Leather Industry

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					      Leather Industry
                     Scope for Export




I     ndia is the third largest leather producer in the world after China and Italy. The
leather industry occupies a place of prominence in the Indian economy on account of
its massive potential for employment, growth, and exports. The industry employs
more than 2.5 million people and was responsible for about US$2.4 billion of exports
in 2004-05, much of it to the developed countries. The exports from the leather sector
constitute 7% of India’s export basket. In 2004-2005, India’s market share of the
global leather industry is estimated to be 2.51%.


Indian Leather Industry


For decades, the leather industry was reserved for the small-scale sector in India.
But in recent years the government has stepped in with a number of policy initiatives
to promote technological upgradation of the industry. Moreover, the leather industry
has undergone radical structural transformation from merely exporting raw materials
in the 1960s to exporting value-added finished products from 1990s onward.
The post liberalization era has opened up a plethora of opportunities for the Indian
leather industry. With global players looking for new sourcing options, India stands to
gain a bigger share of the global market. Leading brands from the US and Europe
are planning to source leather and leather products from India.


The major leather products and exports from India are hides and skins such as cow
and buffcalf, sheep nappa, goat skin, kid leather, wet blue etc. Footwear and
footwear components like shoes, shoe uppers, soles etc., leather garments, leather
gloves, leather saddlery goods, leather travel bags and totes, leather purses, wallets,
briefcases etc.


The major production centres for leather and leather products are located at
Chennai, Ambur, Ranipet, Vaniyambadi, Trichy, Dindigul in Tamil Nadu, Kolkata in
West Bengal, Kanpur in Uttar Pradesh, Jallandhar in Punjab, Hyderabad in Andhra
Pradesh and Bangalore in Karnataka and Delhi.
India has the largest livestock population in the world and produces 1.8 billion sq.ft.
of leather annually. Today, the leather industry ranks 8th in the export trade of the
country. The industry covers a vast spectrum of inputs, activities, skills and products
i.e. livestock, hides and skins, tanning, leather products and exports.


Livestock


India is the leading livestock holding country in the world. It ranks first in the case of
cattle including buffaloes, second in goats and fourth in the case of sheep.
While buffaloes and goats have recorded annual growth rates of 1.86% and 3.11%
respectively, cattle and sheep have recorded a marginal growth rate of 0.52%.


Hides and Skins


About 60% of hides and 90% of the skins are obtained from slaughter. It is well
known that in India, cattle and buffaloes are reared for milk and draught, and they
end up being slaughtered when they become unproductive. On the other hand, goats
and sheep are basically reared for meat.
                   Availability of Hides and Skins in India (2000)


                                                                Slaughtered Fallen
           Category     Net Availability (in million pieces)
                                                                    (%)           (%)

        Cattle Hides                       25                     50-60           40-50

        Buffalo Hides                      21                     60-70           30-40

        Goat Skins                     101                          90             10

        Sheep Skins                        34                       90             10

        Source: FIEO
      Recovery of fallen hides in India is confronted with a number of socio-
economic issues. This is resulting in significant non-recovery of hides.


                   Recovery of Hides and Skins in India (2000)


                            Recovery            Non-Recovery              Total
            Category
                           (million pcs)        (million pcs)       (million pcs)

        Cattle Hides           25.0                 5.3                   30.3

        Buffalo Hides          21.1                 2.1                   23.2

        Goat Skins            100.8                 5.4                   106.2

        Sheep Skins            34.3                 3.4                   37.7

        Source FIEO


In other words, they are being wasted due to non-availability of traditional flayers as
well as the local practice of burying the dead animals in certain parts of the country.
However, in the case of skins, the wastage is confined to lambs/kids due to
uneconomical reasons.


Tanning Industry


The tanning industry is concentrated in three states i.e. Tamil Nadu, West Bengal
and Uttar Pradesh. There are around 1600 tanneries in India. Tamil Nadu accounts
for 52%, West Bengal 23% and U.P. 12%. Other important states having tanneries
are Maharashtra, Andhra Pradesh and Punjab.
The Tanning industry in India is well developed. It has the back-up of a strong R&D
base, modern technology as well as trained manpower. The unique aspect is that it
turns out best possible quality leathers from relatively low quality hides


Leather Products Industries


The main products made out of leather are footwear, leather garments, leather goods
such as hand bags, belts, wallets, gloves, sports goods, harness and saddler,
upholstery etc. Of all these items, it is footwear that consumes about 60% of the total
leather production. The manufacture and export of leather products are
systematically promoted as their value addition is 4 to 5 times that of raw material.
Generally leather industry means that produces leather products.


