The Indian Leather Industry – The Road Ahead.

TABLE OF CONTENTS

1. INTRODUCTION 02

2. SALIENT FEATURES OF LEATHER INDUSTRY 05

3. INDUSTRY OVERVIEW 07

4. INDIAN FOOTWEAR INDUSTRY 15

5. INDIAN LEATHER GARMENTS INDUSTRY 23

6. INDIAN FINISHED LEATHER INDUSTRY 27

7. INDIAN LEATHER GOODS & ACCESSORIES INDUSTRY 31

8. INDIAN SADDLERY & HARNESS INDUSTRY 36

9. STRENGTHS OF INDIAN LEATHER INDUSTRY 39

10. MARKET DYNAMICS 42

11. SLOW DOWN IN LEATHER INDUSTRY 48

12. MOST INFLUENTIAL BUSSINESS HOUSES IN INDIA 52

13. VIOLATION BY INDIAN LEATHER INDUSTRY 59

14. ENVIRONMENTAL HAZARDS DUE TO LEATHER INDUATRY 61

15. COMPETITIVE ADVANTAGES 63

16. SWOT ANALYSIS 65

17. FURTURE OF THE INDIAN LEATHER INDUSTRY 70

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 The Indian Leather Industry – The Road Ahead.

18. CONCLUSION 73

INTRODUCTION

The post liberalization era has opened up a plethora of opportunities for the
Indian leather industry.

With global players looking for new sourcing options (in addition to China, India
stands to gain a bigger share of the global market. Leading brands from the US
and Europe is planning to source leather and leather products from India.

Global players who participated at the India International Leather Fair, 2005,
consider India as the market to be in. The 2006 fair is being designed to focus on
the opportunities for sourcing from India.

This report looks at the leather industry from both the macro and micro
perspectives. At the macro level it deals with international competitiveness of the
industry, environmental and regulatory issues like PCP (Pentachlorophenol
concentration and concerns on animal rights violations, employment creation,
and trade-related details. It also provides information on the micro structure of
the Indian leather industry, the major players and foreign collaborations.

India has a less than 3% share in the global trade in leather compared to China's
20%. Realizing the growth potential of the leather industry, the Government of
India has been making significant efforts to promote rapid advancement of the
industry. On June 30, 2005, the Cabinet Committee on Economic Affairs (CCEA)
decided to implement a Rs 2.9 billion scheme for the integrated development of
the leather sector. Under this scheme, existing tanneries will be modernized and
new units will be set up for footwear, components and leather products. This

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 The Indian Leather Industry – The Road Ahead.

scheme is expected to result in gains in terms of productivity, right-sizing of

capacity, cost-cutting, and design-development.

The Leather Industry holds a prominent place in the Indian economy. This sector
is known for its consistency in high export earnings and it is among the top ten
foreign exchange earners for the country.

With an annual turnover of over US$ 7 billion, the export of leather and leather
products increased manifold over the past decades and touched US$ 3.40 billion
in 2009-10, recording a cumulative annual growth rate of about 5.43% (5 years).

The Leather industry is bestowed with an affluence of raw materials as India is

endowed with 21% of world cattle & buffalo and 11% of world goat & sheep
population. Added to this are the strengths of skilled manpower, innovative
technology, increasing industry compliance to international environmental
standards, and the dedicated support of the allied industries.

The leather industry is an employment intensive sector, providing job to about

2.5 million people, mostly from the weaker sections of the society. Women
employment is predominant in leather products sector with about 30% share.

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 billion (2008).

The major production centers for leather and leather products are located
in Tamil Nadu - Chennai, Ambur, Ranipet, Vaniyambadi, Trichy, Dindigul ; West
Bengal – Kolkata ; Uttar Pradesh – Kanpur, Agra & Noida ; Maharashtra –
Mumbai ;Punjab – Jallandhar ; Karnataka – Bangalore ; Andhra Pradesh -
Hyderabad ; Haryana  - Ambala, Gurgaon, Panchkula and Karnal; Delhi
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 The Indian Leather Industry – The Road Ahead.

The Indian leather industry is spread over the formal as well as informal sectors
and produces a wide range of products from raw hides to fashionable shoes. The
industry comprises of firms in all capacities starting from small artisans to
prominent global players. Specialized institutions like CLE (Council for Leather
Exports) and CLRI (Central Leather Research Institute) have been set up to
promote the overall performance of the industry.

India ranks first among major livestock holding countries in the world and thus
has a rich endowment of raw materials in terms of the cattle population. It has
the capacity to fulfill 10% of the global leather requirement .

In 2005, leather footwear alone accounted for 30% of the total export of leather
and leather products from India. The post liberalization era has opened up a
plethora of opportunities for the Indian leather industry. With global players
looking for new sourcing options (in addition to China), India stands to gain a
bigger share of the global market. Leading brands from the US and Europe are
planning to source leather and leather products from India. 

Global players who participated at the India International Leather Fair, 2005,
consider India as the market to be in. The 2006 fair is being designed to focus on
the opportunities for sourcing from India...

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 The Indian Leather Industry – The Road Ahead.

SALIENT FEATURES OF LEATHER INDUSTRY

The Leather industry occupies a place of prominence in the Indian economy in

view of its massive potential for employment, growth and exports. There has
been an increasing emphasis on its planned development, aimed at optimum
utilization of available raw materials for maximizing the returns, particularly from
exports. The exports of leather and leather products gained momentum during
the past two decades. There has been a phenomenal growth in exports from
Rs.320 million in the year 1965-66 to Rs. 89558 million in 2009- 10. Indian leather
industry today has attained well merited recognition in international markets
besides occupying a pride of place among the top seven foreign exchange earners
of the country.

The leather industry has undergone a dramatic transformation from a mere

exporter of raw materials in the sixties to that of value added finished products in
the nineties. Policy initiatives taken by the Government of India since 1973 have
been instrumental to such a transformation. In the wake of globalization of
Indian economy supported with liberalized economic and trade policies since
1991, the industry is poised for further growth to achieve greater share in the
global trade. Apart from a significant foreign exchange earner, leather industry
has tremendous potential for employment generation. Direct and indirect
employment of the industry is around 2 million. The skilled and semi-skilled
workers constitute nearly 50% of the total work force. For the estimated
employment in different sectors of leather industry.

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 The Indian Leather Industry – The Road Ahead.

FEATURES OF LEATHER SECTOR IN INDIA

 Employs 2.5 million persons directly.

 A large part (nearly 60-65%) of the production is in the small/cottage sector.
 A small capital investment can generate high turnover of two/three times of the
investment.
 Export oriented - amongst top seven foreign exchange earners for India.
 India has 10% of the world’s raw material but only 4% of the world trade.
 In footwear, which constitutes over 40% of world leather trade, India has less
than 1% share of world trade.
 Has good potential for future growth.
 Very high value addition within the country.

INDIAN LEATHER SECTOR: PROFILE

 India has the largest livestock holding country of 27 % large animals and 12%
small animals.
 A source for 11% Global Leather requirement.
 Annual Production value US $ 7 billion.
 Annual Export Value of US $ 3400.97 billion.
 Export Growth CAGR 12.48% (2003-08)
 About 2.5 million workforce (30%) women, a large part of the production (nearly
60-65%) done by the small / cottage sector.
 Promising technology inflow and Foreign Direct Investment.
 Top priority to occupational safety and work environment.
 Meticulous concern for consumer safety.

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 The Indian Leather Industry – The Road Ahead.

 Compliance to environmental standards.

 Enormous potential for future growth (domestic as well as export).
 Estimated 15% of total purchase of leading global brands in footwear, garments,
leather goods & accessories in Europe is sourced from India.

INDUSTRY OVERVIEW

 A large part (nearly 60-65%) of the production is in the Small/Cottage Sector.

 Annual export value poised to touch about 2 billion US dollars.
 Amongst top 8 export earners for India.
 Endowed with 10% of the world raw material and export constitutes about 2% of
the world trade.
 Has enormous potential for future growth.
 Very high value addition within the country.
 ISO certified leather companies.
 Factories meet international ethical engagement criteria.
 Rich experience in producing leather.
 Advantage of largest livestock population in the world.
 Strong accessories and components.
 The second largest manufacturer of leather garments.
 Dominates fashion colors in MODEUROP.
 100% overseas investment allowed in tanning and footwear.
 Amongest the major producers of finished leather in the world.
 Conducive environment for international brands to set up operations in India.
 A large number of qualified leather technologists/technical skills.

PRODUCTS EXPORTED

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 The Indian Leather Industry – The Road Ahead.

 Leather Footwear.
 Footwear components (shoe upper, soles molds, insoles).
 Leather garments
 Leather goods(including harness and saddlery leather gloves etc)
 Finished leather
 Raw hides and skins

MAJOR PRODUCTION CENTRES OF LEATHER AND LEATHER PRODUCTS

SOUTHERN REGION

 Tamil Naidu – Chennai, Ambur, Ranijet, Vaniyambadi, Trichy, and Dindigul

 Andhra Pradesh- Hyderabad
 Karnataka- Bangalore

NORTHERN REGION

 Punjab – Jallandhar
 Delhi

EASTERN REGION

 West Bengal –Kolkata

CENTRAL REGION

 Uttar Pradesh – Kanpur and Agra

WESTERN REGION

 Maharashtra- Mumbai

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 The Indian Leather Industry – The Road Ahead.

Figure 1 INDIAN STATES DOMINATING LEATHER INDUSTRY

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 The Indian Leather Industry – The Road Ahead.

MAJOR IMPORTING COUNTRIES OF INDIAN LEATHER PRODUCTS

 UNITED STATES OF AMERICA

 GERMANY
 ITALY
 UNITED ARAB EMIRATES
 PORTUGAL
 AUSTRIA
 SWITZERLAND
 SPAIN
 SWEDEN
 UNITED KINGDOM
 FRANCE
 HOLLAND
 CANADA
 RUSSIA
 AUSTRILA
 DENMARK

RAW MATERIAL SUPPLIES

There exists a large raw material base. This is on account of population of 194
million cattle, 70 million buffaloes, 95 million goats. According to the latest
census, India ranks first among the major livestock holding countries in the world.
In respect of sheep with 48 million sheep’s, it claims the sixth position. These four
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 The Indian Leather Industry – The Road Ahead.

species provide the basic raw material for the leather industry.  

The annual availability of 166 million pieces of hides and skins is the main
strength of the industry. This is expected to go up to 218 million pieces by the
end of year 2000. Some of the goat/calf/sheep skins available in India are
regarded as speciality products commanding a good market. Abundance of
traditional skills in training, finishing and manufacturing downstream products
and relatively low wage rates are the two other factors of comparative advantage
for India.

