Leather Products Export to Germany

EXPORTS OF LEATHER PRODUCTS TO GERMANY

Institute of Management, Nirma University 1 | P a g e

EXPORT-IMPORT MANAGEMENT

Project Report

on

Exporting Leather Products

to Germany

Submitted to: Prof. P.K. Chugan

Submitted By: Pankaj Poddar

MBA (074141, Fb&e, 07-09)



TABLE OF CONTENTS

Sr.No. Topic Page No.

1 Introduction / History of leather 3

2 Indian Export and Import 5

3 Indian Leather Industry Scenario 7

4 German Economy 10

5 SWOT Analysis of Indian Leather Industry 15

6 Product range 17

7 Price Structure 21

8 Selecting a Suitable Trading Partner 22

9 Doing Business in Germany 24

10 Registration with EPC / Council for Leather Exports 27

11 Method of Costing 28

12 Government Policies 29

13 Registration / IPEC No. 30

14 Statistics 31



Introduction

There came the long awaited dusk to the complacence of the Indian

manufacturers (the village leather industry in particular) When the long

slammed doors of global markets were opened to the leather industry. As

already project by various economic wizards, the leather manufacturers met

challenge with a renewed vigor and started capturing markets like Germany,

U.S, Italy, U.K., and France. The very fact that a major market like Germany

has been chosen to build up positive image for the Indian leather products

and to promote joint ventures adds one more feather in the cap of leather

industry in presenting a strategy so remarkable.

History of Leather

The primitive man, even more than 7000 years ago, made and used leather

goods. He dried fresh skins in the sun, softened them by pounding in animal

fats and brains, and preserved them by salting and smoking. Of course, the

products were crude, made for protection than as fashion.

The Egyptians and Hebrews developed around 400 BC, the process of

vegetable tanning that involved simple drying and curing techniques

Under the Arabs during the middle Ages, the art of leather making became

quite sophisticated. Morocco and cordovan leathers were in great demand.

The ancient puppet theatre in the southern India used primarily leather dolls.

The tradition continues even today.



Product definition as per ITC HS code

ITC HS code for products with outer surface of leather, of composition leather

or of patent leather is 42029190

42 stand for Chapter 42: Articles of leather; saddlery and harness; travel

goods, handbags and similar containers; articles of animal gut (other than

silk-worm gut)

4202 stand for Trunks, suit-cases, vanity-cases, executive-cases, brief-cases,

school satchels, spectacle cases, binocular cases, camera cases, musical

instrument cases, gun cases, holsters and similar containers; travelling-bags,

insulated food or beverages bags.

http://www.infodriveindia.com/HS-Codes/42-Chapter-42-Articles-of-leather.aspx






INDIAN Export & Import

The export of leather and leather products in total during 2006-07 has

reached 2849.61 millions U.S. $ as against 1558.60 millions U.S. $ in 1994-

95 registering an increase of 16.59%.In 2001-02 export has reach 1.93

billion U.S. $ and in year 2005-06, the Indian export of leather goods

reached to 2648.14 million US $.

In 2006, estimated exports stood at US$112 billion and imports were around

US$187.9 billion. Textiles, leather products etc. are major export

commodities. India's most important trading partners are the United States,

the European Union, China, and the United Arab Emirates. More recently,

India has capitalized on its large pool of educated, English-speaking people

to become an important outsourcing destination for multinational

corporations. India has also become a major exporter of software as well as

financial, research, and technological services.

To give a brief idea of the Indian exports of leather products to the world, we

have prepared this table showing you the country wise exports of Indian

leather products on the basis of percentage, FOB value and units exported.

Country Quantity FOB Value % Share

(In pieces) (Rs. In Crores) (value wise)

Germany 1377428 327 19.35

U.S.A. 1565807 300 17.70

Italy 973888 260 15.39

Spain 1117471 253 14.97

U.K. 713954 136 8.09

France 531957 100 5.91

Netherlands 217110 40 2.34

Sweden 169183 33 1.96

Canada 117794 30 1.79

Denmark 162414 28 1.69

Portugal 99341 23 1.38

Greece 86390 22 1.32

Belgium 98851 18 1.10



Switzerland 65820 18 1.06

Source: Council of Leather Exports

At the current stage, in India leather industry is commanding a vast potential

as a valuable foreign exchange earner. Be it pricing or quality, delivery

schedules or frame work conditions, it is imperative for the Indian leather

sector entrepreneur to fully aware with the what the markets demand and

how the competitions adapts it self. The industry has also to pre-empt the

global goings on end constantly initiate proactive measures.

