INDIAN LEATHER INDUSTRY

1. LEATHER INDUSTRY REVIEW
2015-17
FACULTY OF COMMERCE
Banaras Hindu university
Varanasi
Presenter:
Roli Srivastava
Roll No. 23
MBA-Foreign Trade
Sumitted to:
Dr. Ishi Mohan

2. INDIAN LEATHER
INDUSTRY
OBJECTIVES COVERED
 INTRODUCTION
 OVERVIEW
 EXPORTS
 CHALLENGES
 OPPORTUNITIES
 GROWTH DRIVERS
 FUTURE PROSPECTS

3. WHAT IS LEATHER
 Leather is a durable and flexible material created
by tanning animal rawhide and skin, often cattle hide. It can be produced
at manufacturing scales ranging from cottage industry to heavy industry.
 People use leather to make various goods—including clothing (e.g.,
shoes, hats, jackets, skirts, trousers, and belts), bookbinding, leather
wallpaper, and as a furniture covering. It is produced in a wide variety of
types and styles, decorated by a wide range of techniques

4. PROCESSES OF LEATHER
MAKING
Prepping the
hide
Pull the flesh
off the hide
Salt the skin
Soak the skin
in water
Remove the
hairs from the
skin
Give the skin
a final lime
bath
Tanning the
leather
Rinse the
leather
Soften the
leather
Apply a
leather
softening oil
smoke the
hide

5. TYPES OF LEATHER

6. TYPES OF LEATHER
 Full grain leather- refers to the leather which has not had the upper
“top grain” and “split” layers separated.
 Top-grain leather- is the second-highest quality and has the split
layers separated away, making it thinner and more pliable than full grain
 Corrected grain leather-is any leather that has had an artificial grain
applied to its surface
 Split leather-is leather created from fibrous part of the hide left once
the top grain of the raw hide has been separated from the hide.

7. FLOW CHART OF LEATHER
MAKING

8. RAW MATERIALS
SKIN/HIDES
-from cows, pigs, goats, sheep
-exotic animals such as alligators, ostriches and
Kangaroos

9. RAW MATERIALS
 TANNING MATERLAS
 -Vegetables- extract from the bark and wood of trees (oak, wattles
etc.)
 -Mineral-in the main, trivalent chromium sulphate
 -Aldehydes-formaldehyde, glutaraldehyde or oxazolidine
 -Synthetic Replacement

10. IMPORTANT LEATHER PRODUCTS
EXPORTED BY INDIA
Leather Footwear
Leather Garments
Leather Goods (including harness & saddlery
Leather Gloves etc.)
Footwear components (shoes uppers, soles etc)
Finished Leather

11. INDUSTRY AT A GLANCE
Indian leather sector stands at USD 17.85 billion
(Exports – USD 5.85 billion, Domestic Market – USD 12 billion).
 Indian leather industry currently is one
among the top 8 industries for export revenue generation in India, holding 10% of
the global raw material and 2% of the global trade.
India has become biggest livestock producer in
the world, with the capacity of 1.8 billion square feet of leather production annually
India is the second
largest producer of footwear and leather garments in the world

12. INDUSTRY AT A GLANCE
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
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.


13. MARKET CAPITALISATION
Among all the industries the footwear
industry in particular holds a greater
potential for investment in india. Today
India produces approx. 700 million pairs of
footwear every year and accounts for an
18% share of the total indian leather
export.

14. CONTRIBUTION TO THE
ECONOMY/SALES
 With an annual turnover of over US$ 12 billion, the export of
leather and leather products increased manifold over the past decades
and touched US$ 6.5 billion during 2014-15, recording a cumulative
annual growth rate of about 13.10% (5 years).

15. EXPORT HIGHLIGHTS
 India’s leather industry has grown drastically, transforming from a mere raw
material supplier to a value-added product exporter.
 Total leather and leather good exports from India stood at US$ 5.92 billion
in FY 2015-16.
 During 2015–16, the major markets for Indian leather products were US
(14.25 per cent), UK (12.24 per cent), Germany (11.5 per cent), Italy (6.9 per
cent), Spain (5.6 per cent), Hong Kong (5.4 per cent), France (5.3 per cent),
UAE (4.5 per cent), Netherlands (3.2 per cent), China (2.8 per cent) and
Australia and Belgium (1.45 per cent each).
 At 47.0 per cent, footwear accounted for the lion’s share of leather exports
in FY 2015-16, followed by leather goods and accessories with 23.0 per cent
share, finished leather with 18.0 per cent share, leather garments with 9.0 per
cent share, and saddlery & harness with 3.0 per cent share.
 Per capita footwear consumption in India is expected to increase up to four
pairs, while domestic footwear consumption is expected to reach up to five
billion pairs by 2020.

