topic – importance of leather in

footwear industry

submitted to: submitted

by:
Mr. Gur Prashad Sharma Ajay upadhyay
Coordinator, 154195
Dept. of Leather Tech, Footwear(CASD) B.tech 2nd
Dayalbagh Educational Institute
 1. indian leather industry
2. future for leather
3. role of leather industry in
footwear
 INDIAN LEATHER INDUSTRY

The leather industry occupies a place of

prominence in the Indian economy in view of its
massive potential for employment, growth and
exports. There has been an increasing emphasis on
its planned development, aimed at optimum
utilisation of available raw materials for
maximising the returns, particularly from exports.
The exports of leather and leather products gained
momentum during the past two decades. There has
been a phenomenal growth in exports from Rs.320
million in the year 1965-66 to Rs.69558 million in
1996-97. Indian leather industry today has attained
well merited recognition in international markets
besides occupying a prominent place among the
top seven foreign exchange earners of the country.

The leather industry has undergone a dramatic

transformation from a mere exporter of raw
materials in the sixties to that of value added
finished products in the nineties. Policy initiatives
taken by the Government of India since 1973 have
been instrumental to such a transformation. In the
wake of globalisation of Indian economy supported
with liberalised economic and trade policies since
1991, the industry is poised for further growth to
achieve greater share in the global trade.

Apart from a significant foreign exchange earner,

leather industry has tremendous potential for
employment generation. Direct and indirect
employment of the industry is around 2 million. The
skilled and semi-skilled workers constitute nearly
50% of the total work force. The estimated
employment in different sectors of leather industry
is as follows:

SECTOR TOTAL EMPLOYMENT

Flaying, curing & Carcass Recovery 8,00,000

Tanning & Finishing 1,25,000

Full Shoe 1,75,000

Shoe Uppers 75,000

Chappals & Sandals 4,50,000

Leather Goods & Garments 1,50,000

STRUCTURE OF THE INDUSTRY

The leather industry is spread in different

segments, namely, tanning & finishing, footwear &
footwear components, leather garments, leather
goods including saddlery & harness, etc. The
estimated production capacity in different
segments is as under

P RODUCT C APACITY

LEATHER

Hides 64 million
pieces
 Skins 166 million
pieces

FOOTWEAR & FOOTWEAR COMPONENTS

a) Shoes 100 million pairs

b) Leather shoe uppers 78 million
pairs
c) Non-leather shoes/chappals etc 125 million
pairs

Leather Garments 6 million

pieces

Leather Products 70 million

pieces

Industrial Gloves 40 million

pairs

Saddlery 6000 pieces

The major production centres for leather and

leather products are located at Chennai, Ambur,
Ranipet, Vaniyambadi, Trichi, Dindigul in Tamil
Nadu, Calcutta in West Bengal, Kanpur in Uttar
Pradesh, Jalandhar in Punjab, Bangalore in
Karnataka, Delhi and Hyderabad in Andhra
Pradesh.

RAW MATERIAL SUPPLIES

There exists a large raw material base. This

is on account of population of 194 million
cattle, 70 million buffaloes, 95 million goats.
According to the latest census, India ranks
first among the major livestock holding
countries in the world. In respect of sheep
with 48 million sheeps, it claims the sixth
position. These four species provide the
basic raw material for the leather industry.

The annual availability of 166 million pieces

of hides and skins is the main strength of the
industry. This is expected to go up to 218
million pieces by the end of year 2000. Some
of the goat/calf/sheep skins available in India
are regarded as speciality products
commanding a good market. Abundance of
traditional skills in training, finishing and
manufacturing downstream products and
relatively low wage rates are the two other
factors of comparative advantage for India.

TANNING AND FINISHING CAPACITY

With tanning and finishing capacity for processing

1192 million pieces of hides and skins per annum
spread over different parts of the country, most of
which is organised along modern lives, the
capability of India to sustain a much larger
industry with its raw material resource is evident.
In order to augment the domestic raw material
availability, the Government of India has allowed
duty free import of hides and skins from anywhere
in the world. It is an attraction for any foreign
manufacturer who intends to shift his production
base from a high cost location to low cost base.

