Indian Footwear

Industry

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Indian Footwear Industry - Overview

Figure-1: Share of Leather & Non- Leather

Footwear Footwear Production (2012-13)

49%

51%

Non-Leather Footwear
Leather Footwear
Source: Council for Leather Exports

With the advent of globalization and fast

changing retail scenario, the footwear market
has seen a wide transformation over the past
years. The entry of numerous international
players has resulted in providing a significant
boost to the Indian footwear market. Moreover, de-licensing of the market is also creating
expansion opportunities for the production
capacities in modern state-of-the-art units.
India is the second largest global producer of
footwear after China, accounting for 13% of
global footwear production. India produced
2065 million pairs of footwear in 2012-13 of
which the production of leather footwear was
about 1009 Million pairs (including produc-

tion of leather shoe uppers), and production of

non-leather footwear was about 1056 Million
pairs. Nearly 95% of Indias production goes to
meet its own domestic demand.
Some of the major production centers of footwear in India are :

Chennai, Ranipet and Ambur in Tamil Nadu

Pune and Mumbai in Maharashtra
Kanpur and Agra in in U.P.
Ludhiana and Jalandhar in Punjab
Delhi
Sonepat, Faridabad and Karnal in Haryana
Kokata in West Bengal
Ernakulam and Calicut in Kerela

Indian Footwear Industry

Indian footwear industry was dominated by

the unorganised sector with a share of 70%
in 2012. The unorganized segment comprises
of small cottage industry based manufacturers. The organized sector comprising of major
domestic and international players like Bata,
Liberty, Adidas and Metro etc, accounted for
only 30% of the market.

Figure-2: Share of Organized and Unorganized

Sector in Footwear Market (2012)

30%
70%

Unorganized Sector
Organized Sector
Source: Assocham

The organized segment is incorporating

advanced technologies in footwear production to increase its share in the market. For
instance, Adidas has launched its new shoe,
which has superior cushioning, optimal fit and
temperature independence, in India. The new
technology in Energy Boost is based on an innovative development process created by the
sports companys partner BASF. In the product,

the solid granular material (TPU) is blown up

and turned into thousands of small energy capsules that make up the footwears distinctive
midsole. With such developments, the share of
organized sector in footwear market is rapidly
expected to grow at a high rate in the future
from a current rate of 10-15%.

Indian Footwear Industry

Market Size and Growth

Figure-3: Footwear Market (Crore INR),

2012 & 2015

The domestic footwear market is

being driven by
growing fashion
consciousness due
to increased disposable income among
urban middle-class
and abundant availability of raw materials in the market.

38700

22000

2012e

2015f

Source: Assocham

The Indian footwear market was estimated

at INR 22,000 Crore in 2012 and is expected
to touch INR 38,700 Crore by 2015, growing
at a CAGR of more than 20%. Previously, the
market has been growing at an annual average rate of about 15%. Further, the market is
expected to grow at an average annual rate
of 25% in the future. The domestic footwear
market is being driven by growing fashion
consciousness due to increased disposable
income among urban middle-class and abundant availability of raw materials in the market.

Indian Footwear Industry

Market Segmentation

Figure-4: Footwear Market by Type (%), 2012

The footwear market can also

be bifurcated into men, women
and kids footwear segments.

10%
61%

7%

Casual Footwear
Mass Footwear
Premium Footwear

22%

Sports Footwear

Mens footwear occupies the

maximum share in the Indian
footwear market. The share of
mens footwear was estimated
to be around 55% in 2012,
followed by womens footwear
with a share of 30%. Further,
kids footwear was estimated
to capture around 15% share in
the market in 2012.

Source: RNCOS Estimation

Figure-5: Indian Footwear Market by

Category (%), (2012)

The footwear industry in India is fragmented into casual footwear, mass footwear,
premium and sports footwear. The mass
footwear usually refers to low price footwear and majorly consists of slippers. On
the other hand, casual footwear involves
footwear preferred by people for their daily
wear in schools, colleges or at the workplace etc. Casual footwear dominates the
market followed by mass footwear.
The share of casual footwear was estimated
to be 61% in 2012. Though casual footwear is expected to dominate the market in
the coming years as well, the share of sports
and premium footwear is also expected to
increase in the coming time.

15%
55%

30%

Mens Footwear
Womens Footwear
Kids Footwear
Source: RNCOS Estimation

Indian Footwear Industry

Export and Import Scenario

The major markets for Indian footwear exports
in 2012-13 were UK with a share of 19.06%,
Germany with 13.36% and USA with a share of
11.06%. Nearly 82% of Indias export of foot-

wear goes to European countries and USA with

exports touching US$ 1456 Million in EU and
US$ 227.37 Million in USA in 2012-13.

Table-1: Indias Footwear Export Destinations (Million US$), 2011-12 to 2012-13

Country

2012

2011

YOY Growth

% Share in Total
for 2012-13

UK

391.95

360.48
8

8.73%

19.06%

Germany

274.63

353.77
7

-22.37%

13.3
36%

USA

227.37

183.1

24.18%

11.06%

219.79
9

-25.54%

7.96%

Italy

163.66

France

156.53

159.27
7

-1.72%

7.61%

Spain

101.40

113.85

-10.94%

4.93%

Netherlands

91.82

101.72

-9.73%

4.47%

UAE

75.46

62.06

21.59%

3.67%

Denmark

32.88

24.3
3

35.31%

1.60%

Australia

22.41

15.59

43.75%

1.09%

Portugal

21.40

28.77

-25.62%

1.04%

Japan

18.85

14.63

28.84%

0.92%

Canada

14.86

15.01

-1.00%

0.72%

South Africa

13.49

14.75
5

-8.54%

0.66%

Sweden

11.98

14.08
8

-14.91%

0.58%

Others

437.24

396.10

10.39%

21.27%

-1.03%

100.00%

Total

2055.93

2077.27

Source: DGCI & S

In footwear exports from India in 2012-13,

Denmark in the European Union showed the
highest YOY growth of 35.31%. Though India
exports a large proportion of footwear to USA,
it still accounts for a small share in the total
imports of footwear of USA.