Special mentions of Germany need to be mentioned when we talk of export

scenario of the leather goods. Germany has been the principal market for the

Indian leather and leather products and continues to hold its position at the

top commanding about the 20% share of the total Indian leather and leather

products. Largest market for Indian leather industry is continuously nurtured

and developed.

“Leather Fashion”- A Hot Tip:

When one talk of leather products coupled with their bulk exports, naturally

the buzzword ―fashion‖ comes in question. In order to survive in market

already filled with competitors, it is indispensable for an exporter to be at par

with the latest fashion development in the country in which he is exporting

the goods. When the fashion speaks for it self, it can play a stimulating role

as spearhead of an entire industrial sector .

A search for light, purity, clear lines has been acclaimed at the basis for

fashion in the leather products. Elegance is the back with the timeless,

thorough bred city –dwellers-inspirations that will characterize this look. City

fashion has new focal points in this new trend towards elegance. Talking

about the contemporary fashion, one cannot ignore the timeless crocodile

and python prints in elegant cameo tones have a slightly old fashioned look

that is now very fashionable.



The Indian Leather Industry Scenario

Leather Industry in India, occupies a place of prominence in the Indian

economy, in view of its massive potential for employment, growth and

exports.

There are a large number and variety of leather products available and sold

in India. First and foremost this includes footwear, which constitutes the

majority of the leather market. There after there is leather furniture,

garments, fashion jewellery, Men and Women Leather Accessories etc

Features of Leather Sector in India:

Employs nearly 2.5 million persons.

A large part (nearly 60-65%) of the production is in the Small/Cottage

Sector.

Annual export value is about to touch about 2 billion US dollars.

Amongst top 8 export earners for India.

Endowed with 10% of the world raw material and export constitutes

about 2% of the world trade.

Has enormous potential for future growth.

There are also numerous types of leather available in India. But the ones

most commonly used and preferred in Indian climate are Dry Mill, Cow Softy,

Sheep Napa and Buff Calf.

The process of making leather is as follows. The raw animal hide is sent to

the tanneries, where it is cleaned, processed, dyed, dried and polished, after

which it is available and ready for further use. Various Leather product

companies buy leather in bulk from these tanneries and then use them in

their respective products.



Leather wear in India is basically for export though a very small quantity is

available in the local market mainly in the north where the weather is

conducive to leather wear and also in five star hotels where the tourists from

all over the world buy leather garments. Most of the garments sold are

designed as per international standards and the buyers are mainly foreigners

who find the locally made garments very fashionable. The main leather

garment centres for manufacture are Bombay, Kanpur, and Madras.

The Indian Export Trade Corporation (IETC)-one of the leading

manufacturers of very high fashion leather garments for men’s and women’s

wear started its leather business in 1970 with snake skin items. They moved

into women’s garments in 1985 and then to men’s wear in 1989. Their

turnover of 100 pieces per month of women’s wear and 1500 pieces per

month of men’s wear in leather gave them a turnover of Rs. 52,66,000 in

1989/90 to countries like USA. Germany, UAE, Switzerland and in India.

―Stylewise, Indians can compete with the rest of the world in design and

detailing. WE have the best machines, accessories and leather and our

production techniques too are very modern,‖ informs Pawan Sabharwal of

IETC.

The Indian Leather Industry has captured world attention by way of its

unique performance in the international arena. There has been an increasing

emphasis on its planned development, aimed at optimum utilization of

available raw materials for maximizing returns, particularly from exports.

There has been a remarkable growth in exports from US $746.34 million

during 1986-87 to US $ 1.93 Billion in 2001-02.



India’s inherent strength lies in its strong raw material base, technical

manpower, and proven quality control measures. India ranks first among the

major livestock holding countries in the world, having 57% of buffalo, 16% of

cattle, 20% of goat and 4% of sheep population. It is no denying fact that

the legendary quality of India’s traditional leather craft, combined with

modern production facilities and trained personnel, has put India on the

world map for sophisticated leatherwear. The liberalized economic and

developmental trade policies adopted by the government of India since 1991

and simplification of procedures have been instrumental to the growth of this

industry. With an enviable reputation in international leather circles, and an

ever-increasing global demand, Indian leather today ranks among the top

export earners in the country. Indian leather products are exported to as

many as 120 countries.

The Indian leather industry is well set for rapid growth in coming years. The

industry has undergone tremendous changes in the past two decades and the

policy measures adopted by the government have started paying rich

dividends. To add to this, thanks to cheap labour and raw material.



German Economy

Germany is one of the world's most advanced market economies. It is the

world's third largest economy in USD exchange-rate terms, the fifth largest

by purchasing power parity and the largest economy in Europe.

