ABOUT LEATHER INDUSTRY

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
touched US$ 4.86 billion in 2010-14, recording a cumulative annual growth rate of about 8.22%
(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$ 137.96 billion
(2015).

The major production centers for leather and leather products in India are located in Tamil
Nadu - Chennai, Ambur, Ranipet, Vaniyambadi, Vellore, Pernambut, Trichy, Dindigul and
Erode

; West

Bengal

Kolkata

; Uttar

Pradesh

Kanpur,

Agra,

Noida,

Saharanpur; Maharashtra Mumbai ; Punjab Jallandhar ; Karnataka Bangalore ; Andhra

Pradesh - Hyderabad ; Haryana - Ambala, Gurgaon, Panchkula, Karnal and Faridabad; Delhi;
Madhya Pradesh Dewas ; Kerala Calicut and Ernakulam / Cochin.

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 up gradation

Economic size of manufacturing units

Constant human resource development programmer to enhance productivity

Increasing use of quality components

Shorter prototype development time

Delivery compliance

Growing domestic market for footwear and leather articles

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 42.67% share in Indias 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 11.76% share of Indias 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 24.56% share
of Indias total export

PRODUCT-WISE BRANDS SOURCED FROM INDIA

Footwear

Leather Garments

Acme, Ann Taylor, Bally, Charter Club, Armani,

Zegna, Coach, Liz Claiborne, Harrods,

Clarks, Coach, Colehann, Daniel Hector, Abercrombie

Deichmann, DKNY, Double H, Ecco, Marco

&

Polo,

Fitch, Yves

St,

Mango, Hilfiger,

Elefanten, Etienneaigner, Florsheim, Gabor, Colehaan,

Geoffrey Beene, Guess, Harrods, Hasley, Maarc,

Leather Goods / Accessories

Laurent,

Tommy

Etienne

Aigner,

Andre Geoffrey
Guess

Beene,

Pierre Marks & Spencer, Guess, Next,

Hush Puppies, Kenneth Cole, Liz Claiborne, Cardin, Tommy Hilfiger, Pierre Cardin, Prada, GAP,
Marks & Spencer, Nautica, Next, Nike, Cole Versace,
Haan, Nunn Bush, Pierre Cardin, Reebok, Claiborne,
Rockport,

Salamander,

Stacy

Adams, Nautica,

Tommy Hilfiger, Tony Lama, Versace, Yves Charter

DKNY,
Ann
Kenneth
Club,

Liz Levis, H & M, British Home

Taylor, Stores, Banana Republic, Furla,
Cole, American

Eagle

Outfitters,

Daniel Bracciliani, Walmart etc.

St. Laurent, Zara, Johnston & Murphy, Hector

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

BESIDES, MAJOR BRANDS ARE SOURCED FROM INDIA, MNC BRANDS ARE
SOLD IN INDIA AND INDIAN BRANDS SOLD IN INDIA.
MNC 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, Tods, Geox , Louis Vuitton.

INDIAN BRANDS SOLD IN INDIA

Red Tape, Bata, Liberty, Khadims, Lakhani, Metro, Action
INDIAS EXPORT OF LEATHER AND LEATHER PRODUCTS FOR FIVE YEARS
(Value in Million $)
2009-10

2010-11

2011-12

2012-13

2013-114

Finished Leather

807.19

673.37

627.95

841.13

1023.21

Footwear

1489.35

1534.32

1507.59

1758.67

2077.27

Leather Garments

345.34

426.17

428.62

425.04

572.54

Leather Goods

800.46

873.44

757.02

855.78

1088.09

Saddlery & Harness

106.18

92.15

83.39

87.92

107.60

Total

3548.51

3599.46

3404.57

3968.54

4868.71

% Growth

15.99%

1.44%

-5.41%

16.57%

22.68%

Source: DGCI&S
MAJOR MARKETS FOR INDIAN LEATHER & ITS PRODUCTS
The major markets for Indian Leather & Leather Products are Germany with a share of 15.01%, UK
11.15%, Italy 10.85%, USA 9.02%, Hong Kong 7.38%, France 6.25%, Spain 6.08%, Netherlands 4.07%,
Belgium 2.32%, China 2.54%, U.A.E.2.24%, Australia 1.39%, These 12 countries together accounts for
nearly 78.30% of Indias total leather& leather products export.
Indias Export of Leather & Leather Products to the European Union touched US$ 3116.52 mn in 201112, accounting for a share of 64.01% in Indias total leather export trade of US$ 4868.71 mn.

COUNCILS MEMBERSHIP STRENGTH FOR THE LAST FIVE YEARS

REGION

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13**

SOUTH

756

739

758

849

934

912

NORTH

500

496

543

602

706

686

EAST

426

452

465

496

516

530

CENTRAL

346

344

352

396

425

445

WEST

179

157

150

158

157

151

TOTAL

2207

2188

2268

2501

2738

2724

GOVERNMENT SUPPORT MEASURES

Leather sector is one of the Focus Sectors under Foreign Trade Policy of the Govt. of India

Entire leather sector is de-licensed facilitating for expansion on modern lines with state-of-the-art
machinery and equipments. 100% Foreign Direct Investment permitted through automatic route.

Import of specified machinery for use in leather and footwear industry allowed at a 5%
concessional import duty.

Duty free import of raw hides and skins, wet blue chrome tanned leather, crust leather and
finished leather of all kinds including splits and sides thereof.

Duty free import of specified critical inputs for manufacturers of leather garments and other
leather products including footwear under Duty Free Import Scheme (DFIS).

Basic customs duty exempted on machinery or equipment for Effluent Treatment Plants in leather
industry.

Gradual lowering of import tariff current peak customs duty is 10%

Simplified import/export procedures quick customs clearances.