TANNING & FINISHING CAPACITY

With tanning and finishing capacity for processing 1192 million pieces of hides
and skins per annum spread over different parts of the country, most of which is
organised along modern lives, the capability of India to sustain a much larger
industry with its raw material resource is evident. In order to augment the
domestic raw material availability, the Government of India has allowed duty free
import of hides and skins from anywhere in the world. It is an attraction for any
foreign manufacturer who intends to shift his production base from a high cost
location to low cost base.

EXPORT POTENTIAL

The leather industry, one of the major foreign exchange earners of the country
recorded significant growth since the beginning of the decade. Today the share of
the value added finished products in the total exports from leather sector are
80% as against 20% in 1970s.Union Commerce and industry Ministry of India has
identified the leather industry as a trust sector in view of significant Export
Growth prospects and enormous employment potential, particularly in semi-
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 The Indian Leather Industry – The Road Ahead.

urban and rural areas. Its is versioned that the industry would generate revenue
of $15 billion by 2012 through exports from the present level of $2.3 billion,
besides generating over one million additional jobs in the country.

Value-added leather products at present constituted nearly 80% of India’s leather

exports, with footwear alone (both leather and non-leather) .

A Statement showing India’s Export of Leather Goods to different countries:

(Value in Million US$)

COUNTRY APRIL TO MARCH % SHARE % CHANGE

  2006-07 2007-08 2007-08  
Germany 100.14 121.56 15.49% 21.40%
USA 128.12 121.37 15.46% -5.27%
UK 113.91 131.53 16.76% 15.47%
Italy 50.76 56.25 7.17% 10.80%
France 31.54 34.89 4.45% 10.62%
Hong Kong 3.06 3.38 0.43% 10.74%
Spain 53.18 59.11 7.53% 11.17%
Russia 0.89 0.94 0.12% 5.88%
Netherlands 31.81 36.11 4.60% 13.51%
Australia 21.79 27.95 3.56% 28.24%
New Zealand 1.41 2.24 0.29% 59.34%
Denmark 13.83 14.81 1.89% 7.05%
Greece 6.99 7.03 0.90% 0.57%
Canada 9.75 12.55 1.60% 28.78%
Switzerland 8.40 10.41 1.33% 23.97%
Sweden 9.24 10.85 1.38% 17.46%
South Africa 5.08 4.53 0.58% -10.82%
Austria 6.22 7.09 0.90% 13.90%
Belgium 11.72 13.53 1.72% 15.46%
Japan 3.01 4.01 0.51% 33.10%
Portugal 2.67 2.68 0.34% 0.51%
China 1.01 0.95 0.12% -5.58%

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Ireland 2.36 3.74 0.48% 58.65%

UAE 22.06 25.09 3.20% 13.73%
Indonesia 0.15 0.15 0.02% 0.16%
Korea Rep 0.82 0.42 0.05% -49.21%
Finland 3.49 4.14 0.53% 18.62%
Saudi Arabia 6.99 5.72 0.73% -18.23%
Others 55.89 61.90 7.89% 10.76%
Total 706.28 784.95 100.00% 11.14%

 The different types of leather goods exported from India are Wallets, Purses,
Pouches, Ladies Handbags and other bags.  Travel/luggage ware, Passport
holders/Credit Card holders etc, Portfolio/Briefcases, Leather Belts, Caps & Ties,
Diary Covers/Cheque Book Covers, Desktop materials, Covers for Camera,
Calculator, Leather toys, Handcrafted leather items, Pet accessories and other
leather goods.

 Leather Goods and accessories manufactured in India also bear brand names like
Coach, Pierre Cardin, Yves St Laurent, Etienne Aigner, Geoffery Beene, Harrods,
Marks & Spencer, Liz Caliborne, Guess, Next, Tommy Hilfiger, Kieffer,
Waldhausen, Biemen, Nederinum, Zaldi, Kallquists, Shires, GFS, Millers, Eisers,
Weco, Ukal and Decalthon.

 India is now poised to make itself a major destination for global sourcing of
Leather Accessories. India’s position as the fifth largest global supplier of Leather
Accessories is only going to strengthen given the availability of quality raw
material coupled with skilled craftsmanship.

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 The Indian Leather Industry – The Road Ahead.

 The Leather Accessories industry’s accelerated development and growth is being

aided by the ambitious capacity expansion & modernization plans of private
industry and the Indian Government’s encouraging policy measures.

FOOTWEAR & FOOTWEAR COMPONENTS

Estimated production capacities:

ITEMS CAPACITY
65 million pieces
Hides
170 million pieces
Skins
909 million pairs
Leather Footwear
100 million pairs
Leather shoe uppers
1056 million pairs
Non-leather footwear
16 million pieces
Leather Garments
63 million pieces
Leather Goods
52 million pairs
Industrial Gloves
12.50 million pieces
Saddlery & Harness

PRODUCT WISE BRANDS SOURCED FROM INDIA

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 The Indian Leather Industry – The Road Ahead.

LEATHER GOODS /
FOOTWEAR LEATHER GARMENTS
ACCESSORIES
Acme, Ann Taylor, Bally, Charter Club, Pierre Cardin, Tommy Coach, Liz Claiborne,
Clarks, Coach, Colehann, Daniel Hector, Hilfiger, Versace, DKNY, Harrods, Yves St, Laurent,
Deichmann, DKNY, Double H, Ecco, Hugo Boss, Liz Claiborne, Tommy Hilfiger, Etienne
Elefanten, Etienneaigner, Florsheim, Ann Taylor, Nautica, Aigner, Geoffrey Beene,
Gabor, Geoffrey Beene, Guess, Harrods, Kenneth Cole, Charter Marks & Spencer, Guess,
Hasley, Hugo Boss, Hush Puppies, Club, Daniel Hector Next, Pierre Cardin
Kenneth Cole, Liz Claiborne, Marks &
Spencer, Nautica, Next, Nike, Nunn
Bush, Pierre Carding, Reebok,
Salamander, Stacy Adams, Tommy
Hilfiger, Tony Lama, Versace, Yves St.
Laurent

Besides, major brands are sourced from India, MNC brands are sold in India and Indian
brands sold in India.

MNC BRANDS SOLD IN INDIA

INDIAN BRANDS SOLD IN INDIA

Aldo, Bally, Clarks, Ecco, Florshiem,  Red Tape, Bata, Liberty, Khadims,
Ferragammo, Hush Puppies, Lee cooper, Lakhani, Metro, Action
Lloyd, Marks & Spencer, Nike, Nine West,
New Balance, Reebok, Rockport, Stacy Adams

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INDUSTRY SEGMENTS (STRUCTURE)

The leather industry is spread in different segments, namely, tanning &finishing,

footwear & footwear components, leather garments, leather goods including
Saddlery &harness, etc

INDIAN FOOTWEAR INDUSTRY

The footwear sector is a very significant segment of the leather industry in India;
rather it is the engine of growth for the entire Indian leather industry.
 
India is the second largest global producer of footwear after China, accounting for
13% of global footwear production of 16 billion pairs. India produces 2065 million
pairs of different categories of footwear (leather footwear - 909 million pairs,
leather shoe uppers - 100 million pairs and non-leather footwear - 1056 million
pairs). India exports about 115 million pairs. Thus, nearly 95% of its production
goes to meet its own domestic demand.

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 The Indian Leather Industry – The Road Ahead.

 
The major production centers in India are Chennai, Ranipet, Ambur in Tamil
Nadu, Mumbai in Maharastra, Kanpur in U.P., Jalandhar in Punjab, Agra, Delhi,
Karnal, Ludhiana, Sonepat, Faridabad, Pune, Kolkata, Calicut and Ernakulam.
About 1.10 million are engaged in the footwear manufacturing industry.
.
Footwear exported from India are Dress Shoes, Casuals, Moccasins, Sport Shoes,
Horrachies, Sandals, Ballerinas, Boots, Sandals and Chappals made of rubber,
plastic, P.V.C. and other materials.  US Retail giant Wal-Mart has also begun
sourcing footwear from India since the last two years.
 
The Footwear sector is now de-licensed and de-reserved, paving the way for
expansion of capacities on modern lines with state-of-the-art machinery. To
further assist this process, the Government has permitted 100% Foreign Direct
Investment through the automatic route for the footwear sector.
 
Conducive Investment climate towards attracting overseas investments and
increasing cost competitiveness.
 
The Government of India is setting up dedicated Footwear Complex and
Footwear Components Part where footwear clusters are located.
 
There has been active interest in collaborating with Indian Footwear companies
from European countries like Italy, Spain and Portugal.
 
FOOTWEAR - GLOBAL SCENARIO & INDIA’S SHARE

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 The Indian Leather Industry – The Road Ahead.

The global import of Footwear (both made of leather as well as non-leather)

increased from US$ 59.77 billion in 2004 to US$ 87.23 billion in 2008, growing at
a CAGR of 9.91%. During 2008, the India’s share in the global import is 1.76%. 
         (In Million US$)
  2004 2005 2006 2007 2008
Global import of Footwear 59779.52 67066.21 72747.35 80722.29 87234.28
India's export of Footwear
& Footwear Components 910.77 1045.24 1236.91 1489.35 1534.32
% Share of India 1.52% 1.56% 1.70% 1.85% 1.76%
 
Footwear is the engine of growth of the leather industry in India. India’s export of
Footwear touched US$ 1507.51 million in 2009-10, with a share of 44.33% in India’s
total export from the leather sector.  
 
India’s Footwear export (leather, uppers & non-leather) is growing at a CAGR of 9.58%
in the last five years ending 2009-10 India’s export of leather footwear had increased
from US$ 807.81 million in 2004-05 to US$ 1254.37 million in 2009-10.

 India’s export of footwear components had increased from US$ 182.58 million in
2004-05 to US$ 209.13 million in 2009-10
 India’s export of non-leather footwear has declined from US$ 54.85 million in
2004-05 to US$ 44.01 million in 2009-10
 India’s export of footwear (leather, non-leather & footwear components) had
increased from US$ 1045.24 million in 2004-05 to US$ 1507.51 million in 2009-
10 

India’s Footwear Export Growth over the last Four Decades  

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 The Indian Leather Industry – The Road Ahead.

Export of footwear from India increased manifold over the last four decades.
Today, India’s footwear export is valued at US$ 1507.51 million, constituting
44.33% share in total export of leather & leather products. 

