Report by Mr. Ali Ahmed Khan, Executive Director-CLE

Italy is the second largest importer of leather and leather products from India. Italy accounts for a share of about 14% in India’s total export. Italy also has several joint venture collaborations with India. As such, Indo-Italian relationship both in terms of trade as well as joint venture tie-ups has to be sustained and further developed. As an initiative to further give an impetus, the Council has included Italy as one of the countries for organizing the Road Show programmes during 2008-09 under the Mission Mode scheme of Indian Leather Development Programme (ILDP).

Road Show during MICAM / MIPEL Fairs at Milan

The Council has organized the Road Show in Milan, alongside the two important Trade Fairs Events for Italy – MICAM and MIPEL Trade Fairs which took place during March 4-7, 2009. Since these two prestigious Events are attended by both Italian and foreign visitors specializing in the leather sector, the Council decided to organize a Road Show alongside the Event so as to obtain international popularity and recognition to the opportunities potential of the Indian Leather Industry to collaborate with foreign companies including Italy.

The basic purpose of the Road Show is to promote the Indian leather industry and highlight the opportunities that exist for the mutual benefit of Italian and Indian entrepreneurs. As part of the Road Show Event, the series of meetings were held with Italian companies in the MICAM and MIPEL Fairs. A presentation-cum-interaction meeting was organized inside the Fiera Milano Congressi SpA Fairground on March 5, 2009 which is Day 2 of the MICAM Fair, to discuss the strategic directions in which Indian can partner with Italy in the leather sector.

Indian Delegation comprised of Mr. R K Malik, Director, Department of Industrial Policy and Promotion, Ministry of Commerce & Industry, Government of India, Mr. Anurag Sexana, Director, Department of Commerce, Government of India and Mr. Ali Ahmed Khan, Executive Director of the Council for Leather Exports.

Based on a reference from Italian Trade Commission, the Council has engaged an Event Management Agency CRS Global Innovations srl, Torino, for which Mr. Roney Simon is the Managing Director. This agency has taken necessary Event Promotion activities and invited target audience to the Road Show. The event was advertised on the website of MICAM/MIPEL so that interested companies can attend the Road Show. The website had link to the website of CLE.

Presentation-cum-Interaction Session – March 5, 2009

A Presentation-cum-interaction Meeting was held on March 5,2009 at 11.00am in the Meeting Room: Gamma 5–Pavilion Nr.5(2nd Floor on the Balcony)inside the MICAM Fairground –Fiera Milano Congressi SpA.

Mr.Roney Simon, CRS Global Innovations srl, welcomed all the dignitaries, delegates and invitees to the Road Show Event. He emphasized the need for such dialogues to take place between India and Italy in order to prepare leather industries of both countries to face the impact of globalization.

Mr.Ali Ahmed Khan, Executive Director, Council for Leather Exports, made a presentation on the topic of opportunity potential for collaborations between Leather Industries of India and Italy. The various options available to the foreign entrepreneurs to enter into India were explained to the audience with emphasis on joint ventures and technology transfer collaborations. He further informed that India today is in the process of increasing production capacities, modernizing the production facilities, focusing on the design and product developments, use of quality components etc. Indian manufacturers are looking for sustained long term partnerships and technology transfers. Italy with its traditional strengths are better positioned to collaborate with India for mutual benefit, and therefore, he called upon the Italian manufacturers to focus on India.

His Excellency Mr. Sarvajit Chakravarti, Consul General of India, Milan, recollected for the gathered delegates that the leather industry had ancient origins in India and that the shoe was invented in India while he recollected from a poem written by Nobal prize awardee in literature Late Shri Rabindranath Tagore. According to the Consul General, this moment is very favourable to begin a new chapter in collaboration between India and Italy. While recalling the role effectively played by India Leather Desk which was earlier functioned in Milan, he suggested the Council to explore the possibility to re-establish India Leather Desk to promote further the Indian leather industry in Italy, particulary at this juncture when Italian companies are in search of partners to collaborate in production of high quality and high design intensive leather products.

