Industry at a Glance

• The Indian leather Industry occupies a place of prominence in the Indian economy in view of its substantial export earnings, employment generation and growth.

• There has been increasing emphasis on its planned development, aimed at optimum utilization of available raw material for maximizing the returns particularly from exports. 

• The export of leather and leather products increased manifold over the past decades. The export increased from Rs. 290 mn in 1956-57 and from Rs. 30760 mn in 1991-92 to Rs. 140007.33 mn in 2007-08.

• Today the industry ranks 8th in the export trade in terms of foreign exchange earnings of the country. 

• The composition of export of leather and leather products from India has undergone a structural change during the last three decades, from merely an exporter of raw material in the sixties to that of value added products in the nineties.  The value added finished products presently constitute around 80% of the total export from the Industry, which was mere 7% in 1956-57.

• India accounts for a share of 2.62% in the global leather trade during 2006. With the exclusion of non-leather footwear, this is slightly higher at 3.41%.

The Indian leather industry is organised as follows:

• Tanning & finishing
• Footwear & Footwear Components
• Leather Garments
• Leather Goods (bags, wallets, belts, gloves, accessories)
• Saddlery and harness articles

Major production centres:
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. 

Indian leather sector: A Profile

• India is the largest livestock holding country

21% large animals and 11% small animals

• A source for 10% global leather requirement
• Annual production value US$ 5 billion
• Annual export value US$ 3.47 billion
• Export growth CAGR 11.91% (5 years)
• About 2.50 million workforce (30% women)
• Promising technology inflow and Foreign Direct Investment
• Top priority to occupational safety and work environment
• Meticulous concern for consumer safety
• Compliance to environmental standards
• Enormous potential for future growth (domestic as well as export)  

Estimated production capacities:

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

 Strengths of Indian leather sector:

• 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 Human Resources Development and R & D activities   
• Presence of support industries like leather chemicals and finishing auxiliaries 
• Presence in major markets – Long Europe experience
• Preferred sourcing by several international brands –

Pierre Cardin, Versace, NEXT, Hugo Boss, Tommy Hilfiger,  Florsheim, Clarks, K shoes, DKNY, Liz Claiborne, Guess etc

• Strategic location in the Asian landmass

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

Government Support – Policies

• The entire leather sector is now de-licensed and de-reserved, paving way for expansion on modern lines with state-of-the-art machinery and equipments.
• 100% Foreign Direct Investment and Joint Ventures permitted through the automatic route
• 100% repatriation of profit and dividends, if investments made in convertible foreign currency. Only a declaration to this effect to the Reserve Bank is required.
• Promotion of Industrial Parks (one leather park in A.P; one leather goods park in W.B; one footwear park in T.N. and one footwear components park in Chennai)
• Funding support for modernizing manufacturing facilities during Tenth Plan period 2002-07
• Funding support for establishing Design Studios
• Duty free import of all types of raw materials
• Duty-free import of embellishments and components under specific scheme
• Concessional duty on import of specified machinery for use in Leather Sector.
• Duty neutralization/remission scheme in place like DEPB and Duty Drawback
• Liberal import-export of consumer products and components  
• Gradual lowering of import tariff  - Peak Rate 10%
• Simplified import-export procedures, facilitating quicker customs clearances

EXPORT PERFORMANCE

India’s export of leather and leather products for five years  

	(Value in Million US$)
	2003-04	2004-05	2005-06	2006-07	2007-08
Finished Leather	555.71	607.73	636.27	724.00	766.93
Footwear	767.73	910.77	1045.24	1236.91	1475.83
Leather Garments	301.08	329.44	333.30	309.91	343.99
Leather Goods	539.21	585.72	660.17	706.28	784.95
Saddlery & Harness	52.71	61.71	77.52	82.33	105.81
Total	2216.45	2495.37	2752.50	3059.43	3477.52
% Growth	18.20%	12.58%	10.30%	11.15%	13.67%
Source: DGCI&S

India’s Export was growing at a CAGR of 11.91% in the last 5 years. Global leather import trade was growing at a CAGR of 8.77% during last 5 years.