Competition and free enterprise are promoted as a matter of government

policy. However, the state intervenes in the economy through the provision

of subsidies to selected sectors and the partial ownership of enterprises in

sectors of strategic importance. Although Germany, unlike countries such as

France or Italy, is not a classical fashion country, fashion play a large role

and its significance is growing.

Germany, which is the single largest buyer of Indian leather items, with a

14.3 per cent share, increased its imports by 7.2 per cent, buying more of

footwear — leather and non-leather — as well as saddlery and harness.

Exporters of other leather items such as garments, leather goods, footwear

components and leather, also increased over a period of time.

Leather goods and garments are big business all over the world. These are

being manufactured and exported by India and the Indian leather industry is

poised to take the international markets by storm.

Total market size

The German market for luggage and (leather) accessories was worth € 1,953

million in 2006. This represented a volume of approximately 119 thousand

tonnes. Over the review period between 2002 and 2006, the market has

increased by an equivalent 1.7% per annum in value, compared with the EU

average of 3.2%.

http://www.google.co.in/search?hl=en&wikititle=1&q=Germany

http://www.google.co.in/search?hl=en&wikititle=1&q=Market%20economy

http://www.google.co.in/search?hl=en&wikititle=1&q=United%20States%20dollar

http://www.google.co.in/search?hl=en&wikititle=1&q=Exchange%20rate

http://www.google.co.in/search?hl=en&wikititle=1&q=Purchasing%20power%20parity

http://www.google.co.in/search?hl=en&wikititle=1&q=Europe

http://www.google.co.in/search?hl=en&wikititle=1&q=Competition

http://www.google.co.in/search?hl=en&wikititle=1&q=Free%20enterprise

http://www.google.co.in/search?hl=en&wikititle=1&q=Subsidies



Germany was the largest luggage and (leather) accessories market in the EU

in value. It was also close in value to the next three markets of Italy, France

and the UK, although Italian and UK volumes were higher. On a per capita

basis, it was also similar to Spain. Per capita consumption of € 23.7 was

higher than the EU27 average of € 20.3. This suggests that Germans

purchased more high quality items on average than elsewhere, or purchased

more items generally.

Despite the fact that German consumers are generally not as brand

conscious as consumers in some of EU countries, handbags and other

personal accessories such as belts have continued to experience sales

increases, underpinned largely by increasing interest in fashion. This has

been stimulated by major media coverage and close inspection of the

accessories worn and used by celebrities. There are, however, some signs

that the major focus on handbags is starting to become less intense, and

greater interest is now being shown on footwear, both by consumers and by

the media. The other major growth area has been in holders and carrying

cases for electronic gadgets.



Consumption of luggage and (leather) accessories in Germany,

2002-2006

2002 2004 2006 Population

(in million)

2006

Consumption

Per Capita

(€), 2006

Value/

volume

Value/

volume

Value/

volume

1823 / 105 1789 / 110 1953 / 119 82.2 23.7

German consumers are practical and usually feel there should be a clear

reason for replacing luggage. They regard function, quality, comfort and a

competitive price as most important, but fashion is becoming more of an

issue when buying luggage. However, in handbags, belts, cross over bags

and sports bags, design, fashion and brand awareness are still the most

important, especially among women.

Euro monitor have estimated the market to grow by 2.6% in 2007, and then

by 3.2% and 5.2% in the subsequent two years. This market growth will be

mainly driven by:

a) More stimulation of fashion-based purchases by a celebrity-driven

mass media.

b) The continued interest in lower-priced fast fashion items that try to

copy luxury brands and consumers who are no longer ashamed to buy

or admit to owning such products.

c) New markets for men and teens. For example, pouches for men,

instead of briefcases, have become more popular. More variety in girls’

purses in different fabrics is expected.



d) Fast changes in the technology sector will boost the small accessories

segment, as consumers buy new mobile phones, portable audio

systems, personal GPS systems, with or without holders.

German luggage and (leather) accessories consumption by product, % value 2006

Market trends

Environmental concerns continue to grow. Consumers are increasingly

demanding to know how these products are produced.

Bags for men have shown a great increase in interest by affluent working

males of all ages, but particularly younger businessmen. They want small

bags with much internal space, made of soft leather and with a number of

different pockets.

For women, designer bags are less popular. The latest trends are for

individually styled bags with a high gloss finish, and more decorated bags



with rivets, buckles, embroidery and chains, a move away from the simpler,

more subdued styles.

There are more women in business, which means that there is an increasing

demand for briefcases. These briefcases are lighter and have more

compartments nowadays. Designs are more female oriented, which not only

applies to briefcases, but also to suitcases and small accessories. Restrictions

generally on the size of hand luggage for air travellers is also stimulating

more demand for lighter weight models.

More money is being spent on accessories and all sorts of bags, and parents

are also spending more on bags for their children. Part of this is due to

greater influence from advertising.