Footwear exports have increased from US$ 82.56 million in 1979-80 to US$ 1507.51 million in 2009-10

 MAJOR MARKETS 
During 2009-10, the main markets for Indian Footwear are UK with a share of
19.66%, Germany 14.88%, Italy 13.93%, USA 8.20%, France 9.58%, Spain 6.37%,
Netherlands 4.32%, Portugal 1.50%, U.A.E 2.63% and Denmark 1.13.%.  These 10
countries together accounts for 82.20% share in India’s total footwear export.
 
Nearly 90% of India’s export of footwear goes to European Countries and the
USA. Future growth of Indian footwear in India will continue to be market driven.
The European countries and the US are major consumers for the Indian footwear.
 
FUTURE TRENDS
Keeping in view its past performance, current trends in global trade, the
industry’s inherent strengths and growth prospects, the footwear industry aims
to augment production, thereby enhancing its exports to US$ 3.37 billion by
2013-14 from the current level of US$ 1.50 billion. 

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PARTNERSHIPS THAT SPELL SUCCESS

Formas Kunz Brazil - This facility is coming up in the Footwear Component Park.
Chennai, India.
 
Feng-Tay Enterprises Co. Ltd., Taiwan - This is an SEZ-proposed facility in an area
of 275 acres, coming up in SIPCOT Industrial Estate, Cheyyar (TN).  Feng Tay is a
manufacturer of sports shoes, skate shoes and casual shoes for Nike and other
global brands.
 
Apache Footwear, China - This FDI is coming up in Tada Mandal, Nellore (AP), in
an area of 340 acres.  Apache is a supplier of shoes for Adidas and has
manufacturing facilities in China.
 
A few other examples are, Mondial (Italy), Suolificio Malaspina (Italy),
Fagus(Germany), Zahonero Virgili SL, (Spain), Top Fondi (Italy), Xie Zhan Moulds
(China)
 
INDIAN FOOTWEAR INDUSTRY POISED FOR GROWTH
 
India has state-of-the-art manufacturing plants.  The footwear sector has
matured from the level of the manual footwear manufacturing method to the
automated footwear manufacturing systems. Footwear production units are
installed with world class machines.  Manned by skilled technicians, these
machines help to turn any new innovative idea into reality. Support systems
created for the sector have indeed served the footwear industry well. India has a
well developed footwear component manufacturing industry.  The future growth
of the footwear industry in India will continue to be market-driven, and oriented

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 The Indian Leather Industry – The Road Ahead.

towards EU and US markets.  With technology and quality of the footwear

improving year after year, Indian Footwear industry is stamping its class and
expertise in the global footwear trade.
 

INDIA’S EXPORT OF FOOTWEAR TO DIFFERENT COUNTRIES

    (Value in Million US$)

Country 2005-06 2006-07 2007-08 2008-09 2009-10 % Share
Germany 170.97 217.23 246.84 229.65 224.27 14.88%
UK 195.78 208.2 241.37 247.06 296.45 19.66%
Italy 134.35 186.11 229.81 221.09 209.95 13.93%
USA 131.07 127.15 136.92 163.03 123.6 8.20%
France 74.48 99.81 116.03 119.2 144.45 9.58%
Spain 63.7 64.57 76.69 91.86 95.99 6.37%
Netherlands 32.96 48.57 72.91 76.2 65.13 4.32%
Portugal 22.15 35.03 37.34 28.21 22.63 1.50%
UAE 25.78 34.64 39.23 39.4 39.61 2.63%
Denmark 18.37 14.65 17.48 14.78 17.02 1.13%
Australia 11.58 10.11 12.52 13.34 15.49 1.03%
Sweden 6.77 7.99 12.04 12.64 12.2 0.81%
Canada 11.95 10.91 10.41 8.96 9.3 0.62%
South Africa 8.26 12.11 8.52 8.49 9.87 0.65%
Japan 3.17 3.07 4.63 8.23 5.45 0.36%
Others 133.9 156.76 226.61 252.18 216.37 14.35%

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 The Indian Leather Industry – The Road Ahead.

Total 1045.24 1236.91 1489.35 1534.32 1507.51 100.00%

         
 

INDIAN LEATHER GARMENTS INDUSTRY

Leather garments form a significant segment of the Leather Industry in India.
Leather garments production capacity is estimated to be 16 million pieces
annually. India produces different types of leather garments i.e., jackets, long
coats, waist coats/shirts, pant/shorts, motorbike jackets, industrial leather
garments, leather aprons etc.

India is the second largest producer of leather garments, next only to China,
which produces 70 million pieces of the total global trade volume of about 120
million pieces. 

It is a matter of great pride that Indian leather garments have been making giant
strides in the world of fashion. National Institute of Fashion Technology and
National Institute of Design lends design support to make continuous fashion
statements. These Institutes provides well trained personnel and imaginative
designers. India’s acknowledged strength is leather tanning and its ability to
produce a wide variety of fashion leathers.

A Statement showing global import of leather Garments, India’s export and share
during 2004-08

(Value in Million US$)

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 The Indian Leather Industry – The Road Ahead.

LEATHER GARMENTS

   2004 2005 2006 2007 2008

WORLD IMPORT 4007.04 3836.92 3768.09 3980.21 4128.33

INDIA'S EXPORT 329.44 333.30 309.91 345.34 426.17

% SHARE OF INDIA 8.22% 8.69% 8.22% 8.68% 10.32%

India’s export of Leather Garments increased from US$ 333.30 in 2005-06 to US$
428.52 million in 2009-10, growing at a CAGR of 6.48%. 

India’s export of leather garments accounts for a share of 12.60% in India’s total
leather trade of US$ 3400.97 million in 2009-10.

India’s position as the fourth largest global supplier of leather garments is only

going to strengthen given the availability of quality raw material coupled with
skilled craftsmanship. 

Major markets for Indian leather garments are the USA, Germany, France, Italy,
Spain, UK, Japan, Netherlands, Hong Kong, Switzerland, Belgium, Canada, Austria,
Denmark, Russia, Greece, Sweden and Portugal.  These 18 countries account for a
share of 93.83% in India’s total leather garments exports.

In the global leather garments imports, the USA alone accounts for a share of
15.54%, followed by Germany 12.67% and France 8.75%

Major brands like Pierre Cardin, Tommy Hilfiger, Versace, DKNY, Hugo boss, Liz
Claiborne, Ann Taylor, Nautica, Kenneth Cole, Charter Club, Daniel Hector source

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 The Indian Leather Industry – The Road Ahead.

Leather Garments from India.  With modern technology with state-of-the-art

machinery installed in the production units, India is come to be recognized as a
major producer of quality leather garments in the globe.  Leather Garments
industry’s accelerated development and growth is being aided by the capacity
expansion and modernization efforts of the private industry and the Government
of India’s encouraging policy measures.

India’s Export of Leather Garments – Country-wise

LEATHER GARMENTS

APRIL TO MARCH % SHARE % CHANGE

 COUNTRY
2008-09 2009-10 2009-10  

GERMANY 100.26 109.16 25.47% 8.87%

U.S.A. 22.20 17.03 3.97% -23.32%

U.K. 27.92 25.07 5.85% -10.18%

ITALY 70.13 64.95 15.16% -7.38%

FRANCE 42.28 55.55 12.96% 31.39%

HONG KONG 2.02 1.67 0.39% -17.37%

SPAIN 48.47 51.09 11.92% 5.40%

RUSSIA 0.51 1.09 0.25% 112.96%

NETHERLANDS 15.72 16.88 3.94% 7.35%

AUSTRALIA 3.60 5.48 1.28% 52.16%

NEWZEALAND 0.13 0.13 0.03% 0.32%

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 The Indian Leather Industry – The Road Ahead.

DENMARK 23.86 19.73 4.60% -17.30%

GREECE 3.61 2.64 0.62% -26.76%

CANADA 7.86 8.65 2.02% 9.96%

SWITZERLAND 3.92 4.08 0.95% 4.23%

SWEDEN 7.96 6.46 1.51% -18.90%

S. AFRICA 0.44 1.04 0.24% 135.67%

AUSTRIA 4.30 4.63 1.08% 7.73%

BELGIUM 7.45 8.47 1.98% 13.66%

JAPAN 1.18 1.34 0.31% 13.23%

PORTUGAL 4.19 3.63 0.85% -13.48%

CHINA 0.05 0.26 0.06% 396.89%

IRELAND 0.00 0.03 0.01% 14344.61%

U.A.E. 4.13 4.39 1.03% 6.52%

INDONESIA 0.00 0.00 0.00% 0.00%

KOREA REP. 0.13 0.11 0.03% -15.37%

FINLAND 1.05 0.56 0.13% -46.82%

SAUDI ARABIA 0.10 0.63 0.15% 531.08%

OTHERS 22.71 13.79 3.22% -39.27%

TOTAL 426.17 428.52 100.00% 0.55%

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 The Indian Leather Industry – The Road Ahead.

INDIAN FINISHED LEATHER INDUSTRY

India has amongst the largest livestock population in the world, providing a
strong raw material base in goat, buffalo, cow and sheep leather. In terms of raw
material availability in pieces, India is endowed with 12.55% of Bovine hides &
skins, 12.29% of goat and kid skins, and 3.48% of Sheep and Lamb skins in the
world.

The range of finished leathers include classic finishes (polish, glazed, aniline,
patent), matt surfaces (suedes, nubuck), nappa, burnished & oily leathers,
crackled & distressed finishes etc

Amongst the major producers of finished leather in the world, the Indian Leather
Industry has a long tradition of supplying high quality leather for the global
market.  Indian tanning industry produces over 2 billion square feet of leather per
annum. The Industry has the tanning capacity to fulfill 10% of global leather
requirements. 

Major tanning clusters in the country are Chennai, Ambur, Ranipet, Kolkata,
Kanpur, Jalandhar etc. There are approximately 2091 tanneries in the country –
45% in Tamil Nadu, 26% in West Bengal, 18% in Uttar Pradesh.

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 The Indian Leather Industry – The Road Ahead.

The global import of finished leather increased from US$ 19784.34 million in
2004 to US$ 20631.73 million in 2008, growing at a CAGR of 1.05%. India’s share
has increased from 3.07% to 3.26% during the said period.

  (In Million US$)

  2004 2005 2006 2007 2008

Global import 19784.34 19893.53 21700.85 23151.85 20631.73

India's export 607.73 636.27 724.00 807.19 673.37

% Share of India 3.07% 3.20% 3.34% 3.49% 3.26%

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 The Indian Leather Industry – The Road Ahead.

