve into and has a great demand in local and international markets.
4. Tanning: If you have expertise in the tannery business, then this is also a competitive market. You can provide hides to other industries like garments, furniture, shoes, accessories etc. Determine the type of tannery you want to become by analysing the market demands and conducting research in the international market. Find the gap in the supply and demand of a good quality leather tannery and create a solid brand in this domain.
How to export?
Now that we’ve seen what are some of the famous leather products that are always in demand in the international market. Let's take a look at the quick steps on how to export leather goods from India.
1. Set up an export company: If you’ve selected your product, then register your company name and have it set up physically for commencing the import-export business. The company must be registered under DGFT to adhere to the export policies of India.
2. IEC number: The company must apply for this number to export goods from India.
3. License and Quota: Company needs to apply for an export license from the Government of India through the Export Trade Control Authority. It also sets precedence on the permitted quantity of goods that can be exported.
4. Payment and Delivery terms of the agreement: The exporter and the international buyer must sign an agreement to ensure payment terms, e.g. letter of credit or monthly payout, etc., and delivery agreement is in place.
5. Order and Invoice process: Invoice must be prepared for the export order. Documentation for the export process is quite extensive, so ensure to have that in place.
6. Export customs clearance: Exported goods must clear customs in the buyer’s country, and the supporting documentation will ensure this is done smoothly.
7. Shipment: Shipping involves bill of lading, bank documentation and other important aspects to be adhered to in exporting goods.
Exporting goods from India is quite a seamless procedure, provided all the regulations by the trading authority are followed. There are extensive documents involved, but it can be quite an easy ride for your quality leather products to reach overseas once they are in place.
India has been one of the leading exporters of leather goods in Asia and stands at the 4th position worldwide in this aspect. There are already big industries and companies that mass-produce high-quality leather, and the market is as competitive as it is fertile. So, a leather export business in India will only strengthen the national economy.
At the same time, it is important for new entrepreneurs to do thorough research of the market trends, be it in fashion, footwear, accessories or upholstery. There are plenty of opportunities of every kind in this industry, and if done with good quality standards, the returns from this are quite high. Leather has been in fashion from ancient medieval times, and even today, it holds a high position in the markets.
The characteristic smell and high-quality gloss and shine of leather instantly elevate the quality of the product, and they're still hasn’t been any other material that comes even close. If you’re planning to start a leather export business, the time is now, and the market is only thriving for more.
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Q. What kind of inspections are done before the shipment of export goods?
Ans. Phytosanitary and fumigation are some of the inspections done before shipping the goods out of the country as per Government of India regulations.
Q. What is Bill of Lading?
Ans. Bill of lading is the official receipt from the master of the ship issued to the exporter. It has the full description of goods loaded on the ship and the name of the destination port.
Q. How much leather does India produce?
Ans. India produces close to 3 bn sq. ft. of leather, close to 13% of the annual production of leather worldwide.
Q. What are the major production centres of leather in India?
Ans. Uttar Pradesh, Punjab, Karnataka, Andhra Pradesh, and Kerala are India’s major leather producing states.
Q. Why is the leather sector a focus area for the Government of India?
Ans. The leather production sector has immense potential for export and employment generation in its manufacturing. This has led the Government of India to take several special Focus initiatives under the Foreign Trade Policy for its growth.