Market Condition and Industry conditions

Historically, the leather industry has played a significant role in global commerce, with some claiming it may be the world's second oldest profession after farming. Internationally, it is indisputably a major industry with enormous economic impact, generating around  USD 407.92 billion in 2021. Over the past 20-30 years, the industry has undergone many significant and consequential changes, which have had a significant impact on its development. The leather industry is anticipated to develop between 2022 and 2030 at a compound annual growth rate of 6.9%. The market is primarily driven by improving living conditions, changing fashion trends, rising consumer disposable income, and expanding domestic and international tourism. The sector is anticipated to benefit from the expanding demand for stylish, fashionable, and comfortable leather footwear, accessories, garments, and other products.

The world's top 10 producers of leather, top exporters of leather, and top importers of leather continue to be some of the primary forces driving the market's expansion. The global leather industry is booming as a result of the rising demand for leather products around the world. Recent years have seen a sharp rise in the manufacturing and trade of leather products all over the world due to the increased demand for high-end fashion items like handbags, wallets, and other fashion accessories, driven by rising consumer expenditure on personal goods. The world's major producers of leather and the top exporters of leather goods are anticipated to see increasing profits in the near future as the market for leather goods continues to be attractive.

How has COVID impacted the leather industry?

The entire leather industry, including the footwear, garment, and accessories sectors, has been adversely impacted due to COVID-19. The first two quarters of 2020 saw significant losses for retailers. In the U.S., footwear sales decreased by almost 32% at the conclusion of the first two quarters of 2020, according to a World Footwear analysis. China has historically provided finished goods and the raw materials needed to make a variety of leather goods, which has made China a source of dependence for many industry producers. The pandemic has, however, seriously hurt product shipments and on-time deliveries by disrupting the supply chain.

Snapshot of the global leather industry

According to Grand View Research, the global market for leather goods was estimated to be worth US$414.0 billion in 2017 and is anticipated to grow to US$629.65 billion by 2025, showing a robust CAGR of over 5.4% during the projected period.

One of the main factors driving this market's expansion is consumers' rising spending on personal products as a result of rising fashion consciousness. The market is expanding as a result of changing lifestyles, increased smartphone penetration, and rising consumer buying power. Consumers are being influenced to buy the newest and most distinctive leather goods thanks to increased awareness through internet channels.

The Asian Pacific region has grown significantly over the past few years, and is currently the world's largest market for leather and leather goods. The most significant market demand in the coming years will come from developing countries like India, China, and Dubai, thanks to rising disposable incomes and increasing demand for designer leather bags. North America is one of the industry's largest markets regarding imports of leather and the consumption of leather goods. 

World's tannery

In India, at around 3 billion square feet of leather production each year, around 13% of the leather production in the world comes from the leather industry. The country manufactures 9% of the world's footwear. The sector is renowned for consistently generating large export revenues and ranks among the top ten foreign exchange earners for the nation.

India has access to 20% of the world's cow and buffalo populations, as well as 11% of the goat and sheep populations, providing a plethora of raw resources.

The leather industry provides jobs to over 4 million people, mostly from the most vulnerable sections of society. The leather products industry's employment is dominated by women, with about 30% share. With 55% of the workforce under the age of 35, India's leather industry has one of the youngest workforces across the globe. 

India’s Ranking in the Global Leather Industry

India ranks fifth in annual production of roughly 1.4 billion square feet of leather. Globally, the retail industry, which grew by $ 0.7 trillion (Tn) in 2019, is set to exceed $ 1.1 trillion (Tn) by 2025. A significant portion of the Indian economy is based on the leather and leather products industries.  One of the top 10 foreign exchange earners in the nation, this industry is known for its continuously high export income. India exported $3.68 billion worth of leather goods, including footwear, during the fiscal year 2020–21. 4.42 million people work in the leather industry, the majority of them come from the less affluent strata of society.

It's interesting to note that whereas the majority of the nations on the list substantially favour either bovine or sheep and goat leather, India produces nearly equal amounts of light leather from bovine, sheep, and goats. If we simply take into account light leather made from sheep and goat hides and skins, India actually comes in second in the world in terms of the annual output of leather, with 670 million square feet, behind the top producer. 

In the U.S. and Europe, most leather comes from India, China, Brazil, the U.S., and Argentina, which account for 65% of all bovine leather. Additionally, Australia and New Zealand are included in the list of countries where sheep leather is sourced, while Sudan, and Bangladesh are included in the list of countries where goat leather is sourced.

The leather industry is anticipated to expand at a rate of 5–10% annually and account for about 6% of India's GDP. India is the fourth-largest exporter of finished leather, the third-largest exporter of footwear, the third-largest exporter of raw hides and skins, and the eighth-largest exporter of leather apparel worldwide.

Takeaway

The leather industry is unquestionably a global business; everything from the raw hides and skins to the produced leather, finished leather components, and finished leather items is heavily imported and exported.  Production occurs all around the world and is strongly related to each nation's agricultural sector. The location of production greatly depends on where these animals are produced for food and wool, with over 65% of the world's leather output coming from bovine (cattle), 15% from sheep, 11% from pigs, and 9% from goats.

India ranks second globally in the export of leather goods, third globally in the export of saddlery and harnesses, and fourth globally in the export of leather garments. India has emerged as one of the world's most powerful nations. One of the important nations for hide tanning and finishing worldwide.

India, China, Brazil, Vietnam, and Italy are among the top producing nations for leather goods; some are more significant for high-end and luxury goods, while others are more significant for sheer volume. Italy, France, Belgium, and Spain export the most leather goods in Europe, despite the continent's overall fall in leather goods manufacturing.