The Indian footwear industry could experience a substantial increase, reaching a market size of USD 90 billion by 2030—more than three times its current valuation of USD 26 billion. This growth is contingent upon the implementation of various measures, such as banning shoe imports, providing fiscal incentives, establishing additional design centers, and encouraging Taiwanese contract manufacturers to establish a presence in the country, according to a report by the Global Trade Research Initiative (GTRI) released on Sunday.
“This growth will be characterized by two main changes – a significant increase in the demand for non-leather footwear (like sports shoes, running shoes, casual wear, and sneakers) in India, rising from 25 per cent to 75 per cent of the market share by 2030; and a shift in leather shoe production from small-scale, cottage industries to large corporates,” it said.
Strategic Steps for Footwear Sector:
The report proposes eight actions for the sector, emphasizing that the technology used in shoe manufacturing is rudimentary compared to electronics or semiconductor production. It suggests that India should encourage local production by both domestic firms and multinational corporations (MNCs) while advocating for a halt in the importation of finished shoes.
“Today many brands sell make in China or Vietnam shoes in India. Few others do part manufacturing In India and import the premium shoes. India should support firms to make shoes locally by removing policy and logistics impediments,” it said.
The recommendation includes proposing the implementation of the Production-Linked Incentive (PLI) scheme for essential inputs required in the production of premium shoes. This is crucial because India currently lacks the production capability for key inputs such as outsole molds, glue, ethylene vinyl acetate (EVA) granules, and thermoplastic polyurethane (TPU) films.
At present, critical materials are imported by manufacturers, leading to a surge in production costs by 30-40 percent. Consequently, the majority of brands are compelled to import premium shoes from China and Vietnam.
“PLI-supported local production of critical inputs will help in making premium quality light and strong shoes locally. The government should also consider exempting leather shoes from QCO (quality co-tool order) application,” the report prepared by GTRI Co-Founder Ajay Srivastava said.
Additionally, the report recommended that the government levy a 35 percent customs duty on footwear imports priced below USD 3 per pair. It further proposed establishing a minimum import price of USD 5 per pair as a safeguard measure to protect the domestic industry.
Around 25 per cent of shoe imports in India are priced at less than USD 3 per pair.
It added that leather shoes face no quality issues and are not imported in large values and this is evident from the fact that they currently make up 81.7 per cent of India’s footwear exports with most exports going to the quality-conscious markets of the EU and the USA.
“QCO should primarily apply to non-leather shoes that constitute 77 per cent of India’s USD 900 million footwear imports. India is lagging in the non-leather shoe sector in terms of quality and relies on imported inputs,” the report noted.
Further it said that the footwear manufacturing industry is dominated by Taiwanese contract manufacturers that make shoe brands like Nike, Adidas, and Puma.
“India must attempt to attract more Taiwanese contract manufacturers to ensure operations by global brands,” it said, adding sites like Uttar Pradesh and Haryana can become a major hub of the sector after Tamil Nadu.
Taiwanese firms, such as Feng Tay, Hong Fu, Dean Shoes, Oasis Footwear, Sports Gear, and Zucca, are planning to set up operations in India and states like Haryana, Uttar Pradesh, Andhra Pradesh, Telangana, and Karnataka need to assign high importance to footwear manufacturing investments in their investment promotion outreach, it said.
Current Footwear Industry Landscape:
India is the second-largest global producer of footwear after China, accounting for 13 per cent of global footwear production and 2.2 per cent of global exports. India is the 9th largest global footwear exporter.
China, with exports of USD 62 billion tops the chart. It is followed by Vietnam (USD 22 billion), Italy (USD 15.2 billion), Germany (USD 10.3 billion), Indonesia (USD 7.4 billion), France (USD 5.7 billion), the Netherlands (USD 4.6 billion), Spain (USD 3.4 billion) and India (USD 3 billion).
There are two main types of footwear: leather (formal shoes) and non-leather (casual and sports). Non-leather footwear is a larger category globally, accounting for 70 per cent of world trade.
India has a smaller presence in this category, with non-leather shoes making up only 19.3 per cent of its footwear exports. In contrast, China has a majority 79.7 per cent share.
Historically, Indian footwear manufacturers excelled at manufacturing and exporting leather shoes in clusters like Agra, and Chennai.
Leather footwear accounts for 81.7 per cent of India’s footwear exports, showcasing its strength in producing high-quality leather shoes. India is seen as a sourcing destination for leather shoes by brands in the EU, the US, the UK, and Japan.
A majority of India’s shoe exports, 78 per cent, go to the EU, the US, the UK, and Japan. These shoes are valued highly, with the unit price per pair ranging from USD 15 to USD 23.
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