EXPORT POTENTIAL

The leather industry, one of the major foreign

exchange earners of the country recorded
significant growth since the beginning of the
decade. Today the share of the value added
finished products in the total exports from leather
sector are 80% as against 20% in 1970s.

Category 1998-99

Finished Leather 265.2

Leather Footwear 290.2

Footwear Components 243.7

Leather Garments 368.6

Leather Goods 429.0

Saddlery and Harness 33.4

Total 1630.1

(Value in million US$)

 Export of Leather and Leather Products from India

140000
117223.4
120000
110343.2
100000 101143
Rs. Million

80000
81520.38 69557.8
60000
61570.61
40000

20000

0
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99

(Value in million Rs.)

Country 1998-99 Share in total

exports in 1998-99

Germany 15462 22.23 %

USA 10826 15.56 %

Italy 8317 11.96 %

UK 9744 14.00 %

France 3240 4.6 %

Spain 3103 4.46 %

Russia 1009 1.445 %

Portugal 1240 1.78 %

Australia 1465 2.10 %

Denmark 808 1.16 %

Netherlands 2127 3.06 %

Hong Kong 258 3.25 %

O THERS 9958 14.32 %

Total 69558 100 %

TOP TEN INDIAN LEATHER EXPORTERS

Tata International Ltd.

Florind Shoes Ltd.
Punihani International
Farida Shoes Ltd.
Mirza Tanners Ltd.
T. Abdul Wahid & Company
Hindustan Lever Ltd.
Super House Leather Ltd.
RSL Industries Ltd.
Presidency Kid Leather Ltd.

INDIAN LEATHER F OOTWEAR INDUSTRY

India is the world's second largest producer of

footwear; its production estimated over 700 million
pairs per annum. At about US $ 300 million per
year, footwear accounts for 18 percent share of
total exports of leather exports.

Various types of shoes produced and exported

from India include dress shoes, casuals,
moccasins, sports shoes, horacchis, sandals,
ballerinas, and booties. Major production centres
are Chennai (Madras), Delhi, Agra, Kanpur, Mumbai
(Bombay), Calcutta and Jalandhar.

Most of the modern footwear manufacturers in

India are already supplying to well established
brands in Europe and USA. The large domestic
market and the opportunity to cater to world
markets makes India an attractive destination for
technology and investments. Equally relevant is it
for the footwear components industry, at this
juncture, it is posed for real growth and
diversification.
INDIAN LEATHER GOODS INDUSTRY

Items produced by this sector include, in addition

to bags, handbags, handgloves and industrial
gloves, wallets, ruck sacks, folios, brief cases,
travelware, belts, sports goods, upholstery and
saddlery goods.

A surfeit of modern units in Chennai, Kanpur and

Calcutta employing skilled human resources and
equipped with modern and sophisticated
machinery account for a diversified range of
superlative small leather goods including bags,
purses, wallets, industrial gloves etc. made of
quality leathers of cows, sheep, goats and
buffaloes. The products meet the requirement of
bulk buyers and consumers in Europe, USA and
Australia.

The major market for Indian leather goods is

Germany, with an offtake of about 25 per cent of
the leather goods produced in India followed by
USA, UK, France and Italy. With products ranging
from designer collections to personal leather
accessories, this sector has a share of 20.53 per
cent in the leather industry, while maintaining an
average growth rate of 11 per cent recorded in the
last five years.

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.

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. Kanpur, because of
its specialisation in tanning and finishing of buffalo
hides is the only centre in the country where
harness leather, which is major input for saddlery
industry, is manufactured.

The export of saddlery and harn'ess items have

showed an annual growth rate of about 40%
reaching DM 64 million during 1998-99. The major
importers of Indian saddlery are Germany, USA,
UK, France, Scandinavia, Netherlands, Japan,
Australia and New Zealand.

