Indian Leather Industry

Indian 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 utilisation of available raw materials for maximising 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.69558 million in 1996-97. Indian leather industry today has attained well merited recognition in international markets besides occupying a prominent 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 globalisation 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. The estimated employment in different sectors of leather industry is as follows:

Sector Total Employment

Flaying, curing & Carcass Recovery 8,00,000

Tanning & Finishing 1,25,000

Full Shoe 1,75,000

Shoe Uppers 75,000

Chappals & Sandals 4,50,000

Leather Goods & Garments 1,50,000

Structure of the industry

The leather industry is spread in different segments, namely, tanning & finishing, footwear & footwear components, leather garments, leather goods including saddlery & harness, etc. The estimated production capacity in different segments is as under

Product Capacity

Leather

Hides 64 million pieces

Skins 166 million pieces

Footwear & Footwear Components

a) Shoes 100 million pairs

b) Leather shoe uppers 78 million pairs

c) Non-leather shoes/chappals etc 125 million pairs

Leather Garments 6 million pieces

Leather Products 70 million pieces

Industrial Gloves 40 million pairs

Saddlery 6000 pieces

The major production centres for leather and leather products are located at Chennai, Ambur, Ranipet, Vaniyambadi, Trichi, Dindigul in Tamil Nadu, Calcutta in West Bengal, Kanpur in Uttar Pradesh, Jalandhar in Punjab, Bangalore in Karnataka, Delhi and Hyderabad in Andhra Pradesh.

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 sheeps, it claims the sixth position. These four 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 and 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.

(Value in million US$)

Category 1998-99

Finished Leather 265.2

Leather Footwear 290.2

Footwear Components 243.7

Leather Garments 368.6

Leather Goods 429.0

Saddlery and Harness 33.4

Total 1630.1

(Value in million Rs.)

Country 1998-99 Share in total exports in 1998-99

Germany 15462 22.23 %

USA 10826 15.56 %

Italy 8317 11.96 %

UK 9744 14.00 %

France 3240 4.6 %

Spain 3103 4.46 %

Russia 1009 1.445 %

Portugal 1240 1.78