Image is also more prevalent in luggage (suitcases and briefcases), as its

design or brand says something about the status or lifestyle of the owner. In

the luggage and accessories business, marketing will be increasingly

focussed on particular consumer target groups.

For all luggage and (leather) accessories, there is more variety in non-leather

material, e.g. made of nylon, fibre, PVC coated, textile or combinations of

materials.



SWOT Analysis

Strength of Indian leather industry

India has 10% of world’s total animal population so strong raw

material base.

For better technology, Central Leather Institutes produces qualified

leather technocrat.

Growing market.

Purchasing power increases world wide.

Increased consciousness about usage of leather products specifically

among women (matching chappal, matching belt, matching clothes

and hand bag, etc).

Support of the government duty draw back increased from 11% to

16%.

Indian leather industry has provided employment to 2.5 million people.

Annual export value poised to touch about 2 billion US dollars.

Amongst top 8 export earners for India.

Has enormous potential for future growth.

Weakness of Indian leather industry

No quality specifications, poor quality accessories

Competition from low price markets like Pakistan, Ethopia, Indonesia

and Kenya.

Did not project position of products, positioning is wrong not match to

Italian target is just to match Pakistan.

No brand name.

Unorganized sectors.



Opportunities and threats

Germany is a very large market and the large population can provide a range

of opportunities for exporters from developing countries. There is more

demand for cross over bags, fashionable handbags, light and compact

luggage and computer cases.

In the middle-higher segments, German consumers are prepared to pay high

prices for well-known brands and items made in France or in Italy. As an

exporter from a developing country, we may therefore find more

opportunities in the low-medium segments and approach the German market

with less fashion-sensitive lines such as travel bags or small leather

accessories.

The growing market for fashionable handbags provides opportunities for

exporters if they can produce at the prices demanded. However there is a

danger in becoming too reliant on this sector of the market. If you are not

able to supply quickly and change production at the short-term whim of the

fashion market, we could find yourself exposed to the dangers of

overtrading.

The ageing of the German population offers opportunities for suitcases with

ergonomic elements, especially with regard to comfort - easy to carry, easy

to store - which is important for older people.

Outsourcing also provides opportunities. German manufacturers have had to

adapt their systems to remain competitive. They have forged partnerships

with domestic and overseas suppliers. They will particularly appreciate input

from suppliers who can demonstrate design flair and innovation. Try to avoid

competition on price, but offer something different that is unique to your

country in terms of design, material or craftsmanship.



Product range:

We are marketing a range of exquisite Leather accessories for men. To start

with this range would include premium quality leather belts, leather wallets,

Portfolios (Men’s Office Bags) and leather key chains. Finer details of our

product range are explained in the following pages.

Our product range would include:

a} Leather Belts

b} Leather Wallets

c} Leather Portfolios

d} Leather Key Chains

e} Handbags / Business Cases

f} Travel Bags

The highest selling products in the men’s accessories range in the descending

order are leather belts, wallets, portfolios and key chains etc. There are

many players in the men’s leather accessories in the market and there is stiff

competition among them. Following is a summary of major players in each

product segment along with their price range.



We chose these products out of the entire leather accessories range because

they are the highest selling products in the order. Although, the ladies purse

segment also makes very high sales, if we were to survive in this segment,

we would have to keep a very large variety and mix of designs, which is not

possible for us as a new entrant in the market. Hence we have kept limited

variations and designs to start with.

Before giving the variations, we shall explain the features of most commonly

used leathers.

The things which wie will be taking care to select the range for our products

are as follows:

a} It should be distinctive and easily remembered.

b} It should not offend any particular section of the society.

c} It should depict the features of the product.

Leather products that people use, is usually their fashion statement. It

symbolizes their sense of style, their class. We were looking for a brand

name which would appeal to our target costumers and satisfy their styling

ego. Our products are truly a class apart and each of our product is a classic.

Packaging of a product plays a vital role in determining its sales. It has to be

attractive, so that it catches the eyes of the customer. Also at the same time,

it has to be strong and sturdy because it has to travel long distances. Mostly

in case of leather goods, when the products are on display they are not kept

with their packaging, but naked. This is because a person wants to feel,

check the product again and again before buying it. However when the

customer buys it, it is given to him packed in a worthy box or appropriate

packing. A person might buy a leather product for him self or to gift some



one. If he buys for himself, the packaging is not of much use to him but if he

has to gift it to someone he definitely opts for a one which has a good

packing. Keeping in mind the above points, we have decided the packaging

of our various products as follows.