INDIAN LEATHER GARMENTS INDUSTRY

The Leather Garment Industry occupies a place of

prominence in the Indian leather sector. The
product classification of leather garments
comprise of jackets, long coats, waist coats,
shirts, pant/short, children garments, motorbike
jackets, aprons and industrial leather garments.
Indian leather garments, which entered the world
market only in the mid-eighties with exports of Rs.
15 crores in 1997-98, account for about Rs. 1530
crore in 1997-98. The major export destination of
leather garments from India is Germany. In 1997,
German imports of leather garments aggregated
DM 1786 million of which DM 304 million worth of
imports went from India. India, China and Turkey
were the major suppliers of leather garments for
the German market, as they accounted for about
78% of the market share.

Among the three major exporting nations of leather

garments, India maintains a similar level of market
share of about 20%, in both German and EU
markets.

Other markets for India include Italy, U.K., U.S.A.

France, Spain and Netherlands. Recently,
successful attempt had been made for exports to
Denmark, Switzerland and Canada.

INDIAN LEATHER INDUSTRY - INVESTMENT & SALES

The ratio of investment : sales value is 1: 2.25,

which is very low when compared to other
industries. This is mainly due to low capacity
 utilization of the units. The capacity utilisation of
units in respect of hides converting raw into
unfinished leathers is estimated at 49%, raw to
finished 60% and unfinished to finished 70%.

In the case of skin based tanneries, the respective

percentages are 64, 67 and
70. The main reasons reported for under utilisation
of capacity are raw material shortage, high price of
raw materials, lack of modernisation, financial
constraints, power constraints and stringent
environmental regulations.

INVESTMENT DETAILS OF INDIAN LEATHER

INDUSTRY

Average

No. of Units Investment per Total Cost

SECTOR unit *
(in Rs. Crores) (in Rs. Crores)

Tanning

SSI 1077 2.25 2423.25

LARGE / MEDIUM 80 5.00 400.00

Sub – Total (I) 2823.25

Foot Wear

SSI 550 0.80 440.00

Large / medium 50 3.78 189.00

Sub – Total (II) 629.00

Leather goods

SSI 390 0.50 195.00

Large / medium 10 1.68 16.80

Sub – Total (III) 211.80

Leather Garments

SSI 390 1.00 390.00

Large / medium 10 4.00 40.00

Sub – Total (IV) 430.00

Total

(I+II+III+IV) 4094.05

Unorganised sector (@30% of total amount) 1228.21

TOTAL AMOUNT 5322.26

Composition of Indian leather

exports to Germany (1998-99)

3% 8%
13%

31%

15%

30%

Leather Leather Footwear Footwear Component

Leather Garments Leather Goods Saddlery and Harness
 Export of leather and leather products
to Germany (1998-99)

109.5 113.2
120

100
Million US $

80
48.86 56.03
60
28.25
40
8.51
20

0
Leather Leather Footwear Leather Leather Saddlery
Footwear Component Garments Goods and Harness

MARKETING OF LEATHER AND LEATHER PRODUCTS

IN GERMANY & THE EU

The leather sector offers a good potential which

Indian entrepreneurs can exploit in Germany and
other EU markets characterised by ever growing
competitiveness in terms of price and quality, on
one hand, and the environmental considerations,
on the other. With a strong foothold that the Indian
leather industry has had for long in these markets,
and its advantage of raw material and labour
resources, Indian leather exporters can, and
should, mount a concerted marketing campaign to
wrest a share consistent with their inherent
strength and potential. This has to be done against
the background of the well-known salient features
of the German market:

• The world's second largest import and export

market
• A difficult buyers' market with hyper competition
and high expectations
• A dynamic multi-faceted market with rapid
technological development and innovations A
market where a considerable amount of buying
power is devoted to satisfying individual needs
• A market influenced by the rising average age of
the population and low birth rate
• A market where environment awareness and
eco-friendly production becomes more and more
a pre-requisite for successful marketing of
products

RECIPE FOR MARKET INTELLIGENCE

Market information through journals and magazines

» Schuhmarkt
» Schuhkurier
» Lederwaren Report

Quick Market Assessment

» Window shopping
» Backward calculation of price
» Catalogues/ leaflets

Trade Fairs
» GDS – Dusseldorf » Herren Mode
Woche - Munich
» Expo-Riva Schuh - Italy » Igedo Fashion
Fair - Düsseldorf
» Leipzig Fashion Fair » SPOGA -
Cologne
» Lederwarenmesse - Offenbach

Agents
MARKETING CHANNELS

The emerging trend in Germany has been towards

direct imports. The other noteworthy feature is the
integration of retailing and manufacturing,
particularly for the footwear sector. This has led to
increased emphasis on distribution aspects of
business. Other distributors, like departmental
stores, mail order houses, super markets and non-
leather shops have also gained importance. Many
outlets get direct supplies either from the
manufacturers and importers or from wholesalers
and buying associations (Einkaufs- Verband, e.V.).

