Pakistan’s leather exports declined 7 percent YoY to $887 million in FY23 from $953 million last year.
Tanned leather exports showed the biggest decline of 19.4 percent from $208 million to $167 million.
It was followed by an 18 percent decline in other leather manufacturers and an 11 percent reduction in leather garments respectively, while leather gloves exports also shrunk by two percent. But leather footwear exports surprisingly rose by 14.07 percent to $142 million in FY23 compared to $124 million during last year according to the data released by the Pakistan Bureau of Statistics (PBS).
Pakistan contributes less than 0.5 percent to global leather exports despite having huge potential and well-established industry. Pakistan’s leather industry is the second-largest export-oriented sector, and it also offers far more potential for value addition and high perceived pricing due to being a luxury and untapped niche market opportunity.
The country’s leather exports recovered significantly post-pandemic as industries in Pakistan became operational earlier than regional competitors, but the growth streak has ended this year as the industry is facing significant challenges due to economic crisis, slow adoption of sustainability standards, lack of skilled workforce, no localization of necessary chemicals and dyes and little focus on value addition, R&D and branding.
“Government imposed curbs on imports of raw material and high customs duties are the primary reason behind the decline in leather exports,” said Tariq Ismail, Secretary of Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) while talking to ProPakistani.
He added that the abolishment of export concessions in electricity & gas tariffs and rebates also added to the industry’s struggles and government needs to devise specific policies to support it and tap its true potential.
According to a report by Trade Development Authority Pakistan (TDAP), nearly 90 percent of the dyes, chemicals, and raw materials are imported so high customs duties pose a threat to the industry. On the positive side, the State Bank of Pakistan (SBP) recently eased the import restrictions but there is still a need for stable economic policies.
In the face of all of these challenges, leather footwear exports have managed to grow by 14 percent with a 26 percent increase in volume as well which experts say is a good thing as the industry is moving towards value addition.
“Leather export decline is a good thing in a way, and it means we are on a path of value addition,” said the famed leather enthusiast The Leather Dude while talking to ProPakistani. Given the lack of industry-focused care and rearing in the livestock industry, raw material shortage also occurs, so it’s appropriate that it’s put to the best and most value-added uses.
“Footwear exports have increased as it’s the need of every person despite his economic class but leather jackets and other garments have become an item of luxury” added Ismail. He also pointed out that PLGMEA has always opposed plain leather exports because though it provides profits, it has low value, and they then have to import the precious raw material from abroad.
While it’s encouraging that the industry apparently coming to terms with the need for value addition, there is a lot that needs to be done in terms of pulling a new class of young professionals in the industry with their management skills and capital. There is a strong need for innovation in the sector and for that, the industry has to promote the success stories around it to make it attractive for youth to opt for it over other professions.
Government and industry together had established two institutes of National Institute of Leather Technology in Karachi (1998) and the Government Institute of Leather Technology (GILT) to provide highly skilled professionals to industry, but both institutes have reportedly become dysfunctional due to the lack of fund, and it also has been absent from the conversations.
world move towards vegan leather.