World Exports and Imports of Leather and Leather Products


India has the eighth rank in exports of Leather and Leather Products in the world with
US $ 23865 lakh. The total exports of Leather and Leather Products all over the
world amounted to US $ 915868 lakh in 2004. Among the exporting countries of
Leather and Leather Products in the world, China ranked first with US $ 214643 lakh
in 2004 followed by Italy, Hong Kong, France, Germany and others. Table I shows
the top ten exporting countries of Leather and Leather Products.


In imports of Leather and Leather Products, USA ranked first with US $ 22386 million
in 2004 followed by Hong Kong, Italy, Germany, France, UK, Japan China, Spain and
Belgium. Table V details the top ten importing countries in the world over the years
from 2000.


India’s Exports and Imports of Leather and Leather Products


The exports of Leather and Leather Products amounted to US $ 1617.90 million in
1997-98, US $ 1963.55 million in 2000-01 and US $ 2379.44 million in 2004-05.
Country wise analysis of India’s exports of Leather and Leather Products shows that
the country Germany imported Leather products from India for US $ 336.69 million in
2004-05 which was US $ 363.41 million in 1997-98. UK came next with US $ 299.
21 followed by USA, Italy, Hong Kong, and Spain. The Country wise analysis of
India’s Exports of Leather and Leather Products is shown in Table II.
India exports variety of Leather Products like Finished Leather, Leather Footwear,
Footwear Components, Leather Garments, Leather Goods, Leather Gloves, Saddlery
and Harness.    The Product wise India’s Exports of Leather and Leather Products is
shown in Table III.


In 2004-05, Leather Footwear were exported for US $ 601.73 million, Leather Goods
for US $ 568.46 million, Finished Leather for US $ 577 million, Leather Garments for
US $ 318.73 million, non leather Footwear for US $ 90.21 million and Saddlery and
Harness for US $ 59.64 million.


Product wise world imports of Leather and Leather Products are shown in Table IV.
According to this, the world total import amounted to US $ 77331.26 million in 2000
has increased to US $ 97606.18 million in 2004. The share of India’s exports in
world imports has been around 2.5 per cent over the last five years.


Table VI compares the India’s exports and imports of Leather and Leather Products.
Both exports and imports increased from US $ 1963.55 million and US $ 165.38
million in 2000 to US $ 2379.44 million and US $ 275.97 million respectively in 2004.
The share of imports in exports was 11.6 per cent in 2004.


Conclusion


There is an increasing emphasis on the planned development of the industry and
optimum utilization of existing raw materials. Inadequate technology has been cited
as one factor hampering the growth of the Indian leather industry. Technology plays
major role in the exports of leather and leather products, in order to increase our
exports the producers of leather products should concentrate the technology. India
has a less than 3% share in the global trade in leather compared to China’s 20%.
Therefore India has vast potential for exports of leather products because India is the
largest producer of raw leather. Realizing this growth potential of the leather industry,
the Government of India should make significant efforts to promote rapid
advancement of the industry.




                                        Table I
         Exporting Countries of Leather and Leather Products in World
                                  (In Thousand US $)
  Country                 2000           2001             2002        2003        2004

      China             13741545       14691959       16160700      19240562    21464304
           Italy        12286643       13124725       12942282      14382291    15432765
    Hong Kong           10107788       9395231        9117217       9589285     10182840
      France             2522102       2719488        2777321       3347776     3793999
     Germany             2359213       2575999        2916411       3216009     3628318
       Brazil            2427398       2616384        2564015       2778626     3307497
       Spain             2455519       2643641        2806024       2998676     3077629
       India             2015943       1969620        1877829       2204958     2386500
   Usa,Pr,Usvi           2202491       2051348        1877756       1957027     2334344
     Belgium             1526732       1929262        2062334       2092731     2192425
   World Total          73163768       75343767       74920320      85650009    91586819
           Source: DGCI & S


                                           Table II
              Country Wise India’s Export of Leather and Leather Products
                                   (Value in Million US $)