Major importing countries of Indian Leather and Leather Products

The country-wise performance for five years:

                                                                                                (Value in Million US$)

COUNTRY	2003-04	2004-05	2005-06	2006-07	2007-08	CAGR Growth %
Germany	329.82	350.79	363.24	410.08	488.72	10.33%.
Italy	285.02	258.23	317.04	413.35	479.04	13.86%.
UK	250.65	313.69	345.54	359.84	414.32	13.38%.
USA	251.58	290.42	318.36	317.59	306.69	5.07%.
Hong Kong	226.97	247.68	252.15	279.72	267.93	4.23%.
Spain	161.23	176.70	200.18	185.78	212.07	7.09%.
France	109.82	140.00	143.72	174.04	196.17	15.60%.
Netherlands	57.75	65.68	82.95	100.82	133.37	23.27%.
UAE	37.39	48.03	52.34	62.55	74.53	18.82%.
Portugal	34.07	38.38	42.20	49.92	56.06	13.25%.
Belgium	24.24	35.10	40.20	43.01	54.53	22.46%.
China	22.87	34.51	38.71	42.52	51.90	22.73%.
Australia	32.03	36.41	43.22	39.38	49.74	11.63%.
Denmark	24.66	30.84	40.46	42.30	49.08	18.77%.
Sweden	19.61	23.49	25.82	29.01	38.81	18.60%.
Canada	25.59	29.70	34.80	32.17	35.90	8.83%.
Korea Rep.	25.47	30.98	34.45	36.28	28.80	3.11%.
South Africa	20.64	21.71	24.38	35.23	27.49	7.42%.
Switzerland	16.64	18.35	21.54	21.92	25.47	11.22%.
Austria	19.12	21.23	23.38	21.79	25.43	7.39%.
Greece	21.11	19.53	21.94	24.22	23.38	2.58%.
Saudi Arabia	10.61	12.08	14.63	15.77	15.53	9.99%.
Japan	10.37	10.57	12.37	12.26	15.41	10.40%.
Russia	11.33	8.05	11.49	17.18	14.95	7.17%.
Indonesia	8.42	10.22	12.66	12.17	14.90	15.33%.
Finland	4.23	6.62	7.72	9.87	14.33	35.66%.
Ireland	4.08	5.77	4.56	5.46	8.07	18.59%.
New Zealand	4.22	3.28	5.64	6.05	5.60	7.32%.
Others	166.91	207.33	216.81	259.15	349.30	20.27%.
Total	2216.45	2495.37	2752.50	3059.43	3477.52	11.91%.
Source : DGCI & S

 Import Scenario:
India’s import of raw hides & skins and leather for five years

                                                (Value in Million US$)

CATEGORY
	2003-04	2004-05	2005-06	2006-07	2007-08
Raw Hides & Skins	49.80	50.21	58.21	69.58	84.12
Leather	171.01	212.70	233.11	288.85	336.56
TOTAL	220.81	262.91	291.32	358.44	420.68

Source: DGCI & S

Indian Leather Industry – A Vision Document – 2010

Keeping in view the past performance, current trends in the global trade industry’s in inherent strengths and the growth prospects, the industry aims to augment the production, thereby enhance export to US$ 7 billion by 2010-11. Resultantly, create additional employment opportunities for overall one million people.

The Export targets from 2008-09 to 2010-11 is tabulated below:

                                                            (In Million US$)

Product	2008-09	2009-10	2010-11
Leather	785.00	847.80	915.63
Footwear	2597.60	3428.83	4526.05
Garments	372.87	387.78	403.30
Leather Goods	798.69	870.06	948.04
Saddlery & Harness	127.85	154.70	187.19
Total	4682.01	5689.17	6980.21