Leather Industry – Overview, Export Performance and Prospects:

 

 

Overview:

• 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$ 7.5 billion, the export of leather and leather products increased manifold over the past decades and touched US$ 3.84 billion in 2010-11, recording a cumulative annual growth rate of about 5.87% (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$ 115.58 billion (2009).


• The major production centers for leather and leather products in India 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

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 Design & Product Development, HRD and R & D.
• Presence of support industries like leather chemicals and finishing auxiliaries
• Presence in major markets – Long Europe experience
• 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

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

Highlights of Leather Product Segments:

• Tanning Sector – Annual production 2 billion Sq.ft. Accounts for 10% of world leather requirement. Indian colors continuously being selected at the MODEUROPE Congress
• Footwear Sector – Second largest footwear producer after China. Annual Production 2065 million pairs. Huge domestic retail market 1950 million pairs (95%) are sold in domestic market. Footwear export accounts for 45.05% share in India’s total leather & leather products export. The Footwear product mix Gents 54%, Ladies 37% and Children 9%
• Leather Garments Sector – Second largest producer with annual production capacity of 16 million pieces. Third largest global exporter. Accounts for 10.43% share of India’s total leather export
• Leather Goods & Accessories Sector including Saddlery & Harness – Fifth largest global exporter. Annual production capacity - 63 million pieces of leather articles, 52 million pairs of Industrial gloves & 12.50 million pieces of Harness & Saddlery items. Accounts for 23.44% share of India’s total export

Product–wise Brands sourced from India:

Footwear	Leather Garments	Leather Goods / Accessories
Acme, Ann Taylor, Bally, Charter Club, Clarks, Coach, Colehann, Daniel Hector, Deichmann, DKNY, Double H, Ecco, Elefanten, Etienneaigner, Florsheim, Gabor, Geoffrey Beene, Guess, Harrods, Hasley, Hush Puppies, Kenneth Cole, Liz Claiborne, Marks & Spencer, Nautica, Next, Nike, Cole Haan, Nunn Bush, Pierre Cardin, Reebok, Rockport, Salamander, Stacy Adams, Tommy Hilfiger, Tony Lama, Versace, Yves St. Laurent, Zara, Johnston & Murphy, Docksteps, Timberland, Armani, Geox, Diesel, Ted Baker, Lacoste, Kickers, Calvin Klein, Sioux, Brasher, Zegna, Massimu Dutti, Buggatti, Lloyd, Christian Dier, Salamander, Camper, Bata, Espirit, French Connection, Legero, Mercedez, H & M and many more famous brands	Armani, Zegna, Abercrombie & Fitch, Marco Polo, Mango, Colehaan, AndreMaarc, Guess Pierre Cardin, Tommy Hilfiger, Versace, DKNY, Liz Claiborne, Ann Taylor, Nautica, Kenneth Cole, Charter Club, Daniel Hector	Coach, Liz Claiborne, Harrods, Yves St, Laurent, Tommy Hilfiger, Etienne Aigner, Geoffrey Beene,Marks & Spencer, Guess, Next, Pierre Cardin, Prada, GAP, Levis, H & M, British Home Stores, Banana Republic, Furla, American Eagle Outfitters, Bracciliani, Walmart etc.

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, Ferragammo, Hush Puppies, Lee cooper, Lloyd, Marks & Spencer, Nike, Nine West,New Balance, Reebok, Rockport, Stacy Adams, Tod’s, Geox , Louis Vuitton	Red Tape, Bata, Liberty, Khadims, Lakhani, Metro, Action

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

(Value in Million US$)   2006-07 2007-08 2008-09 2009-10 2010-11 Finished Leather 724.00 807.19 673.37 627.95 810.92 Footwear 1236.91 1489.35 1534.32 1507.59 1732.04 Leather Garments 309.91 345.34 426.17 428.62 400.83 Leather Goods 706.28 800.46 873.44 757.02 814.91 Saddlery & Harness 82.33 106.18 92.15 83.39 86.15 Total 3059.43 3548.51 3599.46 3404.57 3844.86 % Growth 11.15% 15.99% 1.44% -5.41% 12.93% Source: DGCI&S

Export Scenario – Last 5 Years

% Share of Leather Products in Export Performance (2010-11)

% share of various countries in India’s Leather & Leather Products Exports (2010-11)

Major Markets:

The major markets for Indian leather products are Germany with a share of 14.34%, 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%, Australia 1.30%. These 11 countries together accounts for nearly 78.09% of India’s total leather products export.