Shri R K Malik, Director, Department of Industrial Policy & Promotion, Ministry of Commerce and Industry, Government of India, outlined the Government of India’s initiatives to develop the leather industry in India. He explained about the Indian Leather Development Programme (ILDP) which is under implementation, more particularly about the financial assistance provided under one of the sub-schemes of ILDP towards technology up gradation, modernization and expansion of production capacities in the leather and leather products manufacturing units. He also emphasized on the advantages that India offered to foreign investors including very competitive labour and skilled workers at very economically attractive levels

Shri Anurag Saxena, Director, Department of Commerce, Ministry of Commerce and Industry, Government of India, in his brief address has stated the importance of Italy being one of the important export destinations for Indian entrepreneurs. He explained to the audience that India and Italy are always been traditional partners in the leather sector, and India today has the right approach and technique to produce goods according to the requirement of the Italian companies. He requested the Italian companies to now go to the next level, of forging long term joint venture partnerships and other forms of collaborations to deeply strengthen the trade ties.

Mr.Massimo Donda, President, Federcalzature (Italian Shoe Trade Federation)made a speech to the audience giving an overview of the Leather Industry in Italy and he was very forthright in his comments about the status of Indian industry, which was grown a lot over the years and has been able to score better than Chinese production. However, he advised the Indian companies to spend a lot more attention to quality development and better marketing techniques. He also believes that India should begin buying of quality Italian shoes for domestic market.

Mr. Gian Mario Spacca, President, Regione Marche (a Cabinet Rank Minister) was expected to participate but could not make it due to air traffic congestion in Rome. Dr. Raimondo Orsetti, Director General of Internationalization, Government of the Marche Region, spoke on behalf of the President of the Marche Region. Dr.Orsetti presented the Marche Region as one of the strongest regions in the shoe sector in Europe, the biggest shoe cluster of Europe that produces approximately 33% of total production. While opening the Marche Region to cooperation with India and expressing the desire of promoting ties between companies of both sides, he also called upon the need for CLE and the Indian Government to facilitate market access for Italian companies from Marche to sell Made in Italy shoes in India.

About 35 industry delegates, Journalists and Italian Associations attended the seminar. Amongst the Associations, representatives from Associations – AIMPES, FEDERCALZATURE, ASSOMAC and also UNIDO – United Nations Industrial Development Organization – participated in the Road Show meeting. The Event attracted the attention of lot of trade visitors and entrepreneurs of the MICAM Fair. Some of the attendees included Mrs. Brigitta bancher, Internationalization Manager, Riva del Garda, Fierecongressi, Mr. Giovanni Laezza, General Manager, Riva del Garda, Fierecongressi, Mr. Anil Munchandani, Trade Analyst, Italian Trade Commission, Chennai, Avv. Rita Gaudenzi, from Assindustria Pesaro e Urbino, Italy

A message has been rightly conveyed in the Italian market about India’s preparedness and capabilities to produce quality products with high fashion design content to satisfy the requirement across product range and price points. The Italian companies have been motivated to take advantage of the conducive investment climate prevailing in Indian market, and Govt. of India’s attractive policies to help the overseas entrepreneurs in setting up their units, or entering into joint venture long term collaborations and also for technology transfer tie ups. India as an investment destination has been projected in the right perspective.

 

Leather Clusters of Italy

 

Italy is considered one of the leading countries in the world market of leather, footwear and leather goods, and has a major trade role. Italy is the leading producer of shoes in the EU and the sixth largest in the world, while being the fourth largest exporter on a global scale. With 6657 firms and trade balance permanently in the black, footwear represents one of the most important sectors in the Italian economy in terms of size and quality, and is one of the pillars of the fashion industry. In Italy, there are total 156 clusters, among 17 regions, and the leather goods is one of the specialized sectors of Made of Italy brand.There are some major Districts in Italy for the leather working industry and that of the relative machinery.

The District of Santa Croce Sull’Arno in Tuscany represents one of the leading areas in Italy and internationally. This cluster produces about 35% of leather in Italy. Almost 50% of it is exported under the Made in Tuscany brand. Tanning began here in the mid 19th century, and today 35% of Italian leather production and 98% of leather soles are produced here, for an overall turnover of almost €2 billion. The district contains around 900 companies accounting for 10000 jobs, with an average size of around 12 employees per business. The sector of machinery alone – at the forefront from the technological point of view represents 30% of national production

The other historical District is that of Vigevano, in Lombardy, which has been subject to severe pressure over recent decades: on one hand from the market (with a shift in consumer interest towards sports footwear), and on the other due to the price war waged by lower quality goods, produced both in areas of Italy in which the sector has recently developed, and in other countries (especially in Eastern Europe). Vigevano responded by concentrating on shoe production for the top end of the market, but above all by investing in the sector of machinery through ever greater specialization, leading it to convert the majority of its manufacturing industries. And the results were not long coming: in the period October 2004 – September 2005 (the last date available) growth in turnover was 17.1% well over the national average in the sector.