On the other hand, footwear in India is mainly

imported from China, Vietnam and Italy. The
highest share in Indias total imports in 2012
was from China with about 63% of the total
imports , as China supplies its goods to India at
lower rates and offers a wider variety.

Indian Footwear Industry

Opportunities & Challenges

Opportunities
Foreign Brands seeking collaborations with Indian Players
Tata International has teamed up with Wolverine Brands of the US to enable the US manufacturer build base in the Indian market. The JV plans to kick off with a chain of stores of CAT
shoes, to be followed by a dozen other Wolverine brands.

Opportunity to provide low cost finished leather to foreign players setting base in
India
Luxury segment customers vouching for quality
Large unorganized women footwear segment offers potential to footwear majors
Bata is planning to shift its focus to women to power its business. It will introduce concept
stores for women in India shortly. It will also be introducing a new ladies footwear brand called
Sundrops in India.

Growing E-commerce trend in Footwear Category

Low per capita consumption compared to other nations
Per capita consumption of footwares in India is lowest among BRIC countries at US$ 7.2 (China
US$ 25.7, Russia US$ 81.5 and Brazil US$ 107.3) .

Challenges
International Brands Facing Problem of Getting Adequate Distribution

Recent entrant Skechers of the US is in 200 multi-brand outlets, but is waiting for FIPB clearance to open stores of its own.

High Tax Rates Leading to Higher Prices

High customs and excise along with local duties like octroi and VAT lead to almost 35% of the
sale price of the footwear.

Increasing Imports from China affecting Domestically Produced Products

Fake Products of Low Quality Crippling Growth

Indian Footwear Industry

Major Players
Bata is the leading player in the mass and casual footwear market in India. Its share was estimated to be
around 15% in 2012, followed by Liberty and Relaxo with a share of 10% and 7.5% respectively.
Figure-7: Share of Major Players in Mass & Casual Footwear Market (2012)

15.0%

10.0%
7.5%
67.5%

Bata

Relaxo

Liberty

Others

Source: RNCOS Estimation

Note: Share Corresponds to the Organized Sector

In the sports footwear market, Reebok dominated the market with a share of 50% in 2012, followed by
Adidas with 20% and Nike with 15%.
Figure-8: Share of Major Players in Sports Footwear Market (2012)

15.0%
Reebok
Adidas
15.0%

50.0%

Nike
Others

20.0%

Source: RNCOS Estimation

Note: Share Corresponds to the Organized Sector

Indian Footwear Industry

Over the past few years, many premium brands have entered or have plans to enter into the Indian market.

August 2013: Pavers England plans to up its ante in India. It is planning a further US$10 Million
investment within the next 12-18 months on top of its US$10 Million already invested in buying out its
franchisee.

May 2013: Ruosh which is in the mens premium footwear space is planning to take its store count to
20 in 2013. The brand currently has eight stores across Bangalore, Mumbai, Chennai and New Delhi.

April 2013: Premium Italian footwear brand Geox has entered into a retail and distribution arrangement with Delhi-based G&B Footcorp to set up its mono brand stores. G&B Footcorp has set up three
stores and plans to add two more stores in the current fiscal year. It also plans to have at least 20 stores
in next three years.

January 2013: C&J Clarks International has plans to expand the number of standalone stores in India
to 100 in the next five years.

Indian Footwear Industry

Future Outlook

Keeping in view its past performance, the industrys inherent strengths and growth prospects, the footwear industry aims to augment production, thereby enhancing its exports from the current levels. According to Assocham, exports are expected to grow at a CAGR of 15% in the next 5 years. The industry
will continue to focus on the European countries and the US markets for exports.
With more and more Indian woman joining the workforce, the ladies footwear market in all the categories/segments will grow rapidly throwing up huge opportunities in an area yet to be fully tapped by
various players.
The government is considering the creation of training centres where the laborers can be imparted
training and making efforts towards provision of new and advance technology to the footwear industry
so that it can become more competitive. Further, it is looking into the fact that the footwear industry
needs to improve cost competitiveness through value chain efficiencies. There should be implementation of best practices at a firm level and at the sectoral level through cluster based approach by setting
up cross-industry clusters and supporting them through governmental interventions on infrastructure
like port clearances and power. All this, would increase the efficiency and scale of operations of the industry and would attract more and more FDI. The footwear sector had seen only INR 500 Crores of FDI
in 2012 (Which is only 0.65 percent of Indias total FDI in 2012).
The total imports of footwear of US in 2012 were 2,28,19,69,730 pairs, with majority of imports being
from China. The share of India in total footwear imports of USA was just 0.6%, creating an opportunity
for India to further increase its exports to USA in the future, by warding off competition with China
through supply of better quality products.

Indian Footwear Industry

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Indian Footwear Industry

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