India’s export of finished leather touched US$ 625.54 million in 2009-10, with a share of
18.39% in India’s total export.  
 
Major markets for Indian Finished Leather are Germany, USA, Italy, France, Hong Kong,
Spain, Russia, Netherlands, South Africa, Portugal, China, Indonesia and Korea Rep.
These 13 countries account for a share of about 75% in India’s total finished leather
export of US$ 625.54 million.

Strong infrastructures are in place for the leather tanning in the country.  Eco-
sustainable tanning processes are being followed in the tanning industry. The tanning
industry is well supported by the presence of chemicals and auxiliaries industry. In the
MODEUROP Congress, colours presented by the India are selected continuously, which
reinforces the quality of India’s leather processing techniques.  Indian finished leather
finds the pride of place in the global fashion markets, and is a much sought after raw
material for premium leather product brands.

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 The Indian Leather Industry – The Road Ahead.

India’s Export of Finished Leather – Country-wise

                                                                                       (Value in Million US$)

                         FINISHED LEATHER  

APRIL TO MARCH % share % change
COUNTRY
2008-09 2009-10 2009-10  
GERMANY 26.77 22.02 3.52% -17.77%
U.S.A. 7.64 7.67 1.23% 0.47%
U.K. 3.42 2.68 0.43% -21.62%
ITALY 99.40 75.06 12.00% -24.49%
FRANCE 6.28 8.71 1.39% 38.65%
HONG KONG 219.80 234.86 37.55% 6.86%
SPAIN 23.46 18.70 2.99% -20.30%
RUSSIA 6.95 3.35 0.53% -51.87%
NETHERLANDS 8.82 11.56 1.85% 31.01%
AUSTRALIA 1.63 1.41 0.22% -13.46%
NEWZEALAND 0.24 0.12 0.02% -50.82%
DENMARK 1.33 0.31 0.05% -76.90%
GREECE 0.60 0.43 0.07% -28.78%
CANADA 2.51 0.65 0.10% -74.13%
SWITZERLAND 0.29 0.18 0.03% -36.54%
SWEDEN 0.06 0.32 0.05% 411.50%
S. AFRICA 9.29 8.48 1.36% -8.81%
AUSTRIA 1.53 1.28 0.21% -15.77%
BELGIUM 1.08 0.11 0.02% -89.49%
JAPAN 5.22 4.37 0.70% -16.29%
PORTUGAL 12.34 9.71 1.55% -21.32%
CHINA 45.79 45.93 7.34% 0.30%
IRELAND 0.00 0.00 0.00% 0.00%
U.A.E. 6.81 3.24 0.52% -52.42%
INDONESIA 12.75 9.16 1.46% -28.18%
KOREA REP. 23.49 27.62 4.42% 17.60%
FINLAND 0.40 0.22 0.03% -45.79%
SAUDI ARABIA 0.19 0.08 0.01% -59.96%

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 The Indian Leather Industry – The Road Ahead.

OTHERS 145.28 127.32 20.35% -12.36%

TOTAL 673.37 625.54 100.00% -7.10%
       

INDIAN LEATHER GOODS & ACCESSORIES INDUSTRY

Leather Goods form an important segment of the leather industry in India.

Leather goods production capacity is estimated to be 63 million pieces annually.  

The different types of Leather Goods and accessories are manufactured in India
i.e., Trunks, suit-cases, vanity-cases, executive-cases, brief-cases, school satchels,
traveling bags / luggage, Portfolio and similar such items,  Hand Bags, shopping
bags and similar such items, Wallets, Purses, Pouches, Passport Holders, Credit
Card Holders, Diary covers and similar such items, Leather Belts, Caps etc.  India
also produces Leather Upholstery – Sofa Seat Covers, Car Seat Covers etc.

Most of the units manufacturing leather goods are located in Kolkata, Chennai,
Mumbai, Kanpur, Bangalore and Pondicherry.  Industry is situated in few other
clusters also. 
   
India is the fifth largest exporter of leather goods and accessories (inclusive of
Gloves) in the world.  India’s share in global leather Goods & Accessories segment
is 4.84% in 2008. Leather Goods and accessories manufactured in India bear
brand names like Coach, Pierre Cardin, Yves St Laurent, Etienne Aigner, Geoffery
Beene, Harrods, Marks & Spencer, Liz Caliborne, Guess, Next, Tommy Hilfiger,

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 The Indian Leather Industry – The Road Ahead.

Kieffer, Waldhausen, Biemen, Nederinum, Zaldi, Kallquists, Shires, GFS, Millers,

Eisers, Weco, Ukal and Decalthon.

With the availability of quality raw materials coupled with skilled craftsmanship,
India is now poised to make itself a major destination for global sourcing of
leather goods and accessories. State-of-the-art production units and in-house
Design Studios will strengthen the industry in producing products with exquisite
design and quality.  The industry’s accelerated development and growth is being
aided by the ambitious capacity expansion & modernization plans of private
industry and the Indian Government’s encouraging policy measures.

LEATHER GLOVES

Leather gloves of all categories like fancy/fashion gloves, sports gloves, industrial
gloves and other leather gloves is a thrust product among the items of small
leather goods being manufactured and exported from India. India is the fourth
largest exporter of Leather Gloves to the world.

India produces about 52 million pairs of industrial gloves annually.   India offers
the world the largest technically trained manpower in leather craft at the most
competitive costs. Its association with respected product testing institutions such
as SATRA in the UK and PFI in Germany ensures the finest quality leather in the
manufacturing of gloves. 

India’s share in global leather gloves import during 2008 was 9.52%. India’s
export of leather gloves increased from US$ 118.77 million in 2004 to US$ 232.05
million in 2008, growing at a CAGR of 18.22%.  Indian Leather Gloves are
engineered to provide long lasting comfort and protection. 

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 The Indian Leather Industry – The Road Ahead.

GLOBAL IMPORT & INDIA’S SHARE

Global import of Leather Goods including Gloves increased from US$ 10786.59
million in 2004 to US$ 18034.94 million in 2008, growing at a CAGR of 13.71%.
During 2008, the India’s share in the global leather goods & accessories import is
4.84%.

(Value in Million US$)

LEATHER GOODS INCLUDING GLOVES

2004 2005 2006 2007 2008
WORLD IMPORT 10786.59 12278.19 13743.57 16386.40 18034.94
INDIA'S EXPORT 585.72 660.17 706.29 800.47 873.44
% SHARE OF INDIA 5.43% 5.38% 5.14% 4.88% 4.84%

India’s export of leather goods & accessories including Gloves touched US$ 756.02
million in 2009-10, with a share of 22.23% in India’s total export.

The major markets for Indian leather goods are the USA, Germany, the UK, Italy, Spain,
France, Russia, Netherlands, UAE and Australia.  Nearly 79.36% of India’s export goes to
these countries.

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 The Indian Leather Industry – The Road Ahead.

India’s Export of Leather Goods & Accessories – Country-wise

LEATHER GOODS
APRIL TO MARCH % share % change
COUNTRY 2008-09 2009-10 2009-10  
GERMANY 132.08 117.88 15.59% -10.75%
U.S.A. 155.02 137.86 18.24% -11.07%
U.K. 125.77 122.45 16.20% -2.64%
ITALY 67.51 45.00 5.95% -33.35%
FRANCE 45.04 39.86 5.27% -11.49%
HONG KONG 4.22 5.56 0.74% 31.86%
SPAIN 52.33 50.98 6.74% -2.57%
RUSSIA 1.01 0.57 0.07% -43.91%
NETHERLANDS 41.91 37.97 5.02% -9.40%
AUSTRALIA 32.72 25.90 3.43% -20.83%
NEWZEALAND 2.02 1.55 0.20% -23.35%
DENMARK 17.02 16.11 2.13% -5.30%
GREECE 5.36 3.86 0.51% -27.97%
CANADA 13.51 6.73 0.89% -50.16%
SWITZERLAND 10.30 11.95 1.58% 15.95%
SWEDEN 11.42 12.04 1.59% 5.42%
S. AFRICA 3.65 4.61 0.61% 26.13%
AUSTRIA 7.65 5.77 0.76% -24.59%
BELGIUM 14.88 12.37 1.64% -16.83%
JAPAN 5.45 5.81 0.77% 6.75%

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 The Indian Leather Industry – The Road Ahead.

PORTUGAL 3.38 3.24 0.43% -4.23%

CHINA 0.48 0.51 0.07% 7.94%
IRELAND 2.31 1.63 0.22% -29.46%
U.A.E. 34.97 21.53 2.85% -38.43%
INDONESIA 0.09 0.12 0.02% 32.00%
KOREA REP. 0.45 0.53 0.07% 15.95%
FINLAND 4.62 3.64 0.48% -21.36%
SAUDI ARABIA 8.28 8.45 1.12% 2.04%
OTHERS 70.00 51.53 6.82% -26.39%
TOTAL 873.44 756.02 100.00% -13.44%

INDIAN SADDLERY & HARNESS INDUSTRY

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 The Indian Leather Industry – The Road Ahead.

Harness & Saddlery goods are being manufactured in Kanpur for more than last
100 years. The Saddlery manufacturing started in the 19th century at the British
Indian Corporation in its Copper Alan branch in Kanpur and simultaneously the
British Government started the Ordinance Equipment Factory at Kanpur to cater
to the needs of the Army. The craft of making saddlery was imparted to the local
artisans by the master saddlers brought from the UK, whose generations now
formed the workforce of the present industry.  Kanpur, a city in Northern India, is
a short flight from the country’s capital-New Delhi

By virtue of Kanpur’s specialization in vegetable tanned buffalo hides, and due to

the presence of trained manpower, this has become the most important centre
for manufacture of saddlery goods in India.  In fact, Kanpur is the only centre in
India which produces the harness & saddlery goods. Almost all the units
operating in Kanpur are 100% export-oriented. Indian Saddlery and Harness
industry is now becoming globally competitive and brand dominated, awash with
designs. India is positioned as the third largest exporter of Saddlery & Harness to
the world, accounting for a share of 8.12% in the global saddlery import of US$
1135.00 million.           
                                                                                           (Value in Million US$)

  2004 2005 2006 2007 2008

Saddlery & Harness
WORLD IMPORT 714.59 828.41 918.42 1099.82 1135.00
INDIA'S EXPORT 61.71 77.52 82.33 106.18 92.15
% SHARE OF INDIA 8.64% 9.36% 8.96% 9.65% 8.12%

During 2009-10, India’s export of Saddlery & Harness was US$ 83.39 million, and
this accounted for a share of 2.45% in India’s total export from leather sector. 