Belts

Belts would be coiled vertically and packed in thin hard board boxes with the

front side upper half having a transparent plastic window, from where we can

see the product. The lower half of the front side would have a white label

stuck on which the following details would be printed: code number, style

number, Colour, size, M.R.P. The two sides would have the Brand name and

the photographs of our other products printed on the box. This would be a

good medium for advertising, as the one who buys or receives it also

becomes aware of our entire product range. The back side would have our

company details such as the name and address printed. The base colour of

the box would be gold.

Wallets

The Wallets would be packed in hardboard boxes. The bottom and the sliding

cover would be separate. The bottom would have case / groove in which the

wallet would fit. The cover which slides in would be made of thick transparent

plastic through which we can see the actual wallet. The Back of the box

would contain the Brand name, product details and the photographs of our

other products. The base colour of the box would be gold.

Port Folios

Portfolios would have a comparatively simple packaging as they are too huge

and bulky to be packed in boxes. They would be packed comfortably in

cream coloured soft cotton bags of the appropriate size. The brand name

would be printed in bold letters on the bag. We would not print the photos on

these bags as photo printing on cloth becomes quite expensive. This bag can



afterwards be used for any other purpose. No body would throw a cotton bag

and thus it would be a permanent reminder of the brand name.

Key Chains

Key chains would be packed in small boxes of appropriate sizes similar to the

wallet. The sliding boxes would have a transparent cover on the top and the

details printed on the back. Here we would not be providing the photos on

the back of the box as the space available is too less.

Leather Jackets

Our leather jackets are of high quality standards. In our tanneries, right from

procuring the raw material to production of finished goods, each and every

process is highly explicit. For the same reason, we have branded our product

“EXPLICIT”. This gives us an added advantage in the quality conscious

market of the United States of America.

In India, leather jackets are manufactured mainly for fashion. It is not used

for the purpose of shielding oneself from cold. But in case of the United

States of America, it is not only used as trendy attire, but also to protect the

masses from cold. It is chilling in the United States of America for most part

of the year.

Therefore, we had to make some changes in the manufacturing process of

the product to suite the needs of the people in the United States of America.

We also had to concentrate on the thickness of the jacket, rather than just

concentrating on the designing. However, in this market, we have not looked

down upon the designing part of the jackets.



Price structure

Luggage and (leather) accessories’ margins have been falling in Germany in

recent years, particularly at the bottom end of the market, as a result of

intense competition in the supply end and more competition between

retailers. There are now signs that margins are stabilising and prices are

slowly starting to increase again. Although there are some national

differences, margins tend to be similar in most markets. There are also

differences in margin levels between different product types, with higher

retail margins for more fashion-related products, and lower margins for more

functional or lower quality products.

In each trade channel different margins and prices apply, with a total mark-

up (including VAT) of 3 up to 4 of the export (CIF) price. The margin figures

quoted in Table 2.2 are calculated as a percentage of the price purchased

from whom they buy in the chain, not as a percentage of the CIF price.

These margins also vary depending on which market segment is being

approached. The higher the market segment, the higher the margins that

can be commanded. Department stores or clothing and variety chains ask for

large-volume discounts, which are then passed on to their affiliated stores.

Overview of margins in luggage and accessories

Low High

Importers/wholesaler

s' margins 30% 50%

Agents' margins 6% 12%

Retailers' margins 95% 120%

Mark-up Export (CIF)

price - Consumer

price 3.0 4.0



VAT of 19% is added to retail prices.

Selecting a suitable trading partner

This is a very important part of the export process. The relationship we can

establish between yourself and your partner is as important as finding a

contact that is suitable for you in terms of the range of products that we can

supply. The essential element of any trading relationship is trust.

The best way to find a trading partner is usually to contact the main trade

sources. The German Leather Goods and Luggage Association and the

German Leather Industry Association are important contacts (see Chapter 6

for contact details). The best place to meet potential trading partners is at a

trade fair, such as the International Leather Goods Fair in Offenbach.

Participating in trade fairs can be expensive, so it would be better to first visit

an exhibition a few times before making a commitment. During a visit you

can extensively look around at the stands of the main players and get a

better idea of the latest fashions. At trade shows we have an opportunity to

talk to potential partners on a face-to-face basis and better judge whether

we would like to work with them. We could also identify potential partners

from the exhibition website beforehand or from a catalogue. When selecting

them (e.g. importer or wholesaler), we will try to find out:

a) What type of luggage or accessories they sell (focussed on comfort,

material or fashion).

b) To which target groups they sell.

c) In which areas they are well represented in their country. If they are

exporting, to which other EU countries they sell.



d) To whom they sell e.g. small or large retailers, department stores,

buying groups etc..

We could also find this out by looking at their website or try to find a

company profile through other hosted sites e.g. of a local Business Support

Organisations or trading platform, or by finding their company brochure.

