Leather clothing and accessories sector expects revenue shrinkage in FY24

By

Isabelle Crossley

Published
Jan 19, 2023

The upcoming 2024 financial year could spell a decline in revenue for the Indian leather clothing and accessories industry. International recession fears and declining customer demand in key markets could lead to up to 8% revenue decline, according to ratings agency Crisil. 

“Demand for discretionary goods in key export markets- essentially the advanced western economies- has been shrinking because of pinching inflation and rising recession fears,” said Crisil Ratings’ director Rahul Guha, ET Retail reported. “Though domestic demand for the leather apparels and accessories segment remains resilient, the overall sectoral revenue is seen declining in the medium term.”  
 
The leather apparel and accessories sector includes products such as belts, handbags, harnesses, and other accessories. Main export markets for the industry include the US and Europe and both markets are experiencing a slowdown, especially in non-essential goods categories. 

Approximately 85% to 90% of India’s leather clothing and accessories are exported and 75% of all export orders are shipped to the US and Europe. Along with dwindling orders, raw materials and logistics costs continue to rise which will impact manufacturers’ profit margins.  
 
Although the percentage of leather exports sent from India to Russia is small compared to its total, the country’s continuation of leather shipments to the country, currently at war with Ukraine, drew the attention of UK publication The Guardian. Following sanctions on trade with Russia by numerous European nations, some Indian leather businesses such as Homera Tanning have increased exports to Russia, the Guardian reported.