Pakistan’s leather exports fell 7% year on year to $887 million in FY23, from $953 million the previous year
Tanned leather exports fell the most, by 19.4 percent, from $208 million to $167 million.
It was followed by an 18% drop in other leather manufacturers and an 11% drop in leather garments, respectively, with leather glove exports also falling by 2%. However, according to data issued by the Pakistan Bureau of Statistics (PBS), leather footwear exports increased 14.07 percent to $142 million in FY23 from $124 million the previous year.
Despite having a large potential and a well-established sector, Pakistan provides less than 0.5 percent of global leather exports. Pakistan’s leather industry is the country’s second-largest export-oriented business, with significantly more potential for value addition and high perceived pricing as a luxury and untapped niche market opportunity.
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The country’s leather exports recovered significantly after the pandemic because Pakistani industries were operational earlier than regional competitors, but the growth streak has come to an end this year as the industry faces significant challenges due to the economic crisis, slow adoption of sustainability standards, a lack of skilled labor, no localization of necessary chemicals and dyes, and a lack of focus on value addition, R&D, and branding.
“Government-imposed curbs on raw material imports and high customs duties are the primary reasons behind the decline in leather exports,” Tariq Ismail, Secretary of Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA), told ProPakistani
He noted that the elimination of export discounts in energy and gas rates and rebates exacerbated the industry’s difficulties, and that the government must design particular measures to promote it and realize its full potential.
According to a Trade Development Authority Pakistan (TDAP) research, approximately 90% of dyes, chemicals, and raw materials are imported, therefore high customs duties pose a threat to the business. On the plus side, the State Bank of Pakistan (SBP) has lately relaxed import restrictions.
“Leather export decline is a good thing in a way, because it means we’re on a path of value addition,” The Leather Dude, a well-known leather enthusiast, told ProPakistani. Because of the lack of industry-focused care and rearing in the livestock business, raw materials are in low supply, so it’s important that they’re put to the greatest and most value-added purposes.
“Footwear exports have increased because it is a necessity for everyone, regardless of economic class,” Ismail continued, “but leather jackets and other garments have become a luxury item.” He also stated that the PLGMEA has long been hostile to plain leather exports since, while they give profits, the value is poor, forcing them to import the precious raw material from overseas.
While it is good that the industry appears to be recognizing the need for value addition, much work remains to be done in terms of attracting a new class of young people to the business with their management skills and money. There is a tremendous demand for innovation in the sector, and the industry must publicize success stories in order to entice young people to choose it over other professions.
The government and industry collaborated to establish two institutes, the 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 have reportedly become dysfunctional due to a lack of funding.