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 The Indian Leather Industry – The Road Ahead.

Indian Saddlery and Harness products are gaining an ever-increasing recognition

in the highly competitive global saddlery & harness leather arena. Estimated
production capacity of the Saddlery & Harness industry in India is 12.50 million
pieces per annum. Technology, work craftsmanship, product quality are the
hallmarks of the Indian Saddlery & Harness industry.  
The major markets for Indian Saddlery & Harness products are Germany with a
share of 21.61%, USA with a share of 12.06%, UK 11.16%, France 9.09%,
Netherlands 6.50%, Sweden 6.00%, Belgium 4.97%, Australia 6.44%, Denmark
3.01%, Finland 1.24%, Canada 2.77%, Italy 4.34%, and Spain 2.26%. These 13
countries together accounts for a share of 91.45% in India’s total export of
saddlery & harness.  

India’s Export of Saddlery & Harness – Country-wise

(Value in Million US$)

SADDLERY & HARNESS

COUNTRY APRIL TO MARCH % SHARE % CHANGE
  2008-09 2009-10 2009-10  
GERMANY 19.67 18.02 21.61% -8.40%
U.S.A. 11.31 10.06 12.06% -11.11%
U.K. 9.08 9.31 11.16% 2.52%
ITALY 3.43 3.62 4.34% 5.45%
FRANCE 8.54 7.58 9.09% -11.25%
HONG KONG 0.31 0.22 0.26% -29.14%
SPAIN 3.07 1.88 2.26% -38.67%
RUSSIA 0.14 0.08 0.09% -45.91%
NETHERLANDS 6.12 5.42 6.50% -11.53%
AUSTRALIA 4.48 5.37 6.44% 19.98%
NEWZEALAND 1.05 1.23 1.48% 17.38%
DENMARK 3.13 2.51 3.01% -19.95%

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 The Indian Leather Industry – The Road Ahead.

GREECE 0.17 0.27 0.32% 59.16%

CANADA 2.45 2.31 2.77% -5.78%
SWITZERLAND 0.27 0.24 0.29% -9.87%
SWEDEN 5.93 5.00 6.00% -15.73%
S. AFRICA 0.58 0.55 0.66% -3.93%
AUSTRIA 0.39 0.35 0.42% -9.62%
BELGIUM 4.67 4.15 4.97% -11.19%
JAPAN 0.16 0.11 0.14% -30.24%
PORTUGAL 0.05 0.06 0.07% 16.65%
CHINA 0.18 0.28 0.34% 56.70%
IRELAND 1.02 0.77 0.92% -25.07%
U.A.E. 0.49 0.40 0.47% -18.93%
INDONESIA 0.00 0.01 0.01% 93.89%
KOREA REP. 0.10 0.06 0.07% -36.51%
FINLAND 1.91 1.03 1.24% -46.12%
SAUDI ARABIA 0.10 0.17 0.21% 67.50%
OTHERS 3.34 2.34 2.80% -29.98%
TOTAL 92.15 83.39 100.00% -9.51%

STRENGTHS OF INDIAN LEATHER INDUSTRY

 Own raw material source – 2 billion sq ft of leather produced annually

 Some varieties of goat / calf / sheep skins command premium position
 Strong and eco-sustainable tanning base
 Modernized manufacturing units
 Trained / skilled manpower at competitive wage levels
 World-class institutional support for Design & Product Development, HRD and
Research & Development.        
 Presence of support industries like leather chemicals and finishing auxiliaries 
 Presence in major markets – Long Europe experience
 Strategic location in the Asian landmass

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 The Indian Leather Industry – The Road Ahead.

 Preferred sourcing center of several international brands including 100% FDI,

Duty free raw material imports, simplified import-export procedures etc.
 ISO certified leather companies with modern eco-conscious manufacturing.

Emerging strengths

 Design development initiatives by institutions and individuals

 Continuous modernization and technology upgradation
 Economic size of manufacturing units
 Constant human resource development programme to enhance productivity
 Increasing use of quality components
 Shorter prototype development time
 Delivery compliance
 Growing domestic market for footwear and leather articles
 India’s export of leather and leather years products for five

(Value in Million US$)

CATEGORIES 2005-06 2006-07 2007-08 2008-09
Finished Leather 636.27 724.00 807.19 673.37
Footwear 1045.24 1236.91 1489.35 1534.32
Leather Garments 333.30 309.91 345.34 426.17
Leather Goods 660.17 706.28 800.46 873.44
Saddlery & Harness 77.52 82.33 106.18 92.15
2752.50 3059.43 3548.51 3599.46
% Growth 10.30% 11.15% 15.99% 1.44%

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 The Indian Leather Industry – The Road Ahead.

India’s Leather & Leather Products Export Basket (2009-10)

Country-wise share in Total Leather & Leather Products Exports from India
(2009-10)

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 The Indian Leather Industry – The Road Ahead.

Major Markets:
 The major markets for Indian leather products are  Germany with a share of
14.45%, UK 13.41%, Italy 11.72%, USA 8.71%, Hong Kong 7.35%, France 7.53%,
Spain 6.43%, Netherlands 4.03%, Belgium 1.92%, U.A.E.2.03% and Australia
1.58% These 11 countries together accounts for nearly 79.16% of India’s total
leather products export.
 India’s Import of Raw Hides & Skins and Leather
 Country-wise export of leather & leather products – 5 year

MARKET DYNAMICS

Marketing of leather and leather products in Germany & the EU

The leather sector offers a good potential which Indian entrepreneurs can exploit
in Germany and other EU markets characterized by ever growing competitiveness
in terms of price and quality, on one hand, and the environmental considerations,
on the other. With a strong foothold that the Indian leather industry has had for
long in these markets, and its advantage of raw material and labour resources,
Indian leather exporters can, and should, mount a concerted marketing campaign
to wrest a share consistent with their inherent strength and potential.

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 The Indian Leather Industry – The Road Ahead.

This has to be done against the background of the well-known salient

features of the German market: 

 The world's second largest import and export market

 A difficult buyers' market with hyper competition and high expectations
 A dynamic multi-faceted market with rapid technological development and
innovations A market where a considerable amount of buying power is devoted
to satisfying individual needs
 A market influenced by the rising average age of the population and low birth
rate
 A market where environment awareness and eco-friendly production becomes
more and more a pre-requisite for successful marketing of products

Top ten Indian leather exporters

 Tata International Ltd.

 Florind Shoes Ltd.
 Punihani International
 Farida Shoes Ltd.
 Mirza Tanners Ltd.
 T. Abdul Wahid & Company
 Hindustan Lever Ltd.
 Super House Leather Ltd.

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 The Indian Leather Industry – The Road Ahead.

 RSL Industries Ltd.

 Presidency Kid Leather Ltd.

Raw material
 Leather is produced from cattle, buffaloes, goats & sheep or in
combination
 India has a large raw material base. India has 10% of world’s raw material
but only 4% of the world trade

Production
 India has a tanning and finishing capacity for processing 192 million prices
of hides & skins
 Nearly 60-65% of the production is in the small scale cottage sector
 Manufacture of leather delicensed since 1993

Imports
 Imports comprise mainly of hides and skins, semi finished and finished
leather.
 Product imports low.
 Imports of leather was around US $ 140 mn
 Products attract a duty of 40% basic import duty, CVD of 16% and SAD of
4%

LEATHER GARMENTS – INDUSTRY SCENARIO

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 The Indian Leather Industry – The Road Ahead.

Products

 Jerkins / Jackets / Blouses

 Vests
 Skirts
 Trousers
 Over coats
 Outerwear & sports wear

Industry

 Rs. 1650 crore (US $ 385 mn.) market

 Organized sector activity low
 Small scale sector accounts for over 90% of the production

Production

 Jerkins & Jackets account for 40% of the production

 All work primarily done in house (80%);  Job work around 8%

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MAJOR PRODUCT CATEGORIES MAJOR PRODUCTION CENTERS

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 The Indian Leather Industry – The Road Ahead.

Players

 Tata International
 Namaste Exports
 Bhartiya International
 I F D Autoliv India
 Goetze (India)
 Mideast (India)
 Worldwide Leather Exports
 Ram Leather Exports
 Alp Exports
 Strauss Industries & Exports, etc.

MARKET CHARACTERISTICS

Customer Segments

 96% of the total production is exported

 Germany a major importer accounts for 27% of the total exports
 Customers becoming more fashion conscious - new designs driving the market

Market

 No major brands in the domestic market

 Importers insist on their own brands
 Over capacity in the industry currently

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 The Indian Leather Industry – The Road Ahead.

Sales

 Leather garments sold primarily  through retail outlets & footpath shops in India.
No organized channel for sales in domestic market
 Highly competitive market
 Demand for leather goods seasonal
 Seasonal variations in prices high

BUSINESS CONCERNS

Key Success factors

 Need  to develop international quality products

 Exports a major market,  hence need to focus on export markets
 Need to be in tune with changing fashion trends
 Brand building currently a neglected area, hence need to focus on building image
in the market
 Small scale sector activity high, hence quality not the best
 Working capital intensive
 Need for improvement in design standards
 Environment pollution control norms affecting smaller players
 Productivity also a concern area
 Branded products associated with high prices

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 The Indian Leather Industry – The Road Ahead.

SLOW DOWN IN LEATHER INDUSTRY

With a direct employment of 2, 50, 000 (with 27% of them being Women),
turnover of Rs 15,200 Crores and an export earnings of Rs 1500 Crore, leather
and leather goods industry is a significant driver of economic growth. Footwear is
the major segment of the leather goods market and constitutes about 1400
Crores. The industry is labour intensive and is concentrated in the small and
cottage industry sectors. The country produces over two billion pairs of different
categories of footwear and nearly 95 percent of its production goes to meet its
own domestic demand. The major production centers of leather and leather
products are located at Chennai, Ambur, Ranipet, Vaniyambadi, Trichy, Tamil
Nadu, with Tamil Nadu is the biggest leather exporter (40%) of the country and
its share in India’s output on leather products is 70%. While leather shoes and
uppers are concentrated in large scale units, the sandals and chappals are
produced in the household and cottage sector. More than 4000 units are
engaged in manufacturing, of which 95% are SME. India’s share in the global
footwear imports is around 1.4%, and with world’s largest livestock stock, India’s
export is to reach 10%. About 46 per cent of the production in the leather sector
is exported to other countries. The major markets for Indian leather products are
Germany, Italy, UK, and USA. Other destinations such as Hong Kong, Spain,
France, Netherlands, UAE and Australia act as trade hubs.