Excellences have been achieved in the construction of machinery for the leather industry, a sector in which Italy boasts such a tradition of Pre-eminence that at the beginning of 2000, over 2/3rd of the world’s tanning machinery was manufactured in Italy. Today, despite global competition according to the trade association ASSOMAC, 50% of the world demand for machinery for footwear and leather good sand 80% of tanning machinery continues to be produced in Italy by the approximately 350 companies in the sector. 126 foreign countries have purchased Italian machinery in recent years, and the overall turnover in 2005 was €488m, 58% of which was sold abroad. The sector provides a total of 6200 jobs.

Machinery for the leather working industry is divided into three sub-sectors, footwear, leather goods and tanning. In terms of exports, the figures for the various sectors vary, in line with the development of the global economy. Italian machinery for footwear manufacture today represents 33.7% of the world market, up from 23% in 1995. In 2004, Europe still accounted for 59.61% of overall exports. In leather working machinery, European markets lead the way with 38.19% of the total, while the Asian market has seen growth of 2.43% and accounts for a market share of 36.69% looking set to soon become the leading customer for Italian machinery. Markets in the Americas grew by 38.26% in 2004, to account for 16.89% of our exports. The sector of tanning machinery instead recorded export growth of +6.71%. Asia is by far the most interesting area; in 2004 it accounted for 43.82% of our exports, with growth of almost 24%. Europe today receives 24.37% and America 23.27%.

MARCHE REGION of Footwear, Clothing and Fashion

Splendid at the centre of Italy. A gateway to the Orient, launched like a meteorite upon the markets of the world. The Marches, Dynamic and emotionally involving capable of astounding. Cradled between the Apennines and the Adriatic, a plural name the releases its innumerable qualities. 27 Districts, spread throughout the territory, Specialization is high. So, high a degree so to be above the Made in Italy national average. This is the diamond point of the Marche industry. Specialization and quality, characterize the 4 most important districts, wood and furniture, mechanics, clothing and footwear, and the agro industrial industry. Excellent leading company branches in diversified production are, in addition to these, enhancing the miracle of the Marches economy.

Marche creates trends – Quality plus innovation equals fashion. In fabrics, clothing and footwear.The Marches means elegance and glamour. It produces classical men’s clothing, casuals, jeans, sweaters, socks and hats with companies spread throughout the territory – a sector that employs 22000 employees in 2600 companies. In the collective imagination, the word shoe cannot be set aside from the prestigious brands of companies in the Marches. Names for luxury, objects that have become cult elements in world fashion. By tradition, the Marches has made the world walk. In first place, for number of companies- almost 5000, and employees – 43000. Production takes place mainly in the south of territory, around Macerata, Fermo and Ascoli PIceno.

A compartment that competes with the world, an additional stimulus to remain wining. An industry that operates at 360 degrees, from the first transformation of the leather, to design, to productions with high technological content; heels, accessories, and then arriving at shoes for everyone; men, women and children. And again handbags, leather articles, cases and artistic objects obtained from valuable materials. All this in Italian style.

The Consortium for the export promotion of Verona’s Footwear District was found as a non profit organization in the year 2000 by a group of footwear manufacturers that lead their activity in Verona, the beautiful city located in the western part of Veneto, between the beauty of Garda Lake and the sweet Valpollicella grape hills. Verona’s Footwear District praises a real tradition in the comfort trade, but across the years the productive ability has developed so much that today it can offer a great variety of products that goes from the technical sports footwear, walking footwear, until men’s and ladies fine shoes. The Veronese Footwear District covers the eastern and western part of Verona’s Province, and is centered around Bussolengo and San Giovanni llarione. It encompasses together 115 firms which account for more than 90% of the district’s turnover. Verona’s footwear district produces 40 million pairs per year and accounts for approx 10% of the Italian footwear market, employing 7000 people in Verona. Shoes Export Verona’s corporate purpose is to promote the production of consortium members and to support his members and their business all over the world.

It can therefore be very easily assumed that the best moment in the history of the footwear and leather industry in India has arrived if we can only transmit courage and optimism amongst Indian companies to collaborate with Italy, and Italian companies would do equally well by joining hands with the Indian companies and form joint venture tie-ups to create a truly global and winning partnership.