Shoe imports ban, fiscal sops, design centres to help footwear industry hit USD 90 billion mark: Report

Market size of the Indian footwear industry can increase by over three times to USD 90 billion by 2030 provided a host of measures such as a ban on show imports, fiscal incentives, more design centres and Taiwanese contract manufacturers setting up shops in the country are taken, a report said on Sunday.

Economic think tank Global Trade Research Initiative (GTRI) said that the Indian footwear market, valued at USD 26 billion, is projected to reach USD 90 billion by 2030.

"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.

Suggesting eight actions for the sector, the report said shoe-making technology is primitive compared to electronics or semiconductor manufacturing and India should support local production by domestic firms and MNCs and "stop imports" 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.

It suggested the government introduce the PLI (production-linked incentive) scheme for inputs needed to make premium shoes as India does not make key inputs like the outsole moulds, glue, ethylene vinyl acetate (EVA) granules, and thermoplastic polyurethane (TPU) films.

Currently, manufacturers import such critical materials, which increases production costs by 30-40 per cent. This forces most brands 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.

It also suggested the government impose a 35 per cent customs duty on footwear imports priced below USD 3 per pair and set a minimum import price of USD 5 per pair 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.

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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