The Jalandhar Leather Industry which is estimated to be around rupees 1200 crores has taken a blow due to the current lockdown. The shutdown of the US and the European markets has not only pressured the working capital of this industry but also its supply chain is in shambles. This has forced the Jalandhar leather industry to refrain from closing down their operations and also making it impossible for them to think about diversification.
The manufacturing across sectors has gone through turmoil. However, the leather industry has been hit hard. The sudden lockdown has disrupted the raw material supply and exports. Amid the pandemic, 60% of export orders were cancelled by the exporters as the markets were closed globally, said Ajay Sharma, secretary, Punjab Leather Federation.
The leather industry in Punjab is majorly concentrated in Jalandhar incorporating tanneries and manufacturers of shoes, bags, jackets, purses and belts. On the directions of the Punjab and Haryana High Court the tanneries are closed a majority of clients from the overseas cancelled the orders they had placed before because of non-fulfilment of environmental norms. Industrialists said the lockdown has led to a whopping financial loss in terms of exports. In addition to this, imported raw hides are also rotting in containers at ports.
The industry is dominated by tiny, cottage and MSMEs. The industry size is pegged at Rs 1,200 crore with 50% turnover coming from exports. Around 200 units which are engaged in the manufacturing of finished leather (dry work) and stitching. According to the industry, the lockdown has hit at a time when the industry was already under the crisis.
They have resumed partial operations. The industry was closed for almost two months. Despite no sales, they had to bear rent, staff cost and other recurring costs which put a strain on their finances. They can’t even think of diversification as they are hardly left with any capital to start afresh,” said Deepak Chawla, Director, Jay Dee Leather (P) Ltd.
As a result, the precious working capital of the tiny, cottage and MSMEs is stuck and it will take at least 6-8 months for the situation to normalise. According to the industry, since the major leather clusters in the country are closed, they are facing raw material shortage and producing with whatever stock is lying with them.
Though the industry has started partial operations, it is still facing issues pertaining to raw material and market for finished products, Sharma added. According to him, the exporters are not able to commit to orders due to the freeze on industrial activities.
Reference:
Tribune News Service. (n.d.). Jalandhar leather industry in distress. Retrieved June 14, 2020, from https://www.tribuneindia.com/news/business/leather-industry-in-distress-88339