Although we may initiate a communication by post or email, it is

recommended that there is some personal communication before a trading

partner is selected. Personal communication is still the most important form

of communication. This communication can include sending samples, inviting

them to see the production facilities, and other meaningful ways of gaining

and maintaining their interest.

Market access requirements

As a manufacturer in a developing country preparing to access Germany, we

should be aware of the market access requirements of your trading partners

and the German government. Requirements are demanded through

legislation and through labels, codes and management systems. These

requirements are based on environmental, consumer health and safety and

social concerns. We need to comply with EU legislation and have to be aware

of the additional non-legislative requirements that your trading partners in

the EU might request.



Doing business in Germany

German fashion companies are notorious for their attention to detail and

subsequent enforcement of trading terms. If you can make a success of a

trading relationship in Germany, you are likely to succeed in most other EU

countries.

Developing a relationship

The most important ways to develop a business relationship are to either

exhibit at one of the main luggage and accessories fairs, or to make a direct

approach to wholesalers or major retailers. In Germany, many business

people still prefer a formal style of communication, both in the way a

presentation is put together, and in the way contact is made. A very

aggressive price driven approach will not be effective, although price is very

important in the German market. It is also important to appreciate from the

outset the importance of holding on to your customers. Many buyers are not

always loyal and it is much easier to lose a customer than to find a new one.

Trade Fairs

The main trade fair for the luggage and (leather) accessories industry in

Germany is called the International Leather Goods Fair and takes place in

Offenbach each year in March and September (http://www.messe-

offenbach.de). The Leather and More Fair, each April and October, could also

be of interest. The GDS Fair in Dusseldorf is an International Event for Shoes

and Accessories, also twice a year in March and September (http://www.gds-

online.com).



Promotion

Advertising in trade magazines can sometimes be an effective means of

reaching a small target group. The main trade publication for the leather

industry is the monthly Leder & Häute (http://www.cor-communication.de).

Another important publisher is Sternefeld, who issue a leatherwear report

(http://www.sternefeld.de) and publish the magazine STEP

(http://www.stepverlag.de), which includes coverage of accessories, as well

as footwear. TM Fashion Trendmagazin provides information on trends and

developments in the fashion industry (http://www.tm-fashion-portal.de).

Having a website Being online is fundamental, especially when taking into account that trust

and credibility are major challenges for DC exporters, a good website can

overcome this issue. A website offering well-defined products, competitive

advantages (e.g. USP, quality, cost reduction and delivery reliability) and a

list of other customers helps create a trusting environment.

Useful contacts

There is information on the luggage and (leather) accessories industry in

Germany at the website of the German Leather Industry Association

(http://www.vdl-web.de) and the Leather Goods and Luggage Association

(http://www.lederwarenverband.de). Some manufacturers featured may be

looking to develop relationships with developing country exporters. Other

useful contacts include:

• The Association of Leather Goods Retailers

(http://www.lederwareneinzelhandel.de).

• The Association of Textile Retailers

(http://www.bte.de).

• The Leather Training, Testing and Research Centre



(http://www.lgr-reutlingen.de).

Registration with export promotional council.

In order to enable us to obtain benefits / concessions under the prevailing

foreign trade policy, we have registered ourselves with the Council of Leather

Exports. This organization is the export promotion council for all leather

articles to be exported. Though, registration to this organization is not

mandatory, we opted for this in order to benefit from it. It helps in finding

customers, conducting exhibitions and many other things.

Council for Leather Exports

The council for Leather Exports was set up in July 1984.A non-profit company

registered under the Indian Companies Act, 1956, the Council functions

under the Ministry of Commerce, Government of India. The council is

entrusted with export promotion activities and overall development of the

Indian leather industry. The Council’s activities also include promoting

Foreign Direct Investment and Joint Ventures in the Indian Leather industry.

The CLE serves as a bridge between Indian leather exporters and buyers all

over the world.

Council’s services to the Indian Leather Industry:

Collecting, Collating and disseminating world market intelligence.

Updating the information on global trends in fashion and design,

product development.

Dissemination of information of commercial and technological nature

through seminars and magazines.

Organizing participation of Indian exporters in international fairs and

buyer-seller meets.

Sponsoring sales-cum-study teams and trade delegations.



Inviting foreign experts for providing technological inputs to Indian

leather exporters.

Organizing international leather fairs in India.

Council’s services to overseas buyers include:

Serving as a focal point for disseminating information on Indian

manufacturers and exporters.

Organizing visits of buyers’ delegations dealing with trade information.

Liaising with various international organizations dealing with trade

information.

Providing trade and commercial information on Indian leather industry

Method of Costing

Pricing methods are usually related to pricing objectives and prices fixed.