India’s Export of Leather & Leather Products to the European Union touched US$2517.51 mn in 2010-11, accounting for a share of 65.48% in India’s total leather export trade of US$ 3844.86 mn.

India’s Export of leather & leather products to different countries – 5 years

	(Value in million USD)
COUNTRY	2005–07	2006–08	2007–09	2008–10	2009–11	% Share
GERMANY	410.08	493.34	508.45	491.28	551.32	14.34%
ITALY	413.35	490.77	461.56	398.56	442.75	11.52%
U.K.	359.84	417.64	413.24	456.59	492.32	12.80%
U.S.A.	317.59	311.21	359.22	296.37	335.11	8.72%%
HONG KONG	279.72	280.97	237.72	251.53	311.81	8.11%
SPAIN	185.78	216.07	219.18	219.13	242.73	6.31%
FRANCE	174.04	198.52	221.33	255.29	271.93	6.52%
NETHERLANDS	100.82	134.75	148.77	137.10	152.94	3.98%
U.A.E.	62.55	76.23	85.79	69.06	73.68	1.92%
PORTUGAL	49.92	56.93	48.17	39.39	37.51	0.98%
BELGIUM	43.01	55.32	54.77	65.39	77.80	2.02%
CHINA	42.52	55.46	49.96	48.58	72.68	1.89%
AUSTRALIA	39.38	50.44	55.76	53.92	50.08	1.30%
DENMARK	42.30	49.58	60.12	55.73	56.44	1.47%
SWEDEN	29.01	38.99	38.03	36.07	38.20	0.99%
CANADA	32.17	36.92	35.29	27.66	28.11	0.73%
KOREA REP.	36.28	29.55	26.17	29.04	29.03	0.75%
South Africa	35.23	27.90	22.45	24.60	30.92	0.80%
SWITZERLAND	21.92	25.79	26.07	27.10	23.00	0.60%
AUSTRIA	21.79	25.68	27.22	28.01	26.79	0.70%
GREECE	24.22	23.57	17.82	12.77	9.85	0.26%
SAUDI ARABIA	15.77	15.96	19.28	21.01	21.99	0.57%
JAPAN	12.26	15.95	20.24	17.19	20.58	0.54%
RUSSIA	17.18	15.77	12.01	6.68	18.35	0.48%
INDONESIA	12.17	15.31	13.45	10.08	19.11	0.50%
FINLAND	9.87	14.39	15.52	9.96	14.29	0.37%
IRELAND	5.46	8.15	6.44	5.79	5.34	0.14%
NEWZEALAND	6.05	5.61	5.46	4.29	5.79	0.15%
OTHERS	259.15	361.74	389.97	306.42	384.41	25.45%
TOTAL	3059.43	3548.51	3599.46	3404.57	3844.86	100.00%
Source : DGCI & S

 Future Outlook:

The Government of India had identified the Leather Sector as a Focus Sector in its Foreign Trade Policy 2004-09 in view of its immense potential for export growth prospects and employment generation. Accordingly, the Government is also implementing various Special Focus Initiatives under the Foreign Trade Policy for the growth of leather sector. With the implementation of various industrial developmental programmes as well as export promotional activities; and keeping in view the past performance, and industry’s inherent strengths of skilled manpower, innovative technology, increasing industry compliance to international environmental standards, and dedicated support of the allied industries, the Indian leather industry aims to augment the production, thereby enhance export, and resultantly create additional employment opportunities for overall one million people.