16. PERCENTAGE SHARE OF LEATHER
AND LEATHER PRODUCTS (2015 -16)

17. P E RC E N TAG E S H A R E O F VA R I O U S C O U N T R I E S I N
I N D I A’ S L E AT H E R A N D L E AT H E R P RO D U C T
E X P O R T ( 2 0 1 5 - 1 6 )

18. EMPLOYMENT OF DIFFERENT
SECTOR OF LEATHER INDUSTRY

19. STRUCTURE OF INDUSTRY

20. PRODUCT WISE GROWTH
CATEGORY APR-MAR
2014-15
APR-MAR
2015-16
%
VARIATION
FINISHED
LEATHER
81263.05 68509.14 15.69%
LEATHER
FOOTWEAR
139296.09 140574.13 0.92%

21. MAJOR MARKET SEGMENT
SIZE
FOOTWEAR
COMPONENTS
22090.86 18613.91 -15.74%
LEATHER
GARMENTS
36952.09 36288.62 -1.80%
LEATHER GOODS 88831.47 89626.45 -0.89%
SADDLERY AND
HARNESS
9948.33 9583.6 -3.67%
NON LEATHER
FOOTWEAR
18736.82 20054.69 -7.08%
TOTAL 397118.71 383250.52 -3.49%

22. PRODUCTION CENTRES
 Leather production centres for leather products are situated in
Tamil Nadu-Chennai, Ambur, Ranipet, Vaniyambadi, Trichy,
Dindigul; West Bengal-Kolkata; Uttar Pradesh-Kanpur, Agra and
Noida; Maharastra—Mumbai; Punjab-Jallandhar; Karnatka-
Bangalore; Andhra Pradesh-Hyderabad; Haryana-Ambala, Gurgaon,
Panchkula and Karnal; Delhi

23. HERE ARE 7 CITIES FAMOUS FOR
LEATHER INDUSTRY IN INDIA
1. Jajmau – Kanpur, Uttar Pradesh
Jajmau is also known as Jajesmow, is a district of Kanpur. This is the main and the largest center for the leather industry in India. Home to
some of the largest leather tanneries in the Northern part of India. The Kanpur’s leather and tannery industry contribute to around Rs 6,000
crore worth foreign exchange for the country and also gives direct livelihood to more than one lakh people.
2. Unnao – Uttar Pradesh
Located approximately 18 km from Kanpur & 60 km from Lucknow city. Tanning is one the biggest industry in Unnao and this city is very
popular for its huge leather industry. Big leather manufactures like, Superhouse Group, Mirza Tanners, Rahman Exports, and Zamzam
Tanners have their factories in Unnao
3. Chennai- Tamil Nadu
Chennai is located on the Coromandel Coast off the Bay of Bengal. In south India, Chennai is the biggest industrial and commercial center.
And also a major cultural, economic and educational center. It contributes far more than 50 percent of India’s total leather exports. It also
has a CSIR research institution named the Central Leather Research Institute.
4. Ambur – Tamil Nadu
Located on the banks of the Palar River, it is a town and the state Assembly Constituency in the Vellore District of Tamil Nadu. Home to a
major part of the India’s leather tanning industry. This town has also earned its nickname as the Leather City of South India. India’s largest
and finest tanneries are located here, which makes it one of the leading exporters of leather goods in India. The finished and unfinished
products include shoes, garments, and gloves

24. 7 CITIES FAMOUS FOR LEATHER
INDUSTRY
5. Kolkata – West Bengal
Also known as the City of Joy, is the capital city of the Indian state of West Bengal. It is located on the east banks of the river
Hooghly. It is the major commercial, educational and cultural center of the Eastern India. It is the second most important
tanning center in the India. Home to around 500 tanneries which contribute about 22-25 % of the total country’s tanning. It
also contributes to about 55% of the total country’s export contribution.
6. Agra – Uttar Pradesh
Agra is located on the banks of the river Yamuna; it is the northern most state of Uttar Pradesh. Total 40% of the population
largely depend on agriculture, and the others on the leather and footwear business. Agra city is very popular for its leather
goods in the country. The Leather footwear of Agra is very popular all across the world for its superb craftsmanship.
7. Ranipet – Tamil Nadu
Located on the northern bank of the Palar river, this city is also known as Ranipettai. It is a suburb, town and also the
industrial hub of the Vellore city. It houses nearly 400 small and medium leather units. The large number of medium-scale
leather industries which make both finished leather and leather articles for export.
The Indian Government has identified the Leather Sector as a Focus Sector, as it has immense potential for export growth
prospects and also in employment generation. The Indian leather industry aims to increase the production even more in the
future, and thereby enhance exports, and resultantly create more and more employment opportunities.