These developments necessitate the marketing

strategies to be attuned to the specifics of the
different channels, keeping in sharp focus the
changes taking place in the distribution pattern of
chain stores, retailers, discounters, etc.

The strategy should focus on a structural approach

to the promotion of export of leather products from
India. This must include market information for
exploring new markets, participation in different
international trade fairs, organising trade
delegations, organising buyer-seller meets,
liaisoning with the representatives of the buying
houses, etc.

For the successful marketing of their products, the

Indian exporters should aim for long lasting trade
relations based on stable partnerships. In such a
context, the German importer needs to be viewed
as much more than only a buyer and distributor. He
would normally take care of the timely
development of the samples and collections
through fashion and design information and also by
employing pattern makers and designers. In
addition, he would organise advertising and PR
activities, besides holding sufficient stocks .

ENVIRONMENTAL ASPECTS FOR LEATHER PRODUCTS

Manufacturers who produce environmentally sound

products will enjoy a competitive advantage in all
business relations with EU in general and Germany
in particular. The pitch has to be to successfully
emphasise the environmental
soundness of the product in the information to the
buyers since major attention is being paid to the
increasing role of the environmental regulations.
Therefore, the manufacturers have to view their
products and production processes not just by
looking at traditional aspects like price, quality,
customer demands, etc. but also at the
environment. Environmentally sound production,
consequently, opens new market opportunities.

The regulations concerning the ban on the use of

Azo Dyes and PCP need to be specially taken care
of. Use of both these inputs has been banned due
to their carcinogenic nature. Likewise, for
compliance with the German packing regulations,
Indian suppliers have to stick to the basic principle
that packaging material be reusable and
recyclable. Consumers may have a tendency to
choose products, which are easily recognisable as
such and are labeled according to legal
stipulations. The hallmark for these environment-
friendly products is normally referred to as ‘ECO-
LABEL’. This indicates that the product is
manufactured in consonance with the
environmental regulations.

GLOBAL SCENARIO :

The global trade in leather and leather products

has been increasing over the years from mere US$
4 billion in 1972 to US$ 70 billion in 1997.

Although the exports of Indian leather and leather

products have grown manifold during the past
decades, our country's share in global trade is
around 3% among world imports of leather
products. Whereas India's share in world imports of
leather footwear is 1%. Major exporting countries
of leather footwear are China (14% share), Portugal
(6% share), Brazil (5% share) and Indonesia (4%
share).

India's share in world imports of leather garments

is 6%. Major exporting countries of leather
garments are China (36% share), Germany (9%
share), Italy (7% share), Turkey (5% share) and
Pakistan (4% share)

India's share in world imports of leather goods is

7%. Major exporting countries are China (22%
share), Italy (22 % share), France (7% share) and
Greece (5% share),

India's share in world imports of harness and

saddlery is 8%. Major exporting countries of
harness & saddlery are Germany (14 % share), U.K.
(14 % share), China (12% share).

Overall, India is facing fierce competition in

international market from countries like China,
Vietnam, Thailand, Indonesia, etc., which are
emerging as major manufacturing countries.