INFRASTRUCTURE DEVELOPMENT PROJECTS UNDER ASIDE SCHEME

Based on the specific requirements of the Industry, the CLE is the implementing agency for the following
infrastructure projects by availing the funding support under ASIDE (Assistance to states for
infrastructure Development and Exports) Scheme:

Establishment of Testing Laboratory at Ranipet (Building Work is currently under progress)

Establishment of Testing Laboratory at Kanpur (Building Work is progressing procurement

process for machinery is under way)

Establishment of Multi-Skill Development Center at Kanpur (Building work is progressing)

Establishment of Common Facility Centre at Jalandhar (Engineering documents are under

preparation for issue of Tender so as to appoint a building contractor.

Already, one project for development of additional infrastructure at Ambur Trade Center and another
project for infrastructure up gradation at Design Studio, Kolkata have been taken up and these two
projects were successfully executed in the recent past. The Agra footwear industry has proposed to set up
Trade Centre at Agra Cluster. As of Oct 2012, the DPR has been submitted to the Govt. of India for
consideration and approval under ASIDE Scheme. Also, it is proposed to establish Testing Lab & Design
Studio at Agra and the DPR will be submitted to the State Government of Uttar Pradesh for funding
assistance.

Further, several more infrastructure projects are under conception stage, to name a few:
Establishment of Common Facility Centre at Ranipet, Melvisharam & Perundurai, Addition of 1 MLD
capacity in the CETP at Melvisharam and Perundurai, Testing Laboratory at Mumbai etc.

INDIAN LEATHER DEVELOPMENT PROGRAMME (ILDP) OF GOVERNMENT OF INDIA

The Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry,
Govt. of India has been undertaking several initiatives to facilitate industrial development of the leather
industry. During Tenth Five Year plan period 2002-07, DIPP implemented an Integrated Leather
Development Programme with a Plan Outlay of Rs.400 Crore. The ILDP was continued in the Eleventh
Plan 2007-2012 with a higher outlay of Rs.1251.29 Crore. The thrust of the ILDP scheme is on
technology upgradation and modernization of production units, expansion of production capacities,
creation of institutional facilities in the country, training Human Resources for the leather sector,
environment management in the tanning sector, support to rural artisans for design and product
development, create market linkages, support for establishment of Leather Parks etc. One of the subschemes of the ILDP is Integrated Development of Leather Sector (IDLS) Scheme, which provides
investment grant for technology up gradation, modernization, capacity creation in all segments of the
Leather Industry at enterprise levels.
The Union Planning Commission has constituted a Working Group exclusively for Leather &
Leather Products for the Twelfth Five Year Plan 2012-17 under the Chairmanship of Secretary-DIPP. The
Working Group, in turn, has constituted six Sub-Groups on different important topics (a) Leather
Technology, Innovation & Environment Issues (b) Infrastructure development (c) Skill development
initiatives (d) Brand building (e) Attracting FDI in Leather Sector in India (f) Macro issues of leather
sector, convergence & linkages. The Nodal Department for this Working Group is DIPP. The DIPP has
taken keen initiatives in holding several review meetings with Chairmen of Sub-Groups to fine tune the
reports. Based on the reports of the sub-groups, the DIPP has prepared the Draft Report of Working
Group on Leather & Leather Products, which seeks an outlay of Rs.3220 Crore for the Twelfth Plan 201217. The Draft Report was discussed in the meeting of the Working Group which was held on 4th Oct
2011. The Industry hopes that higher outlay for ILDP will be sanctioned for the Twelfth Five Year Plan
period 2012-17.

MEGA LEATHER CLUSTERS - SUB-SCHEME NOTIFIED UNDER ILDP

Vide Notification No. 5/4/2011-Leather dated 20th March 2012, the DIPP notified the subscheme Mega Leather Cluster with fund allocation of Rs.600 Crore under the ILDP. It is proposed to
develop Greenfield Mega Leather Clusters in the States having large concentration of leather units and
also in states having potential for growth of the leather sector. The Mega Leather Clusters will have core
infrastructure, social infrastructure, production infrastructure (ready to use factory sheds with plug in
facility for machinery / equipments), HRD & social infrastructure, capacity building etc. Each MLC will
be implemented by a Special Purpose Vehicle, which will be a corporate body registered under the
Companies Act 1956 formed by stakeholders, particularly a group of willing entrepreneurs (minimum
being 7 legally independent companies) that are engaged in leather tanning, manufacturing of leather
goods and components and other activities associated with the leather industry and who intend to set up
production units in the proposed MLC. The SPV would conceptualize, formulate, achieve financial
closure, implement and manage the infrastructure. The GOI assistance will be limited to 70% of the
project cost as grant in aid for all components of the project except the cost of the land, subject to the
ceilings depending upon the land area of the MLC. If the MLC land area is between 40-60 acres, the GOI
assistance ceiling is Rs.50 Crore, For MLC between 61-100 acres Rs.70 crore, For MLC between 101150 acres, Rs.105 crore. For land area more than 151 acres, the assistance ceiling would be Rs.125 Crore.
The CLE has organized series of interaction meetings in the regions to discuss on the Mega
Leather Cluster and create awareness amongst the industry and motivated the industry to take steps to
establish MLC. In nutshell, as of Oct 2012, the leather industry through SPVs intends to establish Mega
Leather Cluster in Sohna-Haryana & Agra (North Region), Ramaipur-Kanpur & Sandila-Hardoi (Central
Region), Perambalur-Tamil Nadu (South Region). The land identification process is currently under
progress. Once land is tied up, these SPVs are expected to commence the work of preparing Detailed
Project Report (DPR) by engaging professional agencies.

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 industrys 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.