Indian Leather Industry

It is now a proven fact that the Indian leather industry forms a strong pillar of the Indian economy. The phenomenal rise of the leather industry from a mere small time exporter of raw materials in the 1960s to holding a major and prominent position in the Indian economy, today the industry generates intensive employment, currently employing 2.5 million people and that too mostly from the weaker sections, 70% of which are women.

As per a written statement by the Minister of State in the Ministry of Commerce and Industry, Dr. D Purandeswari, “For the skill development of the leather work force, training is provided under the sub scheme of Human Resource Development. During the Eleventh plan 50,250 persons were provided training out of which 41,486 were placed in the industry. Rs 44.88 crores was released for the same”. Further, the Indian leather industry’s immense capability to earn foreign exchange has earned it the position of one of the ten top ranking foreign exchange earners of India as evident from the fact that the export graph of the industry soared in the past two decades and touched US$ 4.86 billion in 2011-2012, the ‘cumulative annual growth rate’ being an impressive 8.22% (5 years).

Indian leather industry has a huge export market consisting of mainly eleven countries of which Germany accounts for a share of 14.34%, followed by UK (12.80%), Italy (11.52%), USA (8.72%), Hong Kong (8.11%), France (7.07%), Spain (6.31%), Netherlands (3.98%), Belgium (2.02%), U.A.E. (1.92%) and Australia (1.30%), accounting for 78.9% of the total exports of the Indian leather industry and 3% of the global leather import trade (US$137.96 billion in 2010). Abundance of raw materials, high foreign currency earning capacity, a huge export market, an employment intensive sector and advanced technical support has earned India a well deserved position in the global leather scenario with an annual turnover of over US$ 7.5 billion making the industry an indispensable part of the Indian economy.

India has an abundance of raw materials for the leather industry. India accounts for 21% of the cattle and buffalo and 11% of the global goat and sheep population. The industry is supported by new and innovative design development infrastructure. The Government initiative of setting up seven Campuses of Footwear Design & Development Institute (FDDI) in Noida, UP and Chennai, to name a few, ensures to provide skilled manpower for the industry, is a major boost for the industry’s designing realm. A continuous human resource development program is in place to increase the productivity of the industry. The Industry is backed by intensive R&D involving technological upgradation which reduces the prototype designing time span. Manufacturing units are economically sized which solves the space problem. Other factors like use of high quality materials (because the industry is mainly export oriented) and long time experience in the global market have proven to be some of the major strong points of the industry.

The Indian leather industry can be subdivided into four sectors:

TANNING SECTOR: The tanning sector accounts for the production of a total of 2 billion square feet of leather which caters to 10% of the global requirement. The unique colors of the Indian leather make the industry a steady choice of the MODEUROPE Congress.

FOOTWEAR SECTOR: A diverse sector manufacturing gents, ladies and children’s footwear has a stake of 45.05% in the total leather export of India. India is the second largest producer of footwear after China with a whopping annual production figure of 2,065 million pairs of which the expanding domestic market accounts for 1,950 million pairs (95%) of the net production. Some of the famous international brands sourced from India include Hush Puppies, Florsheim, Reebok, Salamander, Stacy Adams, Lama and Bally. Lakahani, Red Tape, Bata, Liberty and Khadim’s are some of the well known brands sold in the domestic market.

LEATHER GARMENTS SECTOR: Though a late entrant in this particular leather sector, India has taken little time to be the second largest producer of leather garments with an astounding annual production figure of 18 million pieces. With a stake of 10.43% in the total leather exports of India, leather garments sector ranks third in export in the global market.

LEATHER GOODS AND ACCESSORIES SECTOR INCLUDING SADDLERY AND HARNESS: With a staggering annual production capacity of 63 million pieces of leather articles including industrial gloves, harness and saddlery items, this sector has a stake of 23.44% in the total leather export of India. This sector is the fifth largest global exporter. Quality leather of cows, sheep, goats and buffaloes are used to manufacture a multifarious range of small leather goods like purses, wallets and industrial gloves in clusters of highly modernized units centered in Chennai, Kanpur and Kolkata. Armed with a highly skilled workforce, modern equipments and machinery the products of these units mainly cater the bulk exports to countries like Europe, USA, and Australia.

The main production hubs of the leather industry are located in Tamil Nadu (Chennai, Ambur, Ranipet, Vaniyambadi, Vellore, Pernambul, Trichi, Dindigul and Erode), West Bengal (Kolkata), Uttar Pradesh (Kanpur, Agra, Noida, Saharanpur), Maharashtra (Mumbai), Punjab (Jalandhar), Karnataka (Bangalore), Andhra Pradesh (Hyderabad), Haryana (Ambala, Gurgaon, Panchukla, Karnal and Faridabad), Delhi , Madhya Pradesh (Dewas) and Kerala (Calicut, Ernakulam, Cochin).

Some of the Government initiatives to promote the leather industry include:

  • A dedicated focus on the leather industry under the Foreign Trade Policy.
  • The decision of the Government to implement a Rs 600 crore ‘mega leather cluster development scheme for the 12th Five Year Plan (2012-2017)’ will definitely prove to be a shot in the arm for the Indian Leather industry and increase its global competitive edge, enhancing fundings to support export, market development, technical advancement and HRD. According to the Department of Industrial Policy and Promotion, “The concept of mega leather cluster seeks to address the constraints of large infrastructure with integrated production chains in the country”.
  • De-licensing of the leather industry sector has enabled further expansion and easy schemes to attract FDI.
  • Duty free import of the raw materials like rawhide and skin
  • Introduction of Duty Free Import Authorization (DFIA)
  • Simplification of the import/export regulations and smooth customs clearance.

After an eight months slump, the growth curve of the leather industry is soaring again as evident from the fact that the total export value has increased by 4.25% touching US$ 26.26 billion from the beginning of 2013. The leather industry has plans to enhance export potentials by US$ 7.03 billion by 2013-2014, which in turn will provide employment to an additional one million people.

Where leather industry of India stands today, it may sound farfetched, but with proper leverage, the Indian leather industry has the capacity to compete with the designer labels like Gucci and Louis Vuitton in the near future.