East European countries like Poland, Romania,

Czech and Slovak Republics have re-emerged as
major production centres particularly for footwear
sector. These countries pose major challenge to
Indian exporters as they enjoy geographical
advantage.
SWOT ANALYSIS OF THE INDIAN LEATHER INDUSTRY

Strengths
• High Growth
• Ready availability of highly skilled and cheap
manpower
• Large raw material base
• Policy initiatives taken by the Government
• Capability to assimilate new technologies and
handle large projects
• CONTINUOUS EMPHASIS ON PRODUCT DEVELOPMENT
AND DESIGN UPGRADATION

weakness

• Lack of warehousing support from the

government
• International price fluctuation
• Huge labour force resulting in high labour
charges
• Lack of strong presence in the global fashion
market
• Unawareness of international standards by many
players

Opportunities
• Rising potential in the domestic market
• Growing fashion consciousness globally
• Use of information technology and decision
support software to help eliminate the length of
the production cycle for different products
• Use of e-commerce in direct marketing

Threat

• MAJOR PART OF THE INDUSTRY IS UNORGANISED

• LIMITED SCOPE FOR MOBILISING FUNDS THROUGH
PRIVATE PLACEMENTS AND PUBLIC ISSUES (MANY
BUSINESSES ARE FAMILY-OWNED )
• DIFFICULTY IN OBTAINING BANK LOANS RESULTING IN
HIGH COST OF PRIVATE BORROWING
• STRICTER INTERNATIONAL STANDARDS
• HIGH COMPETITION FROM EAST EUROPEAN COUNTRIES
AND OTHER ASIAN COUNTRIES
• LACK OF COMMUNICATION FACILITIES AND SKILLS
The changing uses for leather
For many centuries, leather was almost exclusively used for
footwear, and then later, at the beginning of automotive age
almost all cars were fitted with leather seats. Since those
times, with the advent of mass production in the automotive
sector leather almost disappeared, and the proportion of
leather in footwear declined. More recently we have
witnessed a growing demand for automotive leather, and in
addition to footwear, uses of leather in garments, gloves,
furniture and leather goods.

Clearly, the uses of leather have changed and continue to

change. In some cases leather has lost its prime position as it
could not compete with new materials developed during
recent decades. At the same time the use of alternative
materials was called for within many areas of use due to the
limited availability of leather.

And it is designers who have decided what kind of materials –

such as leather - will be used for products. These are creative
people, and, apart from leather they have other alternatives
available - textiles, plastics, and other natural or synthetic
materials.

The replacement of leather in specific areas

There are many issues to take into account:

One of the main threats for leather are new materials and
substitutes with properties or values which are impossible to achieve
with leather. A comparison of the requirement and performances of
ski boots offers a good example.

In the early 1960's all ski boots were made of leather, but today the
proportion of leather ski boots is 0%. This is because there are
different requirements depending on both the user (beginner, good
skier, top skiers) and kind of use (racing purposes, ski touring, free
ride etc.) However, the common requirements for all of these uses is
that the ski boots should provide:

Waterproofness: If we take into consideration the

development of waterproof leathers, even the best can
hardly compete with plastic materials.

Stability: There are many different requirements and specific

demands, such as a softer or harder skeleton, achieved by the use of
various additives or components or layers of appropriate hardness .

Warmth: The inner boot has a direct contact with the foot and
needs to provide both warm and allow moisture to move through
the boot.

Support: This important requirement is dependent on the exact

foot shape. By using various foams it is possible to hold the foot
firmly in the boot without compromising on comfort. In some models
there is also a possibility to adjust the inner boot to perfectly fit the
foot of a particular user.
This variety of requirements and combination of properties is
impossible to achieve with leather, and is the reason why it is no
longer used in ski boots! Other examples could include leather
protective headwear, such used within contact sports, by pilots, and
within the mining industry. It is unimaginable to think that nowadays
leather helmets could provide the same or better properties than
specialised plastics.

This use of materials where leather was the prime component was
not due to any mistake or oversight by leather manufacturers. These
replacements were due to chemists and chemical companies and the
rapid development of plastic materials that provided better
properties in the 20th century.

COMBINATIONS OF PERFORMANCE AND

PRICE

In the 1970's-80's white leather was used almost exclusively for sport
shoes. However, with the increase in the production of athletic shoes
there was shortage of leather for this growing market. At the same
time it became quite difficult to achieve some increasing
performance parameters required for sport shoes, and the price
comparison leather vs. synthetics materials was in favour of synthetic
materials. The final result was that shoe companies switched to
substitutes - mostly synthetic materials. Now athletic shoes are
mostly fully synthetic

The properties of leather

It is useful to consider three attributes for leather:

DURABILITY

Durability and strength are considered major leather properties. In

this context it is useful to consider requirements found today in
footwear, where there are in fact quite different uses for leather and
non-leather shoes. For example, sport shoes are mostly non-leather,
whereas social and ladies footwear are mostly leather.

