comparative advantage of saddlery/deteregent industry in Kanpur. WIH RESPECT TO ARADHYA INTERNATIONAL subject- microeconomics

1. By:
HIMANI SHUKLA
NEHA TANDON
UPKAR TIWARI
ABHI JAISWAL

2. Comparative Advantage
 The theory of comparative advantage is an economic
theory about the work gains from trade for individuals,
firms, or nations that arise from differences in their factor
endowments or technological progress.
 In an economic model, an agent has a comparative
advantage over another in producing a particular good if
they can produce that good at a lower relative opportunity
cost or autarky price, i.e. at a lower relative marginal
cost prior to trade.

3. Continued..
 One does not compare the monetary costs of
production or even the resource costs (labor needed per
unit of output) of production. Instead, one must
compare the opportunity costs of producing goods
across countries.
 The closely related law or principle of comparative
advantage holds that under free trade, an agent will
produce more of and consume less of a good for which
they have a comparative advantage.

4. Indian Saddlery Industry
 India is one of the largest producers of saddlery and
harness goods in the world.
 The saddlery industry was established in the 19th century
primarily to cater to the needs of military and police.
 From then on, initiatives were taken to develop the
industry and today there are over 150 units in the
organised sector, out of which approximately 105 are
100% export oriented units.

5. (Continued...)
• The Saddlery industry occupies a place of prominence
in the Indian economy in view of its substantial export
earnings and growth.
• India's leather industry has witnessed robust growth in
recent years .
• Almost 50 per cent of India's leather business comes
from international trade.
• The major markets for Indian leather products are
Germany, the US, the UK, Italy, France, Hong Kong,
Spain, the Netherlands and UAE.

6. Percentage share of leather and leather
products (2015-2016)

7. Percentage share of various countries
in India’s leather and leather products
exports (2015-2016)

8. Kanpur, the leather hub of India
 Kanpur, in the state of Uttar Pradesh, is a major production
centre for saddlery goods in India accounting for more
than 95% of the total exports of saddlery items from India.
 Because of its specialisation in tanning and finishing of
buffalo hides, Kanpur is the only centre in the country
where harness leather, which is major input for saddlery
industry, is manufactured.
 The export of saddlery and harness items have showed an
annual growth rate of about 40% reaching DM 64 million
during 1998-99

11. Company Profile:
 Nature of business- manufacturers
 Products manufacturers- Breeches, Halter, Rugs, ridding
boots, Pads, saddle pads.
 Year established- 2009
 Owner- Mr. Ashwini Srivastava
 Address- No. 22-M-7, Dabauli, Ratan lal nagar, Kanpur -
208023, Uttar Pradesh, India.

12. Saddlery industries come under
monopolistic competition

13. Monopolistic Competition
• Monopolistic competition is a type of imperfect
competition such that many producers sell products
that are differentiated from one another (e.g. by
branding or quality)
• In monopolistic competition, a firm takes the prices
charged by its rivals as given and ignores the impact of
its own prices on the prices of other firms.
• In the presence of coercive government, monopolistic
competition will fall into government-granted
monopoly. Unlike perfect competition, the firm
maintains spare capacity.

14.  Short-run equilibrium of the firm under monopolistic competition.
The firm maximizes its profits and produces a quantity where the
firm's marginal revenue (MR) is equal to its marginal cost (MC). The
firm is able to collect a price based on the average revenue (AR)
curve. The difference between the firm's average revenue and average
cost, multiplied by the quantity sold (Qs), gives the total profit.

15.  Long-run equilibrium of the firm under monopolistic competition.
The firm still produces where marginal cost and marginal revenue are
equal; however, the demand curve (and AR) has shifted as other firms
entered the market and increased competition. The firm no longer
sells its goods above average cost and can no longer claim an
economic profit

16. Leather industry has an advantage in
Kanpur because...
Cheap raw material
availability
Easy availability of
water resources
Presence of
slaughterhouse

17. THANKS