On another of our endeavours for, “Business Beyond 2020,” we met Mr. Puran Chand Dawar, Regional Chairman (North), Council of Leather Exports and also Head of AFMEC – Agra Footwear Manufacturing Exports Chamber. Mr. Dawar shares that SMEs are the backbone of the Indian industry in terms of component manufacturing, and particularly the leather industry helps in earning Foreign Exchange. The shoe manufacturing industry in India, largely a labour-centric industry, constitutes of a workforce from the weaker sections of society. With this environment, and innovation being the key to sustenance, will the shoe manufacturing industry thrive or merely survive? Let’s find out more about the role of AFMEC, current challenges, and future of the industry from Mr. Dawar through the excerpts below.
Sentiments towards this industry
“Currently the sentiments are a bit low in the industry for the past couple of years. Although the response has not gone down, but the growth has become flat.” The major factor Mr. Dawar believes is the economic slowdown in Europe and some challenges faced by the industry as well. The share in the global market for Indian shoe manufacturers is only 3% which is very marginal considering the market is a booming $200 million, while India is only at $6 Million, as far as the exports are concerned. Mr. Dawar says that “Although we have traditional talent, the industry is not graduating to the next level, the prime reason being the capital cost. The interest rates are high at around 12% in India, whereas in other countries with best infrastructure the rates are at 1-2%. To scale and go to the next level, we need good infrastructure.” He also believes that the banking sector should be separate for SMEs with interest rates capped to a maximum of 4-5% if these industries are to survive and compete in the global markets.
Key challenges of the sector
He says that there is no regulation for this industry. There is no infrastructure department, but there are too many departments to deal with like the CPWD, Jal Board, NHAI etc. which leads to a lot of time being wasted to manage these departments without much help from them. He also adds that they want all the compliances, whether it is environment, safety, electrical safety or the fire safety under one umbrella, and believes that industries should not be banned even in the eco-sensitive zones and should be given fair assessment. He believes that “if the industry is our livelihood, environment is our life.”
Steps taken by the government to tackle these challenges
“There are always meetings happening with the government authorities, industry interactions, and also by being online for a lot of services, it has become easy, whether it is for SME policies or payment systems,” Mr. Dawar adds. He believes there is still a lot to do on the ground. He shares that any profit the small scale industries make if they put back into the capital investment for advancement, that amount should be considered as ‘expense’. This will help these industries boost to the next level in a much shorter time.
Importance of innovation
“Innovation is the key. Innovation in designing is a must and we need to make more and more different products,” adds Mr. Dawar. We are lagging in this department, he says. China every year adds ten new products into their kitty and we are much behind them. “Innovate or Evaporate, this is the mantra to survive.”
Fighting attrition with cluster-centric education
Mr. Dawar shares that Cluster Centric education is required. “As there are clusters of Footwear and Tourism in Agra, every school, whether it is private or in the government sector, footwear and tourism should be a part of the regular curriculum. This will enable people to join the industry easily either after completion of the schooling or otherwise as they will have the basic training at their school level. This will bring in new talents and players in the industry,” he says. “Once we add these subjects to the school curriculum, we would not require any new infrastructure for this and everybody will be skilled.”
Directives and help from government on skill development
“On the association level, there are skill development programs being held in the association with institutes like CFTI (Central Footwear Training Institute), FDDI(Footwear Design and Development Institute) with whom we collaborate along with some in-house trainings,” says Mr. Dawar. He also adds that “although these programs are going on, we need to introduce Cluster Centric education.”
A new approach on the business models
“Industry is made by industrialists, not government. As an industry, we do not believe in subsidies. We just want a safe environment for us to operate.” When asked about how much of a change of business model is required to survive and thrive and not lose business to competitors like China or Bangladesh, he answers by adding, “Productivity, product enhancement, innovation and upgradation etc. is our way forward and we are taking things on an individual level as well as association level along with domestic and international fairs.” The key is to “bring in modernisation with time.”
A message to the community
Mr. Dawar asserts on the fact that, “to grow, we need to have systems in place and we should not ignore any problem however small it may be. We need to sort the problems we face today and amend the system accordingly so that if the following day a new problem occurs, we should not face the earlier problem as well.” He believes that this process will make the company run on an auto mode if followed correctly and will become more productive. He ends by saying “we are very optimistic about 2020 and believe that it will be better than 2018 and 2019, all thanks to the policies of the government and the steps they are taking.”