LEATHER INDUSTRY

Leather Sector

The Leather Industry holds a prominent place in the Indian economy. It is among the top ten foreign exchange earners for the country. With an annual turnover of over US$ 7.5 bn, the export of leather and leather products increased manifold over the past decades and touched US$ 4.86 bn in 2011-12, recording a cumulative annual growth rate of about 8.22% (5 years). Though India is the second largest producer of footwear and leather garments in the world, India accounts for a share of close to 3% in the global leather import trade of US$ 137.96 billion (2010)

The major exporting countries of leather and leather products are China, Italy, Hong Kong, Germany, France, Belgium, India. Indias is the 7th largest exporter of leather & leather products to the world. China and Italy are the leading producing and exporting nations in the world with exports worth US$ 41.2 bn and US$ 17.7 bn respectively. The leather industry is an employment intensive sector, providing job to about 2.5 million people. Women employment is predominant in leather products sector with about 30% share.

% Share of Leather Products in Export Performance (2011-12)

% share of various countries in Indias Leather & Leather Products Exports (2011-12)

Major Markets:

The major markets for Indian Leather & Leather Products are Germany 15.01%, UK 11.15%, Italy 10.85%, USA 9.02%, Hong Kong 7.38%, France 6.25%, Spain 6.08%, Netherlands 4.07%, Belgium 2.32%, China 2.54%, U.A.E.2.24%, Australia 1.39%.

These 12 countries together accounts for nearly 78.30% of Indias total leather& leather products export.
Indias Export of Leather & Leather Products to the European Union touched US$ 3116.52 mn in 2011-12, accounting for a share of 64.01% in Indias total leather export trade of US$ 4868.71 mn.

Export Scenario Last 5 Years

Major Production Centres of Leather and Leather Products

Profile of Identified Clusters

Major export items of export from Kanpur Cluster are finished leather (buffalo leather), leather footwear (Safety Shoes) and harness & saddler. In Chennai it is finished leather (Goat, Sheep and Calf), leather footwear (fashion shoes), leather goods and garments. In Kolkata cluster major export items are leather goods (bags, purses, wallets) and leather gloves.

Strengths of Indian leather sector

Supply Side 21% world cattle & buffalo and 11% of world goat and sheep population. Low cost skilled labor Innovative technology, increasing industry compliance to international environmental standards. Support of the allied industries.

Demand Side Large domestic market Exporter-friendly government policies. Tax incentives on machinery by Government. Well-established linkages with buyers in EU and USA.

Weakness

Major part of it is unorganized and fragmented. Unawareness of international standards by many players as maximum number of leather industries are SMEs. level of labour productivity due to inadequate formal training / unskilled labour Limited scope for mobilizing funds through private placements and public issues, as many businesses are family-owned Inefficient Supply Chain Lack of negotiating power

THREATS
Entry of multinationals in domestic market. Stiff competition from other countries.(There are at least 5 countries viz, China, Indonesia, Thailand, Vietnam and Brazil, which are more competitive than India.) Non- tariff barriers Strict international standards. Fast changing fashion trends Leather prices 0.5-0.75 US $ per sq ft. more than synthetics which are available in more colors and texture

OPPORTUNITIES

Investment by large corporate New Markets New Trends

Government Support Measures

Leather sector is one of the Focus Sectors under Foreign Trade Policy of the Govt. of India Funding support provided towards export promotion & market development activities. Funding support provided towards technological upgradation and modernization of production units. 100% Foreign Direct Investment through automatic route. permitted

Cont

Import of specified machinery for use in leather and footwear industry allowed at a 5% concessional import duty. Duty free import of raw hides and skins, wet blue chrome tanned leather, crust leather and finished leather of all kinds including splits and sides thereof and Duty free import of specified critical inputs for manufacturers of leather garments and other leather products including footwear. Simplified import/export procedures quick customs clearances.

Suggestions

Developing Infrastructure Improving services of Support Institutions Compliance to Environmental Regulations and Use of Vegetable Tanning Capacity Pooling and Collaborative approach to Marketing Brand Building Working in clusters

Suggestions

Marketing

Fair and Trades Leather Marketing Zone

Training Programmes for labour Improving Infrastructure e.g., Calcutta Leather Complex

THANK YOU!!!