According to a study released by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) on Capacity Utilisation in Indian Manufacturing Industries, some of India’s key sectors in manufacturing have witnessed a decline, ranging from –5.22% to –0.15% in terms of capacity utilisation during 2005, compared with their capacities in 2004. However, in contrast to this trend, the leather and leather and fur products sector reported an increase in capacity utilisation, posting a 6.28% increase from 79.6% in 2003-04 to 84.6% in 2004-05. Rubber, plastic, petroleum, jute and other vegetable fibre textiles also lodged modest increases.

The study stated that the tremendous increase in capacity utilisation in the leather and leather products industry last year was the result of increased demand in the international market because of the phasing out of the quota system and the competitiveness of Indian leather in the international market.

India has emerged as the second largest footwear producer in the world; major export markets include the UK, USA, Germany, Italy, France, Netherlands, Canada, Sweden and Russia. Leather exports account for 7% of India’s exports.