Pakistan Leather Exports Witness 7% Decline in FY23, But There’s Hope Ahead

• FY23 Pakistan leather exports declined by 7%, reaching $887 million.
• Tanned leather exports showed the most significant drop of 19.4%.
• Leather garments and other manufacturers’ exports fell by 11% and 18%, respectively.

In FY23, Pakistan’s leather exports experienced a 7 percent year-on-year decline, dropping to $887 million from $953 million in the previous year. Notably, tanned leather exports saw the most significant decrease, falling by 19.4 percent from $208 million to $167 million.

Additionally, other leather manufacturers and leather garments exports declined by 18 percent and 11 percent, respectively, while leather gloves exports also contracted by two percent. Surprisingly, leather footwear exports showed an unexpected growth of 14.07 percent, reaching $142 million in FY23 compared to $124 million in the previous year, according to data released by the Pakistan Bureau of Statistics (PBS).

Despite its substantial potential and well-established industry, Pakistan’s contribution to global leather exports remains below 0.5 percent. The country’s leather industry ranks as the second-largest export-oriented sector, offering considerable opportunities for value addition and higher perceived pricing, given its luxury and untapped niche market.

Following the post-pandemic recovery, Pakistan’s leather exports witnessed significant growth, benefiting from the early resumption of operations compared to regional competitors. However, this growth momentum has subsided this year as the industry faces notable challenges. Economic crisis, slow adoption of sustainability standards, shortage of skilled workforce, lack of localized necessary chemicals and dyes, and insufficient focus on value addition, research and development, and branding have all contributed to the industry’s current difficulties.

Tariq Ismail, Secretary of Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA), attributed the decline in leather exports to government-imposed restrictions on raw material imports and high customs duties. The abolishment of export concessions in electricity & gas tariffs and rebates has also added to the industry’s challenges, calling for specific policies to support and unleash its true potential.

The industry heavily relies on imports for nearly 90 percent of dyes, chemicals, and raw materials, making high customs duties a threat to its operations. While the State Bank of Pakistan (SBP) has eased import restrictions, stable economic policies are still required.

In the face of these challenges, leather footwear exports have experienced a 14 percent growth with a 26 percent increase in volume, signaling a positive move towards value addition in the industry.

Leather enthusiast, The Leather Dude, views the decline in leather exports as a positive sign, indicating a shift towards value addition. As the livestock industry lacks industry-focused care and rearing, raw material shortage occurs, making value-added uses more appropriate.

Tariq Ismail emphasized that while leather jackets and other garments have become luxury items, footwear exports have increased as they are a necessity for people of all economic classes. PLGMEA has consistently opposed plain leather exports, recognizing its low value and the need to import precious raw materials from abroad.

While the industry’s progress towards value addition is promising, there is a pressing need to attract a new generation of young professionals with management skills and capital into the leather sector. Innovation is crucial for the industry’s growth, and to achieve that, success stories should be promoted to make it an appealing career choice for the youth, surpassing other professions.

Previously, 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), aimed at producing highly skilled professionals for the industry. However, both institutes have reportedly become dysfunctional due to a lack of funding, and the matter has been absent from discussions and planning.

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