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Indian Leather

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Indian LeatherIn view of its immense potential for employment, growth and exports, leather industry occupies an important place in Indian economy. The sector is spread across the formal as well as informal sectors and produces a comprehensive range of products from raw hides to fashionable shoes. The industry consists of firms in all capacities, including small artisans to major global players. Specialized institutions have been setup to promote the overall growth and performance of the industry. There has been an increasing emphasis on the planned development of industry, which is aimed at optimum utilization of available raw materials for maximizing the returns, especially from exports.

The country ranked first among major livestock holding nations in the world and thus has a rich endowment of raw materials in terms of the cattle population. It has the capacity to cater 10% of the global leather requirement. Export of leather and leather products during 2004-05 recorded an impressive growth at US$2,380 million, exceeding the target of US$2,284 million set by the Commerce Ministry.

Today, the sector is amongst top 8 export earners for the country and employs around 2.5 million people. A major part (about 60-65%) of the production is in the small / cottage sector. Endowed with 10% of the world raw material, the export of country constitutes about 2% of world trade.

History
The history of leather tanning in India dates back to 3000 BC. Tanning in the rural areas is done by indigenous techniques, making the use of this material easier.

The most popular Indian leather products include footwear and hand bags. The footwear comes in various designs of traditional embroidery, brocade or textile. Bright colors and unique designs are used. The all time favorite, kholapuri chappals of Maharashtra, are soft and very comfortable to wear. A special type of thickish shoes, called mojadis are designed in Rajasthan. They are decorated with silk, beads and metal embroidery. Jaipur is famous for its fancy and sophisticated footwear.

Bengal is famous for its handbags in batik style with cracks, bold curves, and traditional motifs. Being very ornamental, Kashmiri leather items are very popular among buyers the world across. The red leather embroidered with gold and silk is done in Madhya Pradesh. In Hoshiarpur (Punjab), appliqué work is made in colored leather pieces. Leather with silvery finish or metallic gold is done in Karnataka.

The post liberalization era has opened up floodgates of opportunities for the Indian leather industry. With global players looking for new sourcing options (in addition to China), the country is uniquely positioned to gain a bigger share of the global market. Renowned brands from the US and Europe are planning to import leather and leather products from India. Global players who took part at the India International Leather Fair, 2005, consider India as the market to be in.

Indian Leather Exports – Some important Facts & Figures Some of the important leather products exported by India include -
India has less than 3% share in the global leather global compared to China’s 20%. Realizing the high growth potential of the industry, the Government has been making considerable efforts to promote rapid advancement of the industry. On June 30, 2005, the Cabinet Committee on Economic Affairs (CCEA) decided to carry out a Rs 2.9 billion scheme for the integrated development of the leather sector. According to this scheme, existing tanneries will be modernized and new units will be established for footwear, components and leather products. This scheme is anticipated to result in gains in terms of improved productivity, right-sizing of capacity, cost-cutting, and design-development.

Export of Leather & Leather Products from India During April – July -2006 Vis-A-Vis April – July - 2007
    (Value in Million Rs)  
Category April – July April – July % Variation
  2006 2007  
Finished Leather 10723.76 9126.02 -14.90%
Leather Footwear 12923.24 13793.02 6.73%
Footwear Components 3161.39 3959.72 25.25%
Leather Garments 4419.47 3970.4 -10.16%
Leather Goods 10140.36 8956.96 -11.67%
Saddlery & Harness 1021.38 1361.52 33.30%
Non-Leather Footwear 698.4 771.36 10.45%
Total 43088 41939 -2.67%
Source : DGCI & S      
    (Value in Million US$)  
Category April – July April – July % Variation
  2006 2007  
Finished Leather 234.57 222.43 -5.18%
Leather Footwear 282.68 336.17 18.93%
Footwear Components 69.15 96.51 39.56%
Leather Garments 96.67 96.77 0.10%
Leather Goods 221.81 218.31 -1.58%
Saddlery & Harness 22.34 33.18 48.53%
Non-Leather Footwear 15.28 18.8 23.07%
Total 942.49 1022.17 8.45%

