Agra’s Shoemakers on Edge: Government’s New Standards Pose Threats and Opportunities

Shoemakers in Agra are concerned about the impending changes and disruptions to their traditional methods. Industry associations are worried about the consequences, while workers fear potential layoffs.

The city of Agra, known for its decades-old footwear industry, is filled with the sounds of machines clanking, hammers pounding, and the scent of leather and glue. However, there is now a new unease in this small-scale industry due to a recent government decision to introduce regulations and standards for Indian-made footwear.

Everyone in Agra is well-versed in the art of shoemaking or the business side of it. However, they are now anxious about how the new rules will encompass daily and fashion footwear, which are expected to come into effect on July 1st. As the deadline approaches, the narrow lanes of Agra, filled with potholes and open drains, where shoes, bags, jackets, and belts are displayed in cramped shops, are filled with questions.

Agra’s footwear industry, which can trace its roots back to 16th century Mughal India, produces 150,000 pairs of shoes daily. It is a thriving hub with around 300,000 independent shoemakers, including 60 organized and 3,000 small-scale units. The industry, which is predominantly run by Dalits and Muslim workers and operates through small cottage units, is now poised to change as the Indian government aims to introduce quality control and establish an Indian standard for domestically produced footwear.

The government’s objective is to enhance India’s presence in the global market. The leather products and footwear industry in India is estimated to be worth around $12 billion, with annual exports of finished leather, leather products, and footwear on the rise, projected to surpass $5 billion in 2022-23. India is the second-largest consumer of footwear globally and currently holds a 2% share of the international footwear market. Reports indicate plans to increase this share to 10% by 2030.

Quality control and standardization become particularly crucial for sports shoes, which experts believe have the highest export potential. However, complying with the new standards comes at a significant cost. Kuldeep Singh, chairman of the Fraternity of Agra Footwear Manufacturers (FAFM), estimates that each manufacturer will have to spend Rs 20-25 lakh to meet the new standards, including application, audit, sample testing, licensing fees, and the establishment of testing centers.

In the nearby units and factories, manufacturers have just over a month to standardize shoe sizes and dimensions. They will need to modify their processes to meet the specifications outlined in the Footwear Made from Leather and Other Materials (Quality Control) Order 2022. A total of 27 footwear categories must adhere to the newly prescribed Indian Standard, which requires testing in accredited laboratories or establishing on-site facilities, obtaining BIS certificates, and complying with ISI standards. The prescribed materials, soles, sizes, shapes, designs, and other criteria depend on the specific shoe category.

However, unit owners in Agra are concerned about the changes and disruptions to their traditional methods. Associations are abuzz with concerns over potential fallout, while workers fear the possibility of losing their jobs. Unit owners worry that they might not meet the new requirements.

“We have just started to recover from the impact of Covid. Now, we are grappling with the GST and high electricity costs,” said a small-scale manufacturer in Agra. In 2022, the government raised the GST rate for shoes, which had a significant impact on the affordability segment (footwear priced below Rs. 1000 per pair) as the GST was increased from 5% to 12%.

The Ministry of Commerce and Industry, through its order on June 3, 2022, brought various footwear categories that must adhere to the new BIS norms. These categories include boots, shoes, canvas shoes, rubber-soled boots, Derby shoes, sports footwear, and safety footwear with direct-molded polyvinyl chloride (PVC) soles, among others. However, there is no mention of traditional handcrafted footwear or those with zari work.

Some reports suggest that shoemakers specializing in handcrafted footwear or units with a turnover below Rs 50 lakh will be exempt from the new BIS standards. This exemption would be a significant relief for them, but unit owners claim that they have not received detailed information on the matter.

Workshops and factories account for 30-40% of all industrial units in Agra, and many of them have a turnover exceeding Rs 50 lakh. These businesses will be the most affected by the new standards.

According to a BIS official, not all footwear will be subject to the new rules, as some will be excluded. There are ongoing meetings to determine the specifics, which is causing anxiety among stakeholders due to the complexities of the footwear industry.

Various theories circulate among factory owners. A businessman from Agra, Ramesh Bhaskar, claimed that in a previous meeting, BIS officials stated that businesses with a turnover of up to Rs 50 crore would be exempt. “We hope that this situation will be clarified by the end of June,” said Bhaskar.

Kuldeep Singh from FAFM confirmed this exemption, but he is skeptical about the overall process. He believes that over time, exemptions will be removed, citing a pattern of similar government actions in the past.

A crucial question that remains unanswered is which footwear will fall under the handmade category. What about sandals and shoes with handcrafted zari work? Workers in the streets of Agra raise these questions, but there is no clarity on the answers.

Agra is known as a shoe hub, attracting buyers like Paroma Chatterjee from Delhi’s CR Park. She visits Agra twice a year not to see the Taj Mahal but to purchase shoes. She returns with a collection of boots, sandals with intricate zari work, slippers, and pumps, often at half the price compared to Delhi stores.

Today, Agra plays a significant role in India’s footwear market and is seen as an alternative for international footwear brands seeking to diversify away from China. Around 65% of India’s total domestic footwear requirement is met by supplies from Agra. However, the upcoming rules are likely to change the landscape. Attention must be paid to aspects like design, size, weight, material, etc., to ensure the footwear meets the prescribed standards. Each shoe will have to indicate its size, manufacturer’s name, brand, year and month of production, and shelf life.

The Indian government aims to enhance the quality of footwear to gain a prominent position in the global market. In January of this year, Union Minister Piyush Goyal urged India’s major manufacturers to study the patterns of countries with a higher share of global exports.

Members of industry associations, such as FAFM and the Retailers Association of India, argue that the new rules impose an additional testing burden on footwear manufacturers. They believe testing is expensive and time-consuming and adds limited value in terms of security. According to a report in Mint, only around 30 manufacturers and suppliers across India have received BIS licenses for leather footwear categories, and 18 for non-leather footwear articles.

FAFM has been urging the government to extend the deadline, citing the lack of clarity and the absence of consultations.

“No one from the Agra side was invited to speak. We request the government not to implement these rules at this time. We demand that the government meet with us and discuss this matter,” said Singh.
Source:https://theprint.in/ground-reports/agras-centuries-old-footwear-industry-has-a-new-challenge-quality-control/1604759/