"India’s uphill battle: global competition and domestic woes"

The global leather and footwear landscape is undergoing a structural realignment, driven by geopolitical shifts and a collective corporate push toward supply chain diversification. In an exclusive interview, Md. Zia Nafis, Regional Chairman (East) of the Council for Leather Exports (CLE) and CEO of Nafis Tanning Industries, outlined the delicate intersection of macroeconomic headwinds, operational bottlenecks, and untapped market opportunities defining India’s multi-billion-dollar leather economy. While India possesses deep-seated structural advantages, including an unmatched domestic raw material base and generations of skilled artisanal labor, its path to global dominance remains constricted by intense regional competition, high logistics costs, and a historic deficit in foreign direct investment and indigenous brand equity. Nafis argues that capturing this moment requires moving beyond a traditional reliance on commodity manufacturing toward a tech-driven, sustainable, and design-forward ecosystem capable of competing directly with powerhouse exporters like Vietnam and China.

Structural Headwinds; Competitiveness Cost

The primary battleground for India's leather and footwear exporters is the fierce regional competition within the Asia-Pacific trade corridor. For decades, traditional manufacturing hubs have optimized their operational structures to outpace emerging markets. Nafis points out that the foremost challenge is intense competition from countries such as Vietnam, China, Indonesia and Bangladesh, which benefit from integrated supply chains, lower logistics costs, faster turnaround times and preferential market access. This structural disadvantage is further exacerbated by systemic inefficiencies that inflate the overhead of local manufacturers before their goods even reach a shipping port.

Beyond the external pressures of regional trade agreements and deeply entrenched competitor networks, Indian manufacturers face an uphill battle on domestic turf. The foundational cost structures within the country frequently erode the margins of exporters trying to compete on price-sensitive international contracts. Nafis says that another major concern is the relatively high cost of doing business in India. High logistics costs, fragmented manufacturing ecosystems, limited economies of scale, expensive credit for MSMEs and complex regulatory compliances adversely affect export competitiveness. Without a more consolidated infrastructure and streamlined bureaucratic frameworks, the financial burden remains disproportionately high, particularly for the micro, small, and medium enterprises that form the backbone of the domestic sector.

The long-term profitability of the industry is also capped by its position within the global value chain. Indian factories have mastered the art of high-quality production, yet they rarely capture the premium margins reserved for the intellectual property owners of the products they manufacture. The sector also faces a lack of globally recognized Indian brands. Nafis stresses that while India is a major manufacturer for international labels, it has limited presence in premium global markets under its own brands, resulting in lower value realization and weaker international brand equity. This gap in consumer-facing presence is further compounded by the absence of significant foreign direct investment in the leather and footwear sector, stalling the massive capital injections required to build hyper-scale factories.

China Plus One Shift; Emerging Frontiers

Despite these deep-seated systemic challenges, the broader macroeconomic landscape is offering India an unprecedented window of opportunity. As multinational corporations actively de-risk their procurement networks from over-reliance on a single East Asian manufacturing giant, Indian factories are increasingly being viewed as vital counterweights in global trade. Nafis remains highly optimistic about this fundamental realignment, stating that global supply chain diversification presents one of the biggest opportunities, as international brands seek to reduce overdependence on single-country sourcing. He firmly believes India is well positioned to become a preferred sourcing destination due to its manufacturing capabilities, skilled workforce and expanding policy support.

Simultaneously, a parallel growth engine is accelerating within India's borders. The reliance on export markets is being balanced by a booming domestic consumer base that is rapidly trading up to higher-value goods. Rising incomes, rapid urbanization, heightened fashion consciousness, and the explosive growth of organized retail and e-commerce networks are combining to create an incredibly robust domestic marketplace. This shift creates massive opportunities not only for exports but also for strong Indian brands. Furthermore, global regulatory pressures and changing consumer ethics are shifting the baseline for market entry, meaning companies investing early in sustainable product development are likely to gain a competitive advantage in global markets.

To successfully capture these high-value markets, the industry must move away from basic commodity items and shift toward technically complex, high-margin product categories. The future of manufacturing lies in specialized segments that demand advanced engineering and precise craftsmanship. India can strengthen its position by focusing on higher-value segments such as sports footwear, safety footwear, luxury leather goods and specialized technical products, where margins are significantly better than in commodity manufacturing. Moving into these complex categories protects the industry from low-cost wage competition while unlocking entirely new B2B client portfolios.

Imperative of a Digital, Collaborative Future

The modernization of India's leather manufacturing capacity will ultimately be decided by its willingness to embrace the ongoing industrial digital revolution. Legacy manufacturing methodologies are no longer sufficient to meet the razor-thin lead times demanded by modern global retail. Nafis identifies digital transformation as a core catalyst for this upcoming transition, advocating for the widespread adoption of AI-enabled demand forecasting, digital product development, automation, smart manufacturing and data-driven supply chain management. Integrating these advanced technologies can directly counteract the industry's historical bottlenecks by radically improving floor productivity, slashing development lead times, and enhancing overall responsiveness to volatile customer demands.

Eventually, executing this comprehensive industrial overhaul requires a unified strategy that transcends individual corporate boardrooms. No single company can solve the fragmented ecosystem or the high cost of logistics independently. Nafis stresses that going forward, the sector's success will depend on building globally competitive manufacturing ecosystems, fostering innovation, strengthening sustainability credentials, investing in design and branding, and deepening collaboration between government, industry and academia. If these strategic priorities are pursued consistently and aggressively by all stakeholders, India possesses the foundational potential to emerge as one of the world's leading leather and footwear manufacturing and export hubs over the next decade.

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