There are different methods of calculating prices such as cost plus pricing,

marginal cost pricing etc. For exporting leather goods, we will opt for cost

plus pricing method which is described as follows:-

Cost Plus Pricing :

It is simple and popular method of pricing, under this method average cost of

production and marketing is calculated first. Such cost includes the cost of

raw materials, cost of manufacturing, cost of packing, cost of distribution,

selling cost, taxes and so on. In addition , certain percentage of profit is

added to this cost and price per unit is fixed.

Selling price per unit: Total unit cost + Expected margin of profit per unit.

Apart from this, there are several costs that are related to when products are

exported. These costs are as follows



Expenses incurred on product modification.

Packing and marking of export products.

Loading at factory for onward journey.

Transportation to dock for ocean journey.

Cost of preparing shipping documents.

Handling charges and fees at the port.

Government Policies:

Sometimes, the government offers export incentives and special concession

to exporters for export promotion. The purpose of such incentives is to raise

the competitive capacity of domestic manufacturers and exporters. Due to

such incentives and concession, an exporter can change less price in the

foreign markets. The possible loss due to prices will be covered out of the

benefit available through the incentives. Thus, export prices are influenced

by export incentives offered by the government. In India, duty drawback is

an important export incentives offered to exporters. They make Indian goods

competitive in foreign markets. Sometimes, the government may dictate the

margin by the producers or distributors. This affects export pricing. In

addition, custom duties fixed by the government and trade agreement made

by the government policies including incentives, subsidies, regulation of

margins custom duties and international agreement.

Reserve Bank Code Number:

Reserve bank code number for commercial export will be undertaken by firm

in India only after it has obtained the Reserve Bank Code Number. This is a

requirement under foreign exchange regulation act. For obtaining the code

number, the firm is required to apply to the division office of RBI have

jurisdiction over the area where the firm is located.



The application for this purpose is prescribed from CNX (Code Number for

Exchange), where is to be submitted in duplicate along with a report from

the bank where the firm is opened a current account. Besides providing the

detail about the nature of organization and product intended to export, the

applicant requires permanent Income Tax Number, it will be required to

apply for the same and a reference to this effect is to be given in the CNX

form. RBI is too initiated with in fifteen days of the allotment of the income

tax account number. On completion of these formalities, RBI will allocate

code number to the firm. If the application is in order, RBI wills allot code

number. The code number is permanent there is no need to renew or

revalidate it. the number shall be cited invariably on export forms used for

declaration of exports.



Registration:

To obtain the benefits available to the registered export s under the import

policy, an exporter should get himself registered by making an application on

the prescribed form with an Export Promotion Council related to his main

product line export. If there is no EPC, registration may be done with the

Regional Licensing Authority concerrned.some of the important

registering authority are export promotion council, commodity boards, The

Marine product and proceeds Food Product Export Development Authorities,

Jute Commissioner, Khadi and Village Industries Commission, State Directors

of Industries, Development Commissioner for Foreign Trade Zone/Export

Processing Zone, and the federation of Indian export organization.

Importer-Exporter Code Number:

Every person or exporting goods is required to obtain an Importer Code

Number from the Regional licensing Authority Concerned. Customs

authorities shall not allow clearance of goods to an importer or exporter who

does not process a valid Importer-Exporter Code Number. Application for

allotment of Importer-Exporter Code Number should be made duplicate, in

the prescribed form to the regional import trade control licensing authority

concerned. Code number allotted to a person is valid import/export of any

commodity by that person. It is compulsory

For the importer/exporter to quote his code number in the relevant bill of

entry /shipping bill.



STATISTICS

EXPORT OF LEATHER AND LEATHER PRODUCTS FROM

INDIA DURING APR-MAR- 2006-07 VIS-A-VIS APR-MAR-2007-

08

(Value in Million Rs)

CATEGORY APR-MAR APR-MAR % VARIATION

2006-07 2007-08

FINISHED LEATHER 32760.69 30877.20 -5.75%

LEATHER FOOTWEAR 44087.76 46856.08 6.28%

FOOTWEAR

COMPONENTS 9947.84 10713.89 7.70%

LEATHER GARMENTS 14023.29 13849.39 -1.24%

LEATHER GOODS 31958.86 31602.54 -1.11%

SADDLERY AND

HARNESS 3725.32 4260.16 14.36%

NON-LEATHER

FOOTWEAR 1934.08 1848.07 -4.45%

TOTAL 138437.84 140007.33 1.13%

Source : DGCI &S

(Value in Million US$)

