- Monday, May 20, 2024
By: Shubham Ghosh
Rajesh Kumar, his two brothers and three workers have been sitting idle in his small shoe factory in the northern Indian city of Agra for a week, faced with a shortage of new orders and growing pressure from surging materials expenses.
“The cost of synthetic leather, chemicals and other raw material, mostly imported from China, has gone up by over 20% in last three months, while the price of the final product remains same,” the 60-year-old was quoted as saying by Reuters in his poorly lit two-room factory in the congested back lanes of the Taj Mahal, India’s iconic mausoleum.
“We are now unable to earn even a 10 rupee (£0.10) margin on 200 rupee (£2.06) shoes due to the rise in costs,” Kumar said.
Before the Civid-19 pandemic, he could earn 20-25 rupees (£0.21-£0.26) on a pair of shoes.
Agra has been India’s biggest shoe-making hub since the Mughals ruled from the city centuries ago but Kumar’s small businesses and thousands like it across India now work on shrinking margins, challenged by rising commodity prices and falling consumer demand.
India’s economy grew at its slowest pace in a year in the first three months of the current year, data showed this week, affected by a slump in manufacturing and weaker consumer spending.
Manufacturing contracted 0.2% year-on-year, after a 0.3% expansion in the previous quarter.
Small firms that employ about 110 million Indians and account for 45 per cent of manufacturing, were the worst hit, casting a cloud over the economic recovery.
“Life has become miserable for small businesses,” KE Raghunathan, convenor of the Consortium of Indian Associations, which represents nearly half a million businesses, was quoted as saying.
He is worried about a 30 per cent rise in costs for auto-parts, textiles, footwear, food processing, engineering, and packaging industries.
[With Reuters inputs]
