Footwear and Leather Industry - An Overview

Background :

The Footwear and Leather Products industry, which is highly labour intensive, clearly has a significant potential for being a key contributor to the Sri Lankan economy has a huge potential for employment generation and  foreign exchange earnings. This sector has been recognized as a thrust sector which can reach the level where the   garments industry has reached. Value addition in the Footwear and Leather product sector is between 40% to 75%. At Present the footwear and Leather  industry and its supporting industries, including the marketing chain  employs around 300,000 people directly and indirectly.

Footwear :

Footwear Sector includes 10 large  companies, 30 medium scale companies and about 3000 small scale  Footwear manufacturers.  The Product range includes Leather shoes, PU pouring gent’s shoes , Safety shoes ,School Shoes, Leather slippers, Rubber wellington boots, Canvas built up shoes and Flip flop.

The country’s approximate annual footwear requirement is in the range of 60 Mn pairs while the County’s current installed production capacity is also around 60 million pairs excluding rubber thongs. Thongs along has reached about more than 25 Mn pairs. Value of this industry is around Rs 60 to 70 Billion. The  current local manufacture’s share is in the range75%   ( 45 million )and the  balance 25% (15 million) is fulfilled by legal and illegal imports as well as assembled footwear . The majority of footwear and Leather Products industries are situated in the western province.  With the continuation of the safety net of CESS  the industry has become major foreign Exchange saving industry in the country . 100% of the  country’s school shoes requirement of 4.5 Million pairs is being produced by the local Manufactures. Sri Lanka’s barefoot population has been eradicated by the introduction of Flip flops . Today flip flops have been successfully repositioned to cater to the teenage markets fashion tastes and pitched it in the up market and now have  become a major item of footwear exported to Australia and European Countries. 

Many factories have facilities for producing moulded rubber soles, Rubber Soles, Polyvinyl Chloride (PVC) soles, EVA  and PU  soles.  As the progress of the  sole industry, shoe manufacturers agreed to introduce CESS on imported out soles in order to assist this industry towards the long term development.  This has given local sole manufacturers to move forward. Few companies have already ventured into the manufacture of shoe heels and soles.  Realizing that it is important to protect local manufacturers of this sector the government has maintained the CESS on footwear imports and introduced zero duty facilities for import of finished leather for manufacturing of Footwear and Leather goods. 

Exports of Footwear & Leather products (Value in US $ Millions) 

Year	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018 Jan–Aug
Footwear	17	20	17	12	29	87	86	117	108	66
Leather products	13	16	20	119	22	23	23	22	23	18
Total	30	36	36	31	51	110	110	139	131	84

  

Leather Industry :

There are about 8 large scale and 5 small scale tanneries currently operating in the country  producing 600,000to 700,000ft of leather per month.  In the Leather Industry, apart from tanning, Leather bags, small leather goods such as Gloves, wallets, bags, purses, belts, key tags are also produced.  

Apart from the  tanning industries producing Leather, the industry  includes  8 large scale manufacturers of Leather Products’ including  4 BOI companies .There about 1000 SME manufacturers of Leather Products catering mainly to the tourist market.  The bulk of the leather Products and Leather Footwear manufactured locally  are procured by using leather from the local tanneries but export oriented manufactures use large  percentage from imported leather and negligible quantity from the local supply.

The local Tanning Industry was disturbed during last two decades due to environmental issues.  Although the relocation of all the tanneries in order to overcome the environmental pollution was established  in a site in Bataatha  of the Hambanthota District   was abandoned due to unavoidable  circumstances .  Ever since the local tanners are  looking for new locations  without any success.  Due to this reason manufactures are allowed  the duty free import of leather facility  on recommendation from  the  Ministry of Industries and Commerce.  A quality and competitive raw material base for Leather industry  is an added advantage to excel in the competitive export market.

To redress this situation  the Ministry of Industry & Commerce has already finalized a programme to assist  all existing tanneries to acquire  latest  affluent Treatment  Technologies which results Zero discharge.  With this in position the Tanning industry will be able to meet the  requirements of  Leather in the country in future.

 

GSP + Concessions :                

Sri Lanka has obtained GSP+ Concessions from year 2016 which facilitates duty free access to European Market .Further the United states also has given duty free access to Leather products

 

Contribution of the  related Government Institutions :

Industrial Development Board of Ceylon which was established in year 1998 has taken the industry to the village level as a cottage Industry and have established training centers in and around the island.  Setting up a Footwear Training Centre in Sri Lanka Institute of Textile & Apparel at Ratmalana which is  under the Ministry of Industry & Commerce is a big boost for the Industry. It has already commenced training of Specialized Technically Qualified Designers and Production Personnel.

The Sri Lanka Export Development Board having identified the sector’s potential to become an export industry, has implemented various market and product development programmes. One of the main initiatives was product development programme to enhance the product quality of a selected group of footwear manufacturers /exporters by providing experts knowledge on shoe technology, targeting the international market, especially EU, UK and USA.

 

Footwear & Leather Fair :

Recognizing the Footwear & Leather industry as a potential industry to be developed for exports, the government has facilitated the industry with several initiatives. The local industry is almost reaching the saturating point where exports are essential for the sustainability of the industry.  With a view to broad base the export ready footwear and leather industry and to create awareness on the capabilities of the industry locally and internationally, the Sri Lanka Export Development Board (EDB) together with other stakeholders organized Sri Lanka’s first ever Footwear & Leather fair in year 2007.

The objectives of this fair was to strengthen and sustain the image of the industry, promote Sri Lankan export capabilities among international buyers, provide opportunity for SME’s to improve their talents and capabilities to become export ready companies and to upgrade technological capabilities of SME’s and encourage them to move into manufacture of value added products to cater to the international market. 

The number of stalls in the year 2007 was 141 and it was increased to 230 by the year 2018.  Apart from the local exhibitors, foreign importers of raw material and components exhibited their products at this fair. Foreign delegations from many countries also visited this fair. In parallel to this event, a design competition, best stall competition and an exclusive fashion show has also been organized.

Considering the success of the 2007 fair and the importance of continuing the fair which has achieved the set objectives, the Footwear & Leather fair was held annually  The fair which was held for nine (10) consecutive years have contributed immensely in creating awareness of the Sri Lanka footwear and leather industry locally and internationally.