Indian Footwear Industry - Dec'13

Indian Footwear
Industry
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Indian Footwear IndustryIndian Footwear Industry
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. Moreo-
ver, 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 India’s production goes to
meet its own domestic demand.
Some of the major production centers of foot-
wear 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
Source: Council for Leather Exports
Figure-1: Share of Leather & Non- Leather
Footwear Footwear Production (2012-13)
Indian Footwear Industry - Overview
Non-Leather Footwear
Leather Footwear
49% 51%

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 manufactur-
ers. The organized sector comprising of major
domestic and international players like Bata,
Liberty, Adidas and Metro etc, accounted for
only 30% of the market.
The organized segment is incorporating
advanced technologies in footwear produc-
tion 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 in-
novative development process created by the
sports company’s partner BASF. In the product,
the solid granular material (TPU) is blown up
and turned into thousands of small energy cap-
sules that make up the footwear’s 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%.
Source: Assocham
Figure-2: Share of Organized and Unorganized
Sector in Footwear Market (2012)
Unorganized Sector
Organized Sector
30%
70%

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 aver-
age 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 abun-
dant availability of raw materials in the market.
Source: Assocham
Figure-3: Footwear Market (Crore INR),
2012 & 2015
22000
2012e 2015f
38700
Market Size and Growth
The domestic foot-
wear market is
being driven by
growing fashion
consciousness due
to increased dispos-
able income among
urban middle-class
and abundant avail-
ability of raw mate-
rials in the market.

The footwear industry in India is fragment-
ed into casual footwear, mass footwear,
premium and sports footwear. The mass
footwear usually refers to low price foot-
wear 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 work-
place etc. Casual footwear dominates the
market followed by mass footwear.
The share of casual footwear was estimated
to be 61% in 2012. Though casual foot-
wear 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.
The footwear market can also
be bifurcated into men, women
and kid’s footwear segments.
Men’s footwear occupies the
maximum share in the Indian
footwear market. The share of
men’s footwear was estimated
to be around 55% in 2012,
followed by women’s footwear
with a share of 30%. Further,
kid’s footwear was estimated
to capture around 15% share in
the market in 2012.
Market Segmentation
30%
15%
55%
Source: RNCOS Estimation
Figure-5: Indian Footwear Market by
Category (%), (2012)
61%
22%
7%
10%
Casual Footwear
Mass Footwear
Premium Footwear
Sports Footwear
Figure-4: Footwear Market by Type (%), 2012
Women’s Footwear
Kid’s Footwear
Men’s Footwear

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 India’s 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.
Source: DGCI & S
Table-1: India’s Footwear Export Destinations (Million US$), 2011-12 to 2012-13
Export and Import Scenario
Country 2012 2011 YOY Growth
% Share in Total
for 2012-13
UK 391.95 360.488 8.73% 19.06%
Germany 274.63 353.777 -22.37% 1133.3366%%
USA 227.37 183.1 24.18% 11.06%
Italy 163.66 219.799 -25.54% 7.96%
France 156.53 159.277 -1.72% 7.61%
Spain 101.40 1113.85 -10.94% 4.93%
Netherlands 91.82 1101.72 -9.73% 4.47%
UAE 75.46 662.06 21.59% 3.67%
Denmark 32.88 24.33 35.31% 1.60%
Australia 22.41 115.59 43.75% 1.09%
Portugal 21.40 228.77 -25.62% 1.04%
Japan 18.85 114.63 28.84% 0.92%
Canada 14.86 115.01 -1.00% 0.72%
South Africa 13.49 14.755 -8.54% 0.66%
Sweden 11.98 14.088 -14.91% 0.58%
Others 437.24 396.10 10.39% 21.27%
Total 2055.93 2077.27 -1.03% 100.00%
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 India’s 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.

Foreign Brands seeking collaborations with Indian Players
• Tata International has teamed up with Wolverine Brands of the US to enable the US manu-
facturer 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) .
Opportunities
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 clear-
ance 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
Challenges
Opportunities & Challenges

Bata is the leading player in the mass and casual footwear market in India. It’s share was estimated to be
around 15% in 2012, followed by Liberty and Relaxo with a share of 10% and 7.5% respectively.
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%.
Major Players
15.0%
10.0%
7.5%
67.5%
Bata
Liberty
Relaxo
Others
50.0%
20.0%
15.0%
15.0%
Reebok
Adidas
Others
Nike
Note: Share Corresponds to the Organized Sector
Figure-7: Share of Major Players in Mass & Casual Footwear Market (2012)
Note: Share Corresponds to the Organized Sector
Figure-8: Share of Major Players in Sports Footwear Market (2012)

Over the past few years, many premium brands have entered or have plans to enter into the Indian mar-
ket.
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 men’s 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 arrange-
ment 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.

Keeping in view its past performance, the industry’s inherent strengths and growth prospects, the foot-
wear industry aims to augment production, thereby enhancing its exports from the current levels. Ac-
cording 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 cat-
egories/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 implementa-
tion 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 in-
dustry 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 India’s 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.
Future Outlook

Indian Footwear Industry
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