CATEGORY APR-MAR APR-MAR % VARIATION

2006-07 2007-08

FINISHED LEATHER 724.00 766.93 5.93%

LEATHER FOOTWEAR 974.33 1163.82 19.45%

FOOTWEAR

COMPONENTS 219.84 266.11 21.05%

LEATHER GARMENTS 309.91 343.99 11.00%

LEATHER GOODS 706.28 784.95 11.14%

SADDLERY AND

HARNESS 82.33 105.81 28.53%

NON-LEATHER

FOOTWEAR 42.74 45.90 7.39%

TOTAL 3059.43 3477.52 13.67%



EXPORT OF LEATHER AND LEATHER PRODUCTS FROM INDIA DURING

APRIL-MARCH 2000- 2001 VIS-À-VIS APRIL-MARCH 2001-2002

( Value in million US$ )

Category April-March

2000-01

April-March

2001-02

%

VARIATION

FINISHED

LEATHER 381.49 457.37 19.89%

LEATHER

FOOTWEAR 381.37 394.19 3.36%

FOOTWEAR

COMPONENTS 238.09 233.34 -2.00%

LEATHER

GARMENTS 460.45 378.62 -17.77%



Source: DGCI & S, Kolkata

INDIA'S EXPORT OF LEATHER AND LEATHER PRODUCTS DURING LAST

EIGHT YEARS

(Value in Million US$)

COUNTRY 1994-

95

1995-

96

1996-

97

1997-

98

1998-

99

1999-

2000

2000-

01

2001-

02

U.S.A. 277.43 295.62 298.75 251.40 252.71 258.24 342.78 286.67

GERMANY 361.84 400.38 362.88 363.41 364.19 293.59 307.17 304.02

LEATHER GOODS 440.37 406.52 -7.69%

SADDLERY AND

HARNESS 42.66 35.50 -16.78%

NON-LEATHER

FOOTWEAR 19.11 26.09 36.49%

TOTAL 1963.55 1931.63 -1.63%



U.K. 185.39 200.93 204.92 219.26 235.79 266.29 270.09 248.31

ITALY 193.07 221.26 182.99 221.53 197.16 165.47 241.07 262.49

SPAIN 35.77 50.75 46.97 54.96 69.23 66.72 100.75 100.98

HONG KONG 59.28 59.46 59.07 53.93 53.26 55.22 98.32 120.92

FRANCE 82.38 88.73 72.34 79.01 79.77 84.36 90.68 89.51

NETHERLANDS 28.75 38.65 38.48 43.83 49.78 44.17 55.56 60.39

PORTUGAL 18.38 23.7 20.21 31.91 29.39 24.41 37.44 36.97

RUSSIA 57.24 47.58 30.22 50.99 25.19 27.97 31.53 15.74

DENMARK 27.57 27.81 23.34 21.73 18.82 28.30 28.37 22.47

AUSTRALIA 36.25 40.74 36.91 36.83 35.39 31.84 28.33 27.03

CANADA 16.96 22.84 19.63 21.69 18.77 21.42 26.66 27.73

SWEDEN 7.70 12.70 11.20 12.76 15.40 19.79 25.39 19.79

S. AFRICA 24.46 29.13 25.70 25.10 26.29 24.28 23.43 19.39

U.A.E. 14.10 13.15 13.52 10.91 15.54 15.11 18.97 20.07

SWITZERLAND 17.86 20.25 21.14 22.78 21.49 16.13 18.61 16.92

BELGIUM 11.82 12.76 11.80 13.22 16.82 14.75 17.35 21.08

KOREA REP. 15.21 10.34 12.22 4.25 2.07 5.96 16.70 27.03

AUSTRIA 20.04 18.37 18.18 20.16 17.22 14.65 15.01 16.36

JAPAN 21.53 21.52 13.36 14.31 7.30 8.36 13.33 15.32

SAUDI ARABIA 4.50 5.09 5.52 5.91 6.98 7.49 9.03 9.14

CHINA 7.85 3.91 4.16 3.73 3.72 4.68 8.93 13.84

GREECE 3.82 5.27 6.33 6.92 5.75 4.50 5.96 6.37

IRELAND 2.23 2.40 2.02 2.05 2.70 3.65 5.25 2.88

FINLAND 4.56 2.37 2.75 3.01 4.17 2.63 4.36 7.92

NEWZEALAND 3.47 4.95 4.59 4.17 4.79 5.28 3.77 3.36

INDONESIA 1.32 2.03 1.46 1.79 1.54 2.64 3.36 5.77

OTHERS 85.38 80.30 67.61 70.36 73.66 86.45 115.35 123.16

TOTAL 1626.16 1762.99 1618.27 1671.90 1654.89 1604.35 1963.55 1931.63

Source: DGCI & S, Kolkata



Documents

Leather Products Export to Germany