India’s leather exports have already suffered a significant drop due to the COVID-19 pandemic. While exports rose briefly in the summer of 2020, they soon fell again, a trend that continued into 2021. Now, the problem has worsened as workers in tanneries in West Bengal, a key leather manufacturing location in India, operate with a skeletal workforce due to the rise in COVID-19 cases.

Exports of leather goods from India will likely drop 40-50% by the end of the year if these tanneries don’t implement drastic measures. The government, however, has made no announcements regarding the implementation of relief measures to support the industry. 

Indian Leather Exports are Declining

India accounts for 13% of the world’s leather production and is the second-largest producer. Leather is one of India’s key exporting industries, but like many sectors around the world, the COVID-19 pandemic has had a detrimental impact on production. 

Exports of leather and related products in India dropped by 40.5% during the initial stage of the pandemic, falling from $411.38 million in June 2019 to $244.89 million in June 2020. While these figures are concerning, numbers have recovered since their worst drop between April and May of 2020 where exports saw a steep decline of 83%. These statistics reflect the devastating effects of the pandemic on manufacturing and logistics, which may force the industry to lose large markets such as the European Union (EU), the UK, and the US.

The pandemic forced the closure of many brick-and-mortar stores around the world for extended periods of time, altering the nature of commerce. People are conducting business transactions online in greater numbers than ever before. This transition has altered the way businesses manufacture and ship products. Customers no longer want large stock inventories, but rather smaller orders shipped in shorter timeframes. However, this demand for faster delivery has been experiencing a slowdown as a result of a recent shipping container shortage, which further harmed the Indian leather industry by limiting access to containers and increasing container costs.

COVID-19 Outbreak Further Hurts Indian Leather Exporters

The Indian leather industry suffered another setback in May. An outbreak of COVID-19 forced tanneries and leather manufacturing units in West Bengal's Bantala region to operate with a skeleton crew for several weeks. Cases in India reached a new high in May of this year, with a seven-day rolling average of newly reported cases reaching 392,000. After the US, the country now has the highest number of COVID-19 reports. The second wave caused havoc in many industries as large numbers of critical workers became ill or needed to be isolated. The potential recovery of the leather industry was hampered by the second wave, as only a bare minimum of employees were available to work across tanneries in Bantala.

India usually exports $5.5-6 billion worth of leather products each year. The industry thus has a huge potential if it can bounce back from the pandemic. Fortunately, many European buyers are looking to shift contracts to companies based in China and India, which could help boost the industry once more. However, it may take roughly six to nine months for the industry to start seeing actual progress.

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