Global recession had a major impact on the industry, in terms of revenue fall and
markets. Exports dipped by 11% and SME’s that were primarily into semi-finished
leather processing saw a dip over 30% in their revenues. Exports to Germany, UK,
and USA, the three major exports markets saw a fall of 17%. With the collapse of

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 The Indian Leather Industry – The Road Ahead.

traditional Germany and UK market, SME were expecting Dubai to bail them out.
However, that did not happen. Cheaper alternate markets such as Russia, Eastern
Europe with lower gross margins emerged to fill in the coffers.

Central Government announced Stimulus package offering the following to

leather industry:

 2% interest subvention scheme for leather sector continued till 31st

March 2010,
 Duty emissions for Duty Entitlement Pass Book Scheme (DPEB) scheme,
 Removal of FBT,
 Service tax exemptions for ‘Transport of goods through road’ and 
 ‘Commission paid to foreign agents’ instead of going through refund route.

SME’s we analyzed had benefited little from the stimulus package. Duty
Entitlement Passbook Scheme (DEPB) for duty emissions did not have any impact
as most of the SME’s avail the Duty Drawback Scheme. With buyers delaying
fresh orders and payments getting delayed, the credit ratings of the SME’s
suffered and hence their likelihood of accessing the MSME Credit. On the market
development side, the MDA assistance available to exporters with turnover up to
Rs 15 Crores and for only three participants per fair, limits the exposure to a small
percentage of the SME community. Our estimates of the incremental credit
support to leather industry are around Rs 120 Crore, clearly quite inadequate for
the industry.
Slowdown had brought four significant learning. First, the need to diversify and
expand in order to stay competitive in the market and explore domestic market.
The leather SME’s needs to exploit opportunities for leather products in countries
such as Russia and New Zealand which has huge potential for value add products

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like gloves, saddler and leather clothing this can enable the SME’s to grow at a
faster rate with better global reach. Opportunities in countries such as Russia
(primarily imports from Turkey), Argentina, and Brazil with no manufacturing
base were targeted more aggressively. Vaniyambadi and Agra based SME’s also
discovered Japan as a profitable destination for low quality leather products.

Secondly, focus on domestic market beyond semi-finished leather and uppers.

Retail footwear segment in Indian is very price sensitive and has been steadily
growing over the year. Major part of the demand is met by the unorganized
sector and still there is a shortfall of 300 million pairs. Branded shoe market only
account for 20% of the entire market. While international brands largely
dominate the higher end of the spectrum, the lower end of the market is
dominated by home-grown players as well as unorganized players. While men's
footwear is the biggest target category (contributing almost 48%), children's
(11%) and women's lifestyle footwear (41%) is not behind in the race. From a
price perspective the market consists of four primary segments: less than
$3(about 19%), $3-$8 (46%), $9-$16(41%), and >$16(4%). While an average
Indian male purchase 3 shoes per annum, the second gender purchases an
average 6 pairs per annum. Store format targeting women and children is an
unexplored area in retail footwear market.
With organized retail on the rise and increase in the disposable income retailing
certainly looks a promising option. Domestic footwear retail business witnessed a
shift in channels too. With large volume brands sales remaining at high streets,
and mid segment customers preferring to purchase shoe and other accessories in
tandem with clothes, some of the retailers were reworking their presence. For
example, M&B footwear does high street retailing through multi-brand outlets
and discounts retail chain stores, prefers Malls to position international retail

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chain stores (sale of international brands such as Lee, Provogue, etc). Domestic
brands moved beyond regional markets and were embarking pan-India presence.
From a primarily NCR player, Mahtani Fashion, an aggressive shoe retailer who
owns Vi-Ga has plans to build a national presence. Domestic brands were
realizing the limits to growth by pursuing own store format and switching over to
franchise formats to tap markets such as Patna, Ranchi, Vizag, Raipur, etc.
Expansion into sub-brands such as sportswear, kids and women were the steps
the domestic brands expected to pursue in future. Domestic Tier-II market (semi-
rural) with high support crop prices and loan waivers had seen growth over 30%.
According to the National Council of Applied Economic Research (NCAER) reports,
there are 720 million consumers across 6,27,000 villages in rural India. Led by the
rising purchasing power, changing consumption patterns, the rural market (semi-
urban) which constitutes about 32% showed a growth rate of 17%.
Thirdly, moving up the value chain from just suppliers of semi-finished leather
and expansion into retail helps to grow revenues even in difficult times. SGL
leathers increased their gross margins with introduction of Bags, Wallets and
Leather Accessories. SME’s focused more emphatically on institutional sales.
Local players such as Damask, SS and other also found safety shoes for industrial
use a niche segment where margins are better than in the wholesale business.
Finally, branding does pay off. Even in price sensitive markets, Customers prefer
to buy brands they can relate and trust. Marsons India (known for leather
jackets) and Stylo (leather bags) held on to their margins in European markets
because of their branding efforts.
The recessionary period has been a great teacher. It taught SME’s to seek out
opportunities in moments of challenge.

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MOST INFLUENTIAL BUSSINESS HOUSES

I. MIRZA INTERNATIONAL

Mirza’s journey began in the year 1979 with a small tannery for manufacturing
finished leather at Magarwara near Kanpur. The company, established by Mr.
Irshad Mirza and Mr. Rashid Mirza, was then called ‘Mirza Tanners Private
Limited’.

The company focused on supplying high quality leather and leather products to
the overseas markets and gradually became one of the largest exporters of
finished leather in the country.

During this phase, Mirza took a significant leap, by venturing into newer areas
which were extensions of its existing competencies. The global shoe market was
then looking upon outsourcing of leather footwear in a big way. To take
advantage of this opportunity, Mirza diversified into manufacturing of shoes.
Very swiftly, four state-of-the-art manufacturing units were setup at Unnao and
Noida.

Having made a foothold in the footwear business, Mirza quickly reorganized itself
by setting up In-house Design and Development studios, Marketing offices and a
strong Distribution and Logistics network. After successfully reorganizing itself,
Mirza moved a step ahead of others by launching its own brands ‘Red Tape’ and
‘Oaktrak’.

Having firmly established its product lines and market geographies, the company
spread its wings to several other countries through its marketing companies and

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networking associates. Some of countries where Mirza has a significant presence

are U.K., Portugal, South Africa, USA, Germany, France, Scandinavian Countries
and UAE.

Today, Red Tape has emerged as the one of the most stylish lifestyle brands
available.  Through growing scale of operations, the brand has reached markets
in USA, U.K., Canada, France, Germany, Belgium, Holland, South Africa, Australia,
New Zealand, South East Asia and the Middle East.

At, Mirza International Limited, delivering quality is of paramount importance

across processes. We consistently aim to deliver world-class quality to our clients
and end users.

 We are an ISO 9001,9002,14000 certified company

 Satra guidelines are followed for quality check of shoes

 All our units have in house laboratories for testing of raw materials and finished
products
 Regular Inspection of intermediate products is carried out at various ancillary
units to maintain quality of end product
 Batch wise quality inspection of finished products is undertaken

Plans for Existing Brands

 To extend the Red Tape brand umbrella into an overall lifestyle brand for men’s
products sold through one stop men’s wear stores.
 To become a major player in ladies footwear segment by further strengthening
it’s newly launched footwear line for women.

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Plans for Retailing

 To remodel all Red Tape retail stores operated on a franchise basis to sell all
men’s products including garments, personal care products, sun glasses and
other accessories like belts, wallets and socks in addition to shoes.
 To increase the number of Red Tape stores from 35 to 100 by year 2010.

Plans for Product Line Expansion

 To diversify into Hi-fashion sports and casual shoes

 To diversify into automotive leather business
 To increase presence in new markets like Germany, France and USA

Plans for Capacity Expansion

 9 million pairs of shoes per annum by the year 2010.

 To set up a new manufacturing plant at Kanpur, with a capacity of 1.5-2 million
pairs of shoes per annum.
 To schedule 6 units with a capacity of 1 million pairs each, in stages within a
single complex.
 To dedicate individual units to large buyers.

II. SUPERHOUSE LIMITED

History

Superhouse Group is a conglomeration of several companies engaged in

manufacturing and export of finished leather, leather products and textile
garments. The parent company, Aminsons Leather Finishers Pvt., was
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incorporated as private limited company on January 14, 1980. It was converted

into a public limited company on December 22, 1984 and its name changed to
Aminsons Limited on February 21,1989. In addition, five group companies - Super
House Limited, Super Garments Limited, Sharp Leathers Limited, Super Footwear
Limited and Allen Shoes Limited - were merged with Aminsons Limited in 1994,
1995 and 1996 as per the orders of the Hon’ble High Court of Judicature,
Allahabad. The name of the company was changed to Superhouse Leathers
Limited on March 4,1996 and finally Superhouse Limited on November10, 2006
with the approval of the Registrar of Companies, Kanpur (U.P.).

From a single tannery in the 1980’s producing finished leather, Superhouse

Group has emerged as one of the largest players in the industry. We started with
a commitment to excel, achieve and deliver the very best. Towards this end, we
engineer, optimize and control every phase of the manufacturing process from
raw material to finished products to ensure that end products are of the highest
quality and also the best value for money for our clients.

Group have four overseas companies in the UK, the U.S.A., the U.A.E. and
Romania, primarily engaged in marketing and distribution of leather, leather
products and textile garments.

 The group has crossed an annual turnover of Rs. 4,000 million.

 The Group has 15 manufacturing units located in Kanpur, Unnao, Agra and Noida

Vision and Mission

 The last three decades have been dedicated to building strong foundations for
Superhouse brick by brick: from infrastructure to technology, from solid
relationships with employees to market acceptance.

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 We are now poised to take the next giant leap – to establish ourselves as the
undisputed leader in leather products be it footwear or finished leather or
leather accessories.
 Retaining our leadership through growth as a consequence of customer
satisfaction is of paramount important to us.
 To achieve our vision, the framework for quality inputs and , processes is in place,
and is constantly monitored and upgraded.
 Superhouse Group aims to constantly improve the quality of its products by
fulfilling its customers’ expectations.

III. LAKHANI INDIA LIMITED

The patriarch started this commendable journey in 1966 with the inception of
Lakhani Rubber Works, a small venture to manufacture rubbercomponents. His
hardship and commitment made Lakhani Rubber Works an acclaimed name in
the industry. Eight years later, he expanded his vision further when the group
diversified into the manufacturing of Beach Slippers and that signaled a new
dawn in the history of Indian Shoe Industry. And three years later, the Canvas
Shoes followed.

