On August 1, 2024, the Indian Department for Promotion of Industry and Internal Trade introduced a mandatory certification regulation for footwear manufacturers with an annual turnover of 500 million rupees or more. These manufacturers are required to obtain the Bureau of Indian Standards (BIS) certification and bear the Standard Mark (ISI Mark) on their products. This policy aims to enhance product quality and industry standardization but has severely impacted small and medium enterprises in a short period, even triggering an industry-wide crisis.

Multiple Challenges for Small and Medium Enterprises

As a prominent footwear manufacturing hub in India, Agra is losing its edge. Numerous orders have been canceled, leading to massive stockpiles in footwear manufacturers. Approximately 350,000 pairs of footwear from around 2,000 factories remain unsold, resulting in a freeze of funds amounting to 2.5 billion rupees. Some well-known brands have even halted their plans to procure footwear from Agra, exacerbating the plight of local footwear industry. “Our warehouses are filled with over ten thousand pairs of shoes, but we can’t even afford the materials cost,” lamented a footwear factory owner. Despite on-demand production, clients refuse to accept deliveries due to lack of BIS certification, worsening the inventory backlog. Adding to the concern is that the BIS’s new regulations categorize footwear into over twenty types, making the certification process complex and time-consuming, rendering many small enterprises incapable of complying.

Apart from the intricate certification procedures, frequent surprise inspections have become a heavy burden on these manufacturers. Under the guise of quality checks, inspectors frequently enter factories and disrupted production. Abuse of power has become prevalent. Companies are forced to expend significant time and resources handling tedious paperwork related to invoices, sales, returns, etc., diverting focus from production and operations. To make matters worse, a large influx of imported products into the Indian market further shrinks the survival space for local footwear manufacturers. Some manufacturers express that they won’t need to purchase new goods in the next four to five months as existing stock is more than sufficient.

Double Pressure from Exports and Traditional Footwear Manufacturing

The uncertainty in the international market has brought new challenges to the Indian footwear industry. Reduction in European orders and export restrictions arising from regional conflicts, coupled with a gradual displacement of traditional handmade shoes by modern and low-cost shoes, have forced many small manufacturers to close down. India produced 2.6 billion pairs of footwear in 2023, and the annual output is expected to decrease to xxx in 2024.

Resilience of Polyurethane Footwear Market

Amid the overall downturn in the footwear industry, the polyurethane (PU) footwear segment has shown resilience. PU footwear is primarily produced by larger-scale, environmentally compliant enterprises, thus being less affected by the BIS compulsory certification. Besides, industry standardization has driven the demand for high-quality materials. In 2024, PMDI consumption in the Indian footwear industry is projected to reach xxx tonnes, a year-on-year growth of xxx%. It indicates that despite the headwinds faced by the footwear industry, standardization has created new development opportunities for PU footwear manufacturers.

The Indian footwear industry is undergoing a profound transformation. While the BIS compulsory certification has brought challenges, the progression of standardization has also created opportunities for high-end materials and technology-based enterprises. In the future, balancing policy implementation with business survival will be crucial in determining whether the Indian footwear industry can transition successfully.

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