COUNTRY            1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
  U.S.A.            251.40    252.71   258.24   342.78     286.89   246.44    251.58   279.70
 Germany            363.41    364.19   293.59   307.17     304.46   272.53    329.82   336.69
   U.K.             219.26    235.79   266.29   270.09     248.89   240.96    250.65   299.21
   Italy            221.53    197.16   165.47   241.07     263.11   255.92    285.02   242.60
  Spain               54.96    69.23    66.72   100.75     101.30   110.56    161.23   169.21
Hong Kong             53.93    53.26    55.22     98.32    121.43   165.70    226.97   236.52
  France              79.01    79.77    84.36     90.68     89.72    88.43    109.82   132.73
Netherlands           43.83    49.78    44.17     55.56     60.50    50.95     57.75     63.32
 Portugal             31.91    29.39    24.41     37.44     37.00    34.75     34.07     36.23
  Russia              50.99    25.19    27.97     31.53     16.09    11.09     11.33      7.61
 Denmark              21.73    18.82    28.30     28.37     22.47    17.59     24.66     29.40
 Australia            36.83    35.39    31.84     28.33     27.07    30.31     32.03     34.78
 Canada               21.69    18.77    21.42     26.66     27.81    24.81     25.59     28.19
 Sweden               12.76    15.40    19.79     25.39     19.91    17.78     19.61     22.10
 S. Africa            25.10    26.29    24.28     23.43     19.53    16.91     20.64     20.85
       U.A.E.          10.91      15.54      15.11       18.97       20.13      28.00      37.39      46.76
    Switzerland        22.78      21.49      16.13       18.61       16.92      13.92      16.64      17.25
      Belgium          13.22      16.82      14.75       17.35       21.08      19.53      24.24      32.66
    Korea Rep.          4.25       2.07       5.96       16.70       27.04      27.64      25.47      29.60
      Austria          20.16      17.22      14.65       15.01       16.42      13.78      19.12      20.22
       Japan           14.31       7.30       8.36       13.33       15.34      13.77      10.37       9.93
       Saudi
                        5.91       6.98       7.49        9.03        9.20       8.41      10.61      11.78
       Arabia
       China            3.73       3.72       4.68        8.93       13.86      16.57      22.87      32.59
      Greece            6.92       5.75       4.50        5.96        6.38      10.16      21.11      18.34
      Ireland           2.05       2.70       3.65        5.25        2.89       3.84       4.08       5.50
      Finland           3.01       4.17       2.63        4.36        7.92       3.52       4.23       6.37
       New
                        4.17       4.79       5.28        3.77        3.39       3.37       4.22       2.89
      Zealand
     Indonesia          1.79       1.54       2.64        3.36        5.91       7.76       8.42       9.47
      Others           70.36      73.66      86.45   115.35      123.48      120.21     166.91     196.94
      TOTAL          1671.90 1654.89 1604.35 1963.55 1936.14 1875.21 2216.45 2379.44
     Source: DGCI & S




                                                 Table III
                 Product wise India’s Export of Leather and Leather Products
                                          (Value in Million US $)


     Category           1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
  Finished Leather       295.83     264.67      239.82       381.49    459.25     508.83     555.71     577.00
  Leather Footwear       281.90     320.25      377.39       381.37    395.39     423.30     553.04     601.73
Footwear Components      240.48     237.72      215.09       238.09    233.94     175.07     161.27     163.67
 Leather Garments        425.21     376.66      347.28       460.45    378.75     272.08     301.08     318.73
   Leather Goods         301.71     311.15      278.72       343.76    321.46     335.36     403.20     568.46
Saddlery And Harness     25.96       32.69       34.11       42.66      35.64      43.66      52.71      59.64
   Leather Gloves        85.61       94.23       97.80       96.61      85.69      90.04     136.01           -
Non-Leather Footwear     15.21       17.52       14.12       19.11      26.02      26.88      53.42      90.21
       Total            1671.90 1654.89 1604.35 1963.55 1936.14 1875.21 2216.45 2379.44
     Source: DGCI & S
                                Table IV
World Import of Leather and Leather Products and India's Share 2000-2004


           DETAILS            2000     2001         2002     2003     2004

                                           (Value in million US $)

           Leather
         World Import        14979.29 16208.67 15909.70 17532.66 18653.14
         India's Export       381.49   459.25      508.83    555.71   577.00

       % Share Of India       2.55%    2.83%       3.20%     3.17%    3.09%

      Leather Footwear
         World Import        27594.22 28867.41 30568.73 33638.95 36420.19
         India's Export       381.37   395.39      423.30    553.04   601.73