His endeavor and systematic approach helped the group expanding its horizons
to sports shoes manufacturing in the year 1982. This never ending saga of success
continued with their tie-up with Adidas India for the manufacturing of sports
shoes. Present today, the group is the largest manufacturer of beach slippers in
India with a production capacity of 40 million pairs per year. Also, it is the largest
manufacturer & largest exporter of canvas and vulcanized shoes in India, with a
production capacity of 3.5 million pairs per year.

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Lakhani Armaan group is the largest producer of Sports Shoes, PU Injected Sports
Shoes, PVC Injected Sports Shoes and Leather Shoes with a total capacity of 5.4
million pairs per year. It also manufactures high fashion ladies and gents leather
shoes for the European Union Market.

The eminence of the company, in the International Footwear Industry, is

apparent from the fact that it has been manufacturing sports shoes for the global
sports apparel manufacturing giant, Adidas.

For over 80 years the Adidas Group has been part of the world of sports on every
level, delivering state-of-the-art sports footwear, apparel and accessories. Today,
the Adidas Group is a global leader in the sporting goods industry and offers a
broad portfolio of products.

Lakhani Armaan group has been manufacturing sports shoes for Adidas for the
last 10 years and it is the only suppliers in India. The group is manufacturing more
than 1 million pairs per year for the brand Adidas including all the latest high tech
shoes.

Beside this, the group also has the distinction of being the largest suppliers of
rubberized auto components to major automobile players in the Indian market.
Year of tracking key industries extensive experience and knowledge coupled with
primary research has enabled the group to deliver specified products to their
customer.

IV. BATA

Bata India is the largest retailer and leading manufacturer of footwear in India
and is a part of the Bata Shoe Organization.

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Incorporated as Bata Shoe Company Private Limited in 1931, the company was
set up initially as a small operation in Konnagar (near Calcutta) in 1932. In January
1934, the foundation stone for the first building of Bata’s operation - now called
the Bata. In the years that followed, the overall site was doubled in area. This
township is popularly known as Batanagar. It was also the first manufacturing
facility in the Indian shoe industry to receive the ISO: 9001 certification.

The Company went public in 1973 when it changed its name to Bata India
Limited. Today, Bata India has established itself as India’s largest footwear
retailer. Its retail network of over 1200 stores gives it a reach / coverage that no
other footwear company can match. The stores are present in good locations and
can be found in all the metros, mini-metros and towns

Bata’s smart looking new stores supported by a range of better quality products
are aimed at offering a superior shopping experience to its customers.The
Company also operates a large non retail distribution network through its urban
wholesale division and caters to millions of customers through over 30,000
dealers.

Our Values

 Constant innovation in design and product development

 Superior customer service

 Excellence in operational and commercial execution

 Entrepreneurial spirit and passion to win

 Teamwork in international environment

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 Trust and respect for our employees

 Adding value to the community

 Delivering on our commitment to shareholders

VIOLATION BY INDIAN LEATHER INDUSTRY

Leather can be made from cows, pigs, goats, and sheep; exotic animals such as
alligators, ostriches, and kangaroos; and even dogs and cats, who are slaughtered
for their meat and skin in China, which exports their skins around the world.
Because leather is normally not labeled, you never really know where (or whom)
it came from.

Most leather comes from developing countries such as India and China, where
animal welfare laws are either non-existent or not enforced. In India, a PETA
investigation found that workers break cows' tails and rub chili peppers and
tobacco into their eyes in order to force them to get up and walk after they
collapse from exhaustion on the way to the slaughterhouse.

In the U.S., many of the millions of cows and other animals who are killed for
their skin endure the horrors of factory farming—extreme crowding and
deprivation as well as castration, branding, tail-docking, and dehorning—all
without any painkillers. At slaughterhouses, animals routinely have their throats
cut and are skinned and dismembered while they are still conscious. Most leather
comes from cows raised for both beef and milk. Cows raised for beef spend most
of their lives on extremely crowded feedlots. Studies have found that ranchers
maximize profits by giving each steer less than 20 square feet of living space—the
equivalent of putting 12 half-ton steers in a typical American bedroom! 
The animals are subjected to painful procedures such as castration, branding

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(which causes third-degree burns), tail-docking, and dehorning—all without

painkillers. They are deprived of veterinary care and exposed to the elements
without any shelter. These breathing, thinking, feeling beings, who feel pain just
as humans do, suffer immensely. They are also fed a steady diet of hormones to
fatten them and antibiotics to keep them alive in extremely poor living
conditions. 

At the end of their short, dismal lives, cows are jam-packed into metal trucks,
where, confused and terrified, they suffer from injury, weather extremes,
crowded conditions, hunger, and thirst. In the winter, cows routinely arrive for
slaughter frozen to the sides of transport trucks, frozen to truck bottoms in their
own feces and urine, and injured or dead from the journey. 
Frequently collapsing during their hellish ride, many cows arrive at the
slaughterhouse unable to walk out of the back of the transport truck, so they are
dragged off the truck with chains—often breaking bones when they hit the
ground. 

Every year, tens of millions of cows are stunned, hung upside-down, bled to
death, and skinned in slaughterhouses. The federal Humane Slaughter Act
stipulates that cows should be stunned by a mechanical blow to the head and
rendered unconscious before they are strung up, but the high speed of the
assembly lines—which often process up to 400 cows per hour—often results in
improper stunning. Each year, millions of cows are skinned and dismembered
while they are still kicking and crying out in terror.
Buying leather directly contributes to factory farms and slaughterhouses because
skin is the most economically important byproduct of the meat industry.

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ENVIRONMENTAL HAZARDS DUE TO LEATHER INDUATRY

Arising animals for food and leather requires huge amounts of feed, pastureland,
water, and fossil fuels. Animals on factory farms produce 130 times as much
excrement as the entire human population, without the benefit of waste
treatment plants. The U.S. Environmental Protection Agency (EPA) has even
acknowledged that livestock pollution is the greatest threat to our waterways.

Although some leather makers deceptively tout their products as "eco-friendly,"

turning skin into leather also requires massive amounts of energy and dangerous
chemicals, including mineral salts, formaldehyde, coal-tar derivatives, and various
oils, dyes, and finishes, some of them cyanide-based. Most leather produced in
the U.S. is chrome-tanned; all wastes containing chromium are considered
hazardous by the EPA.

Tannery effluent contains large amounts of pollutants, such as salt, lime sludge,
sulfides, and acids. The process of tanning stabilizes the collagen or protein fibers
in skins so that they actually stop biodegrading—otherwise the leather would rot
right off your feet.

People who work in and live near tanneries suffer too. Many die from cancer
possibly caused by exposure to toxic chemicals used to process and dye the
leather. The Centers for Disease Control and Prevention found that the incidence

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of leukemia among residents in an area near one tannery in Kentucky was five
times the U.S. average.

Arsenic, a common tannery chemical, has long been associated with lung cancer
in workers who are exposed to it on a regular basis. Studies of leather-tannery
workers in Sweden and Italy found cancer risks "between 20% and 50% above
[those] expected."

Additionally, raising the animals whose skin eventually becomes leather requires
vast quantities of water and wide tracts of pastureland, which must be cleared of
trees. Runoff from feedlots and dairy farms also creates a major source of water
pollution. Huge amounts of fossil fuels are consumed in livestock production as
well; by contrast, plastic wearables account for only a fraction of the petroleum
used in the U.S.

The production of leather hurts animals, the environment, and the workers who
manufacture it. The only ones who benefit are people who profit from the misery
and suffering of others.

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COMPETITIVE ADVANTAGES

The leather industry can benefit from several characteristics of the Indian market
and the corresponding advantage they offer. Some of these advantages .are

Supply Advantages

Availability of low cost labour India’s advantages as a source of low cost skilled
labour is quite relevant to industries such as manufacturing of leather goods and
footwear that are relatively labour intensive . India has among the lowest cost of
labour among key footwear producing countries. In addition to low costs, India
also has the world’s largest technically trained manpower in leather craft. The
twins advantages of low cost and technical skill offer India a Marketing channels.

The emerging trend in Germany has been towards direct imports. The other
noteworthy feature is the integration of retailing and manufacturing, particularly
for the footwear sector. This has led to increased emphasis on distribution
aspects of business. Other distributors, like departmental stores, mail order
houses, super markets and non-leather shops have also gained importance. Many
outlets get direct supplies either from the manufacturers and importers or from
wholesalers and buying associations (Einkaufs- Verband, etc.).

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These developments necessitate the marketing strategies to be attuned to the

specifics of the different channels, keeping in sharp focus the changes taking
place in the distribution pattern of chain stores, retailers, discounters, etc.

The strategy should focus on a structural approach to the promotion of export of

leather products from India. This must include market information for exploring
new markets, participation in different international trade fairs, organizing trade
delegations, organizing buyer-seller meets, liaisoning with the representatives of
the buying houses, etc.

For the successful marketing of their products, the Indian exporters should aim
for long lasting trade relations based on stable partnerships. In such a context,
the German importer needs to be viewed as much more than only a buyer and
distributor. He would normally take care of the timely development of the
samples and collections through fashion and design information and also by
employing pattern makers and designers. In addition, he would organize
advertising and PR activities, besides holding sufficient stocks.

Environmental aspects for leather products

Manufacturers who produce environmentally sound products will enjoy a

competitive advantage in all business relations with EU in general and Germany in
particular. The pitch has to be to successfully emphasise the environmental
soundness of the product in the information to the buyers since major attention is
being paid to the increasing role of the environmental regulations. Therefore, the
manufacturers have to view their products and production processes not just by
looking at traditional aspects like price, quality, customer demands, etc. but also at
the environment. Environmentally sound production, consequently, opens new
market opportunities. The regulations concerning the ban on the use of Azo Dyes
and PCP need to be specially taken care of. Use of both these inputs has been

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banned due to their carcinogenic nature. Likewise, for compliance with the German
packing regulations, Indian suppliers have to stick to the basic principle that
packaging material be reusable and recyclable. Consumers may have a tendency to
choose products, which are easily recognizable as such and are labeled according to
legal stipulations. The hallmark for these environment-friendly products is normally
referred to as ‘ECO-LABEL’. This indicates that the product is manufactured in
consonance with the environmental regulations.