25. SORCING HUBS

26. TOP LEADING COMPANIES
1.
Bata India
Relaxo Footwears
Mirza International
Bhartiya International
Liberty Shoes
Lawreshwar Polymers
Tinna Overseas
Super
Tannery
Sarup
Industries

27. FOREIGN INVESTORS
 Apache Group (Taiwan), Nellore, Andhra Pradesh
 Feng Tay Shoes (Taiwan), Cheyyar, Tamil Nadu
 Itares (Italy), Ambur, Tamil Nadu

28. PROBLEMS OF LEATHER
INDUSTRY IN INDIAProblems of tanneries
• Environmental issues: The leather industry is considered to be a major pollutant, especially during the
last stages of production in tanning. As the leather industry also releases its waste and chemicals in to water
bodies it is known to badly affect groundwater. Due to its nature, importing countries have set global
standards, besides banning usage of many chemicals.. • lack of financial assistance • high cost of
semi-tanned leather • Unhygenic working conditions leading to health hazards for the
workforce. • No facilities for quality testing
Problems faced by Manufacturers
• Lack of proper working environment • Illiterate and poverty struck workforce
• Underutilisation of capacity: Due to deficient raw materials, shortage of finance, labour problems and
regular power failures there is underutilisation of capacity in the industry. • Lack of financial assistance •
non availability of design and art centers • Absence of technical research and development
institutions • absence of training centers • Illiteracy causing unawareness of various
incentives/promotional schemes. Unavailability of raw materials: The unavailability of raw materials is
a serious problem for both the developed countries and the developing countries like India. Other
components like fittings, adhesives and many more are also less accessible in preferred scale.

29. PROBLEMS OF LEATHER
INDUSTRY IN INDIA
Hindrances encountered by the traders
• Wide disparity in market prices of end products
• lack of financial assistance
• Chinese competition: China dominates the global leather industry due to its low production costs. cheap, second
hand imported
• Inability to export directly leading to untapped export potential
• Lack of technology: In India leather is produced in the old fashioned way through tanning that takes a lot of
time to process raw hide skin into leather. Further, the activities of designing, cutting and stitching are done manually,
which affects the quality and unit value realisation of products. Evidently, the industry lacks in terms of level of
modernisation and technology readiness.
• Inadequate investments: The leather industry needs to make high capital investments for proper production
processes and infrastructure.

30. GOVERNMENT INITIATIVES
 The Integrated Development of Leather Sector (IDLS) sub-scheme implemented as part of the
ILDP has significantly contributed to capacity modernisation and technological up-gradation of the
leather sector.
 No Central Excise duty and import duty on raw hides and skins, semi-processed leathers like wet
blue, crust leather or finished leather.
 Capital goods (machinery) required by the industry can be imported without import duty under the
Export Promotion Capital Goods (EPCG) Scheme of Foreign Trade Policy, subject to meeting the
export obligation of six times the duty saved in six years.
 No Central Excise Duty on footwear with Retail Price upto USD 7.69. Concessional Excise duty of
6% for all footwear with Retail Price above USD 7.69 and USD 15.38.
 Excise duty on footwear with leather uppers and having retail price more than USD 15.38 reduced
from 12%to 6%.
 Under leather technology, innovation and environment issues, a sub-scheme of the Indian Leather
Development Programme (ILDP), assistance is provided for technology benchmarking and environment
management for the upgradation of Common Effluent Treatment Plants (CETPs), for Solid Waste
Management and for holding environmental workshops.

31. GOVERNMENT
INITIATIVES
 State governments have a single window clearance system in place to fast-track
clearances for the establishment of production units.
 3% reduction in interest on Rupee Export Credit to MSME units and all footwear
units under Interest Equalisation Scheme for 5 years from 1st April 2015.
 No Central Excise duty and import duty on raw hides and skins, semi-processed
leathers like wet blue, crust leather or finished leather.
 Imported leather too is now available to the industry at competitive prices.Technology
Mission scheme planned for tanning sector to utilize 100% tanning capacity of existing
tanneries, to upgrade Common Effluent Treatment Plants (CETPs), systematic and large
collection of hides and skins etc.

32. INVESTMENT
OPPORTUNITIES
 The National Manufacturing Policy identifies leather as a special focus sector, for growth and
employment generation.
 Huge Production Centres in the form of Mega Leather Clusters (MLC) with all required
infrastructure for production to be set-up in next 5 years. These include the following projects.
Investors can set-up their units in one of these MLCs.
 LOCATION OF THE MLC
 Project Approved
 Kothapatnam Village, Kota Mandal, Andhra Pradesh (Area: 537 acres)
 Project under consideration
 IMT Rajkot, Mewat, Haryana (Area: 105 acres)

33. GROWTH DRIVERS

34. SWOT ANALYSIS

35. SWOT ANALYSIS

36. THANK YOU!!