       % Share Of India       1.38%    1.37%       1.38%     1.64%    1.65%

    Footwear Components
         World Import        4449.43 4603.55 4380.85 4789.71 4863.55

         India's Export       238.09   233.94      175.07    161.27   163.67
       % Share Of India       5.35%    5.08%       4.00%     3.37%    3.37%

      Leather Garments
         World Import        4453.76 4761.08 4206.77 4188.46 3974.20
         India's Export       460.45   378.75      272.08    301.08   318.73
       % Share Of India      10.34%    7.96%       6.47%     7.19%    8.02%

        Leather Goods
         World Import        5863.87 6166.62 6606.16 7514.61 9007.34
         India's Export       343.76   321.46      335.36    403.20   449.69

       % Share Of India       5.86%    5.21%       5.08%     5.37%    4.99%
       Leather Gloves
         World Import        1390.65 1352.89 1361.24 1480.83 1638.76

         India's Export       96.61    85.69       90.04     136.01   118.77
       % Share Of India       6.95%    6.33%       6.61%     9.18%    7.25%
  Leather Goods (Including

           Gloves)
         World Import        7254.52 7519.51 7967.41 8995.44 10646.11
         India's Export       440.37   407.15      425.40    539.21   568.46
      % Share Of India           6.07%       5.41%         5.34%      5.99%    5.34%

    Saddlery & Harness
        World Import             447.40      463.24    498.84        599.89    704.69
        India's Export            42.66      35.64         43.66      52.71     59.64
      % Share Of India           9.54%       7.69%         8.75%      8.79%    8.46%

      Total - Excluding

   Non-Leather Footwear
        World Import            59178.64 62423.49 63532.32 69745.15 75261.90

        India's Export          1944.44 1910.12 1848.33 2163.03 2289.23
      % Share Of India           3.29%       3.06%         2.91%      3.10%    3.04%

   Non-Leather Footwear
        World Import            18152.62 18178.98 18363.29 20079.93 22344.28
        India's Export            19.11      26.02         26.88      53.42     90.21
      % Share Of India           0.11%       0.14%         0.15%      0.27%    0.40%



 GRAND TOTAL -including
      non-leather ftwr

      WORLD IMPORT              77331.26 80602.47 81895.61 89825.08 97606.18

      INDIA'S EXPORT            1963.55 1936.14 1875.21 2216.45 2379.44

    % SHARE OF INDIA             2.54%       2.40%         2.29%      2.47%    2.44%

Source: World Statistics, ITC, Geneva
                                India's export, DGCI & S



                                          Table V
Top Ten Importing Countries of Leather and Leather Production in World
                                (In Million US$)


    Country              2000        2001           2002           2003       2004
   Usa,Pr,Usvi      20701.741 20964.180 20930.420 21155.554 22386.452
   Hong Kong         9097.919      8763.739 8517.831 8991.245             9648.893
      Italy          4712.548      5491.003 5750.593 6634.839             7054.536
    Germany          5571.828      5864.153 5678.359 6387.381             6700.530
     France          3779.652      4048.608 4444.479 5271.458             5777.731
     United Kingdom       3918.771   4161.021 4461.107 4925.195           5682.472
          Japan           4472.168   4539.873 4252.672 4528.926           4888.955
          China           2743.976   2783.882 2923.013 3331.767           3930.424
          Spain           1434.854   1656.183 1758.392 2252.519           2566.403
         Belgium          1454.489   1444.123 1758.893 1976.133           2225.618
      World Total        77331.260 80602.473 81895.619 89825.086 97606.188
    Source: DGCI & S


                                        Table VI
                     India’s Exports and Imports of Leather and
                          Leather Products - Comparison
                                  (In Million US$)


                                                             % of Imports
             Year             Imports              Exports
                                                              in Exports


             2000             165.382              1963.55        8.42
             2001             175.584              1936.14        9.07
             2002             171.520              1875.21        9.15
             2003             218.723              2216.45        9.87
             2004             275.974              2379.44        11.60


        Source: DGCI & S


    M. Selvakumar

Lecturer, PG and Research Dept of Commerce,
Sri. S.R.N.M. College,
Sattur, Tamil Nadu
&

    R. Sundar

Head, Dept of Commerce (CA),
Vidyasagar College,
Udumalpet, Tamil Nadu

				
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