SWOT ANALYSIS OF THE INDIAN LEATHER INDUSTRY

Strengths
 High Growth
 Ready availability of highly skilled
and cheap manpower
 Large raw material base
 Policy initiatives taken by the
Government
 Capability to assimilate new
technologies and handle large
projects
 Continuous emphasis on product
development and design up
gradation Threats
 Major part of the industry is
Opportunities unorganized
 Limited scope for mobilizing
 Rising potential in the domestic funds through private
market placements and public issues
 Growing fashion consciousness (many businesses are family-
globally owned)
 Use of information technology and  Difficulty in obtaining bank loans
resulting in high cost of private
decision support software to help
borrowing
eliminate the length of the
 Stricter international standards
production cycle for different  High competition from East
products European countries and other
 Use of e-commerce in direct Asian countries
marketing  Lack of communication facilities
and skills

Weaknesses
 Lack of warehousing support from
the government

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 International price fluctuation

 Huge labour force resulting in high
labour charges
 Lack of strong presence in the
global fashion market
 Unawareness of international
standards by many players

RAW MATERIAL

The cows and buffalo constitute the principal animals of leather industry. The
skin of cow is commonly called "kips" and those of the buffaloes as "buffs". 
There is a great demand for the hides and skins in the world market. The skin and
hides of cattle are subjected to a long and complicated process to obtain leather
from them. 

The major processing of the skin industry includes flaying, curing, salting and
tanning. The tanning of skin is an ancient art of India and the various operations
involved fall into the categories are pre tanning, tanning and post tanning. 

After a number of these steps, market quality leather will be ready for world
market. Since the livestock population in India is comparatively very large, the
production and status of skin and hide industries are also one of the highest in
the world. Kanpur is one of the leading leather and leather goods producing
centers in India. In Karnataka, Mysore chrome tanneries (MCT) are situated in
Bangalore. Scientists at the central leather research institute(CLRI), Chennai are
engaged in improving the quality of leather by the application of latest technique

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of leather processing. 

After proper tanning the skin of cattle is being extensively used in the preparation
of shoes, purses, belts, drums and also cloths. 

AVAILABILITY OF SUPPORTING INSTITUIONS

India has institutions that support the leather industry in specific areas such as
product development design and R&D. These intuitions enable capability building
the industry and help it become globally competitive.

 Product Development / Design

A design development centre for leather for leather garments and leather
accessories is underway under the joint efforts of the Council for Leather Exports
and the National Institute of Fashion Technology (NIFT). The design development
centre functions from the NIFT campus in New Delhi.

 Research and development capabilities

The Centre Leather Research Institute (CLRI) (id the world’s largest leather
Research Institute. CLRI today, is a central hub in Indian leather sector with direct
roles in education, research, training , testing, designing, forecasting, planning,
social empowerment and leading in science and technology recreating to leather.
State-of-art facilities in CLRI support in leather processing, creative designing of

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leather products and development of novel environment of novel environment

technologies for the leather sector.

 Regulatory and Policy related Advantages

The government of India has announced various to make the initiatives to make the
leather industry more competitive. Key policy initiatives to make the leather industry
more competitive. Key policy inactivates include:

1. De-licensing of integrated tanneries that convert raw hides and skins into
finished leather.
2. Several leather goods have been de-reserved from the Small Scale sector.
3. Free imports of raw hides & skins, semi-finished and finished leather.
4. Concessional duty on Imported Machinery and Chemicals.
5. Free export of raw hides & skins, semi-finished and finished leather and
leather products.
6. Establishment of design centre’s at individual manufacturing units, to
facilitate improvement in design capabilities: Under this scheme, 25 per cent
of the project is provided to the units under the market access initiative
scheme of Ministry. Several individual units have come forward to establish
their own design centers..

LEATHER EXPORTS

In order to get overall patterns of exports and imports we use the HS system of date
for the sub-groups

 HS41-Raw hides and skins (other than fur –skins) and leathers
 HS42- Articles of leather, animal gut, harness and travel goods
 HS43- Fur-skins and artificial fur, manufactures thereof
 HS64- footwear and artificial fur , parts thereof.
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 HS41 lumps together hides and skins and different kinds of leather. Using the
USND data we could separate hides and skins from leather, but not different
kinds of leather. These were the statistics for 2009.

China was the largest exporter with a global share of 35.7% followed by Italy 11.8%
and US 3.33%. USA derived 45.2% of the export earnings from hides and skins and
23.6% from leather. In general, the shares of hides and skins exports in the total
exports were smaller for developing countries (the major exception being Mexico)
than for developed countries. Argentina and Brazil earned more than half of the
export earnings from leather. Even developed countries such as USA, Germany, UK
and Italy, because of their access to cleaner technologies and production of high
value-added products.

While it is generally true that there has been a shift in production of leather and
leather products from developed to developing countries because of high
environmental compliance costs and high labour costs in developed countries , there
are a few exceptions .Italy, Spain and Belgium have significant market shares in the
world exports of leather goods. Hence , differences in raw material suppliers ,
access to environment-friendly technologies, and capability to anticipate and adjust
to changing consumer demands ,do influence the production and trade patterns.

The Far East overtook Latin America as the main exporter of light bovine leather and
remained the main exporter of sheep and goat leather from developing countries.
Developed countries, mainly Europe and North America increased shipments of
leather of all types of hides and skins.

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FUTURE OF THE INDIAN LEATHER INDUSTRY

 Industry expected to grow over 18%

 Exports will to continue to be a focus area.
 Domestic market hitherto a neglected area offers good prospects.
 Need to be in tune with changing fashion trends
 Need to develop international quality products.
 The world trade in leather products is growing in view of the increasing demand
for products made for leather.
 Development of efficient Marketing Channels.
 Brand building currently a neglected area ,hence need to focus on building image
in the market.
 The domestic demand is also expected to rise with the growing GDP, and
consumption patten particularly for products like footwear, leather .
 The developed countries have lost the competitiveness and they depend on
imports for meeting their requirements from developing countries like India.
 The leather sector in India is fully geared to meet the higher end consumer
markets by upgrading technology and machinery.
 The Government of India plays proactive role o enhance export of leather
products considering the industry’s inherent strengths and prospects.

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BUSINESS CONCERNS

 Small-scale sector activity high, hence quality should be at the best.

 Working capital intensive.
 Need for improvement in design standards.
 Productivity also a concern area.
 Environment pollution control norms affecting smaller players.
 Branded products associated with high prices.

DEMAND DRIVERES

 Demand from European & North American markets

 Also driven by fashion trends in the industry
 Government initiatives will drive this sector further to a bright and promising
future .
 Focus on R&D.
 Building Strong Indian brands & making their presence felt overseas.

COMPLIANCE WITH THE GLOBAL REQUIREMENTS

The production, use and marketing of PCP have been banned in India. Chemical
manufacturers use other alternatives now. The CLRI in collaboration with the
Indo-German Export Promotion Project has set up special testing equipment at
six different centers. The manufacture, storage and imports of azo dyes was
banned in India according to a Gazette Notification on March 26, 1997. Substitute
chemicals are available. Testing laboration have been been set up in
collaboration with SATRA of UK at the CLRI and in the Footwear design and
development institute in Noida in collaboration with Bally Shoes of Switzerland

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and Formaldehyde. Even though chromium 4 is generally not used in leather

making, under some process conditions chromium 3 gets converted to chrome 4.
The tanners have been warned to be careful. As for AOX, many chemical
companies have started eliminating halogens in fat liquor as far as possible.

Indian leather manufacturers import substitute chemicals from companies in

Europe and USA or buy from 50 leather chemical companies located in India
Some prefer imports even though it involves payment of import duty of about 45
percent in order to impart required physical properties in the products. Even
though our policy has been reactive, India has been able to meet the
environmental requirement of the EU. The Ministries Of Environment and
forests and Commerce and Industry, the CLRI, the CLE the industry associations
and the leather magazines have played important role in informing the tanners
and leather manufacturers about the global environmental requirements and
manufacturers about the global environmental requirements.

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CONCLUSION –THE BOOMING LEATHER INDUTRY

Leather enriches our lives in numerous pleasant ways. The belts and shoes
that we wear and the wallets and purses that we carry are made of leather.
In the developed countries, almost all of which are located in the frigid
North leather jackets, trousers and suits have long become a status symbol;
also leather seat covers available only in top-of-the-line luxury cars add
luxury.

Leather has long outgrown its practical purposes and today is regarded
more as a luxury than necessity in the affluent West. This transformation
has been made possible thickness, unlimited colour variations, luxurious
feel and silky touch. This has also turned leather into as comfortable a
material to work with as other fabric for any or all of the uses mentioned
above.

Indian leather industry occupies a place of prominence in Indian economy.

The sectors has massive potential for growth since India leads in the
availability of raw materials and also the use of leather is gaining

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prominence in many sectors and its vast potential for exports. The
availability of cheap labour is another factor, which is in its favour.

Leather industry also occupies a place of prominence in view of its massive

potential for employment, growth and exports. There has been increasing
emphasis in its planned development, aimed at optimum utilization of
available raw materials for maximizing the returns, particularly from
exports.

Leather technology in recent times is fast emerging as a lucrative career

option. Until a few years ago, those who happened to be in the formal
training. But now, in India, scores of institute are offering certificate as well
as diploma courses in designing as well as production.

MARKET

The Indian leather industry is growing by leaps and bounds. One must be
wondering why India is exporting so much of leather to western countries.
Apparently because leather wear still enjoys a great demand abroad and of
late even the domestic market is developing and consuming the offerings of
this industry.

To many, it would also be a surprise to know that the Indian leather

industry is the fourth largest export earner in the country. One can only
imagine what shape this industry will take on further maturing.

There has been increasing emphasis on the planned development of th

leather and footwear industry aimed at optimums utilization of available
raw materials for maximizing the returns, particularly from exports. The

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exports of leather and leather products gained momentum during the past
decades. The exports from leather sectors constitute 7% in country’s
exports. With the scientific advancement in footwear technology and
modernization of techniques, designers, all of a high caliber to optimize and
upgrade our production to meet international standards. There is an ever
increasing demand for these trained personnel.

VISION AHEAD

National Manufacturing Competitive Council (NMCC) has recognized the

role and importance of leather sector in employment generation and
dramatic results for the country in the next seven years. There is National
Programme which will develop the leather industry with all safeguards. A
technology led growth of the sector is the path ahead. Synergy of all agents
of change in effecting a planned development of the sector based on
technology leadership, progressive policies, collective wisdom and effort in
an India manner is visible. The Industry has begun Season 2010 - 2011 well

and THE BEST IS YET TO COME!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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