Indian Leather Industry

Because of its enormous potential for employment, development, and exports, the leather sector has a prominent position in the Indian economy. There has been a growing focus on its planned development, which aims to make the best use of available raw resources in order to maximise revenues, notably from exports. The Indian leather sector has benefited greatly from the post-liberalization period. India expects to earn a larger part of the global market as multinational businesses seek new sourcing choices.

From being a mere exporter of raw materials in the 1960s to being a producer of value-added finished products in the 1990s, the leather industry has seen a tremendous transition. Since 1973, the government’s policy measures have been critical in bringing about this shift. India’s share in the worldwide leather trade is 2.6 percent, and the country’s foreign exchange profits from the industry are ranked seventh. The export composition has also changed, with more and more value-added items being exported.

At a constant price 2000-2001, India’s contribution of global value added from this industry was 2.1 percent in 2000 and 1.8 percent in 2009. Though India has significant advantages in the leather business in terms of raw material availability and having the world’s biggest cattle population, the leather sector’s untapped potential, particularly in the high end value chain, is still restricted. This untapped potential presents enormous development and diversification prospects for the sector.

The organisation of the industry and the manner of production

The leather and leather goods sector includes the raw material production process, such as carcass collection and flaying, as well as the manufacture of leather from the raw material, such as tanning, and the fabrication of leather items from completed leather. Carcass collection and flaying are distributed across the nation, whereas tanning and product processing, which make up the industry’s manufacturing operations, are concentrated mostly in metropolitan areas in the form of industrial clusters.

The manufacturing of raw hides and skins from either dead or slain animals is the initial step in the chain. Cattle, buffaloes, goats, and sheep are the most common animal species that provide hides and skins to the leather industry. India has the world’s greatest livestock population, with 15 percent of cattle, 56 percent of buffaloes, 20 percent of goats, and 5% of sheep. 

Raw material availability and quality, on the other hand, are one of the key restraints that the industry faces in general. Many of the issues that have major ramifications for raw material availability and export performance and quality in the industry are tied to the techniques of procuring raw hides and skins, as well as their flaying and curing.

Despite having the world’s greatest animal population, India’s availability of hides and skins is limited by a poor rate of recovery. Available cattle are dispersed across the country, and gathering procedures differ from one location to the next. Recovery occurs from both killed and fallen (dead) animals, and in a nation where cow slaughter is prohibited in vast sections of the country, and cattle that die are sometimes not collected for days, if not weeks, the recovery rates are far lower than they could be.

Key Summary: 

• Leather plays a prominent role in the Indian economy 
• Indian leather sector has been earning and growing substantially, generating revenues and is becoming one of the top-ten earners of foreign exchange 
• Footwear is one of the most important account for India’s leather market revenue generation, product export and it accounts at 47.59 percent. 
• Leather business is India’s one of the biggest job creating industry that has the potential to employee around 4.42 million people
• India is the world’s second-biggest manufacturer of footwear item and the world’s second highest exporter of the leather garments. Also the world’s fifth largest exporter of leather material goods and the world’s third largest exporter of saddlery and harness items. 

Key Reasons to Invest:

• India managed to trade mutual agreements with countries such as Korea, Japan, Chile and ASEAN sectors and many others and is also on the verge to trade for a free trade agreement with Australia and the European Union as well. With 20% of the world’s cow and buffalo population and 11% of the world’s goat and sheep population, India’s leather industry has enough raw resources.
• Women account for around 30% of the workforce in the leather goods business. With 55 percent of the workforce under the age of 35, India’s leather sector has one of the youngest workforces.
• Potential to get into India’s massive domestic market: By 2020, the market of the domestic sector is near to become worth USD 18 billion.
• If compared to other big manufacturing countries, there are comparative benefits in production costs and labour expenses.
• There is skilled/trained labour present for new or existing production unit.
• By 2025, the Government of India wants to reach a target of USD 10 billion in leather exports. Kolhapuri Chappals’ export goal is one billion dollars.
• With the goal of making the “Made in India” trademark the hallmark of quality, the government of India will establish BIS Standards laboratories near leather clusters.

Achievements till date: 

• In December 2017, the Indian Footwear, Leather & Accessories Development Programme (IFLADP), a specific package for creating jobs in the leather and footwear sector, was launched. 
• From 2017-18 to 2019-20, USD 371 million has been authorised for this purpose. Four projects totaling USD 15 million have been authorised under the programme.
• This will help with infrastructure upgrades, employment generation, and sustainability of the environment in Tamil Nadu. 
• The gigantic West Bengal leather sector has got a preferable permission along with the potential of employment of over 7K people and an investment next to USD 64 million dollars.
• Around 9 projects are approved for upgrading common effluent treatment plants now being implemented under the plan, with an approximate value USD 67 million and government support of USD 46 million.
• In the 2017-18 fiscal year, 94,231 jobless people in the leather and footwear sector received primary skill development training, with 71,125 of them being placed.

In conclusion:- 

India is ranked 63 in the World Bank’s Doing Business 2020 report. Many of the initiatives included in the National Trade Facilitation Action Plan (2017-2020) have helped to increase cross-border trade productivity by reducing border and paperwork compliance delays for both exports and imports. According to the National Manufacturing Policy, leather is a high-growth, high-job-creation industry. By 2025, the programme targets a GDP of 25% and the development of 100 million employment across all industries.

Existence of massive manufacturing centres in the form of Mega Leather Clusters (MLCs) with the necessary infrastructure, where investors can establish one of these MLCs.