Country-wise Export of Leather & Leather Products
Export of Leather & Leather Products During the Period April-July 2007 & April-July 2006
(Value in Million US$)                        
  Leather Leather Footwear Footwear Component                  
Country April-July % share % change April-July % share % change April-July % share % change      
  2006 2007 200700.00%   2006 2007 2007   2006 2007 2007  
Germany 7.74 8.52 3.83% 10.14% 44.44 60 17.85% 35.00% 10.72 14.86 15.39% 38.55%
USA 4.08 2.28 1.02% -44.15% 37.75 37.7 11.22% -0.13% 0.27 1.45 1.50% 432.63%
UK 0.89 0.65 0.29% -26.70% 56.57 63.83 18.99% 12.82% 2.99 4.9 5.08% 63.93%
Italy 36.24 37.74 16.97% 4.12% 41.44 50.69 15.08% 22.33% 17.55 24.17 25.04% 37.70%
France 4.32 2.75 1.24% -36.27% 20.32 23.99 7.14% 18.08% 6.64 9.52 9.87% 43.32%
Hong Kong 93.4 74.43 33.46% -20.31% 0.44 0.96 0.29% 117.92% 0.25 0.12 0.12% -52.52%
Spain 7.45 8.92 4.01% 19.64% 13.92 12.9 3.84% -7.35% 4.9 5.1 5.28% 4.00%
Russia 2.57 3.91 1.76% 51.87% 0.42 0.68 0.20% 61.60% 0.27 0.78 0.81% 189.33%
Netherlands 1.99 1.91 0.86% -3.61% 12.09 20.16 6.00% 66.77% 0.83 1.29 1.34% 55.22%
Australia 0.44 0.62 0.28% 40.55% 3.24 2.1 0.62% -35.17% 0.21 1.01 1.05% 378.08%
New Zealand 0.16 0.11 0.05% -33.68% 0.99 0.13 0.04% -86.45% 0.89 0.19 0.20% -78.58%
Denmakr 0.04 0.41 0.18% 807.79% 4.23 5.86 1.74% 38.59% 0.03 0.16 0.16% 499.26%
Greece 0.18 0.23 0.10% 28.48% 2.45 1.72 0.51% -29.68% 0.07 0.2 0.21% 189.23%
Canada 0.36 0.4 0.18% 807.79% 4.23 5.86% 1.74% 38.59% 0.03 0.16 0.16% 499.26%
Switzerland 0.01 0.04 0.18% 12.52% 2.71 2.21 0.66% -18.54% 0.7 0.74 0.76% 5.37%
Sweden 0 0.03 0.01% 828.55% 3.09 4.45 1.32% 44.18% 0 0.02 0.02% 3967.04%
S. Africa 6 5.44 2.44% -9.43% 4.27 2.95 0.88% -30.99% 0.79 0.22 0.23% -72.27%
Austria 0.14 0.22 10.00% 54.04% 2.34 2.54 0.76% 8.60% 0.6 2.34 2.43% 291.03%
Belgium 0.26 0.16 0.07% -39.45% 6.6 11.47 3.41% 73.83% 0.71 0.23 0.24% -67.93%
Japan 2.15 1.83 0.82% -14.75% 1.06 0.85 0.25% -19.30% 0.08 0.14 0.15% 80.48%
Portugal 2.75 3.03 1.36% 10.24% 6.24 4.4 1.31% -29.51% 5.67 5.23 5.42% -7.78%
China 13.27 15.82 7.11% 19.21% 0 0.58 0.17% 132998.04% 0.43 0.04 0.05% -89.81%
Ireland 0 0 0.00% 0.00% 0.56 1 0.30% 77.31% 0 0 0.00% 0.00%
UAE 0.56 1.84 0.83% 227.78% 6.76 8.48 2.52% 25.48% 1.86 0.28 0.29% -84.71%
Indonesia 2 4.47 2.01% 124.17% 0 0.02 0.01% 0.00% 0.83 0.31 0.32% -62.845
Korea Rep. 11.95 7.77 3.49% -35.00% 0.1 0.07 0.02% -28.08% 0.02 0 0.00% -100.00%
Finland 0.2 0.1 0.05% -49.44% 0.71 0.79 0.23% 10.60% 0.01 0.84 0.87% 11853.89%
Saudi Arabia 0.09 0.02 0.01% -80.47% 1.38 1.19 0.35% -13.85 0.43% 0.54 0.56% 24.77%
Others 35.32 38.78 17.43% 9.80% 8.06 13.33 3.97% 65.36% 8.89 18.69 19.36% 110.21%
Total 234.57 222.43 100.00% -5.18% 282.68 336.17 100.00% 18.93% 69.15 96.51 100.00%  
  39.56%                      
Source : DGCIS

Major Markets for India's Export of Leather Export of Leather Products (2000-01 to 2004-05)
Country 2000-01 2001-02 2002-03 2003-04 2004-05
USA 342.78 286.89 246.44 251.58 279.7
Germany 307.17 304.46 272.53 329.82 336.69
UK 270.09 248.89 24096.00% 250.65 299.21
Italy 241.07 263.11 25592.00% 285.02 242.6
Hong Kong 98.32 121.43 16570.00% 22697.00% 236.52

Structure of Exports of Indian Leather Industry (2003-04)
Structure of Exports of Indian Leather Industry (2003-04)

India's Export of Leather & Leather Products – Products wise (2000-01 to 2004-05)
(Value in Million US$)
Category April-March        
  2000-01 2001-02 2002-03 2003-04 2004-05
Finished Leather 381.49 459.25 50883.00% 555.71 577
Leather Footwear 381.37 395.39 42330.00% 553.04 601.73
Footwear Components 238.09 233.94 17507.00% 16127.00% 163.67
Leather Garments 460.45 378.75 27208.00% 30108.00% 318.73
Leather Goods 343.76 321.46 33536.00% 40320.00% 568.46
Saddlery & Harness 42.66 35.64 4366.00% 5271.00% 59.64
Leather Gloves 96.11 85.69 9004.00% 13601.00%  
Non-Leather Footwear 19.11 26.02 2688.00% 5342.00% 90.21
Total 1963.55 1936.14 187521.00% 221645.00% 2379.44
Source – DGCI&S

Future Forecasts
With its rich resource base of raw hides, skins and human capital, Indian leather industry has the capability to increase its share in global leather trade. At present, Indian leather exports account for 3% of the global trade with USA, Germany, UK and Spain as major markets. The country has a lot of potential to increase its share in these markets by utilizing its unique advantage of economies of scale and the capability to produce niche products.

Several challenges, which hinder the export growth of the Indian leather industry, include - effluent management, non-tariff barriers, quality specifications and cost of compliance to various standards. However, there are ample opportunities to realize the export potential of this sector, with the adoption of suitable strategies.

The global leather industry is in the process of shifting its manufacturing base from developed to developing nations. This provides an opportunity for increased flow of foreign direct investment into India. In such a scenario, factors like abundance of leather, increasing awareness for quality, manufacturing know-how and designing capabilities, work in favor of India. Increasing presence of big corporate houses in this industry would help improve the investments required, and thereby the competitiveness in the international markets.