In turn, the main requirement here is fashion, where durability can

be almost irrelevant. Men's shoes are not subject to rapid fashion
changes, but ladies shoes are often discarded before being worn out .

And in addition, while there are no widely known benchmarks or

data available with comparisons of leather and non-leather shoes,
the key element that generally determines the lifetime potential of
shoes is not the leather upper but the sole. This component of the
shoe is normally worn out sooner than the upper part - regardless
whether it is made from leather or non-leather.

It should also be remembered that a great advantage of non-leather

shoes - especially sport shoes - is that it is a well-known that they can
be machine washed. Most leather can be hand washed quite readily
with gentle wetting agents – and in this event any weakness can be
in the methods of construction – but this is not widely appreciated.

UNIFORMITY

Traditionally, an important advantage of leather was its ability to

“breath”. The parameters for measuring this property are water

vapour permeability (WVP), water vapour absorption (WVA) and
water vapour coefficient (WVC).

These parameters are not always easy to achieve, and depend on the
technology of chemicals and products used and their methods of
application. Furthermore, these values also depend on structure of
the raw material: this is different from piece to piece as well as from
which part of skin/hide is sample taken.
These cross-hide and inter-pack variation applies to other physical
properties. It should be appreciated that the properties of various
textile materials, both natural and synthetics, are more uniform both
across the piece and from batch to batch.

SPECIAL APPEAL
Thanks to mass production of synthetic products we have product
uniformity and similarity. However, consumers like express their
individuality, hence the appeal of natural materials and products.
Leather offers appeal in this aspect, as each piece is unique and
therefore offers opportunity.

Heavy coated leather is threat to this concept. In particular,

automotive manufacture have very strict requirements and the
majority of leather required is heavily coated to achieve durability
and light-fastness. It is also the case that within multi-fabric
constructions - as synthetics cannot match leather in appearance - it
is necessary for leather to match the synthetic product. In this
situation even for an expert it is difficult to determine if the material
used is leather. Sometimes the only proof is that leather is listed in
the car specification or invoice.

It is clear that whenever there is a shift from the recognisable leather

appearance towards a plastic or synthetic appearance, then the
concept of expressing individuality is diminished.

Major considerations for the future

A number of considerations were taken into account:

HIDES AS WASTE FROM THE MEAT AND DAIRY INDUSTRIES

• If the approximately 9-10 million tons1 of raw hides and skins as
by-products of the meat industry (generated irrespective of the
needs of the leather industry) is not processed into leather and
subsequently into consumer goods, then it would remain as
organic waste. This would be a significant problem – rotting,
odour, volume/mass – to be handled or disposed of somehow. It is
even claimed that the carbon footprint of disposal footpath would
be greater than processi for the short and long termng into
leather.

• In case of serious food shortage in the future, the dilemma hide
for leather vs. hide for food might tip in favour of the latter. Many
of the essential amino acids are absent in collagen, but it is still a
protein, although of lower value. It may be that hide utilisation in
the future becomes similar to the prevailing use of pig skins.

• A futuristic technical avenue of development is the conversion of
collagen emanating from raw hides and skins into a sheet
material. In this event the focus would be to retain the
advantageous features of leather but as a uniform and predictable
material for applications already being served by various types of
leather today. This might be viewed as a product with handling
advantages of say leather board, but created using
intelligent/smart material processing technology. In this situation,
the leather products industry will benefit rather than loose,
whereas the leather processing industry will change into a higher-
tech form of biotechnology.

In the event where hides/skins were widely converted in other kinds
of material - food, cosmetics or other collagen products - jobs in
tanning and leather products industry would be lost. Regardless,
automotive interiors, furniture, clothing, shoes and accessories will
always be required - be it with leather or some substitute.
Employment and opportunity would change to other industrial
sectors - most likely chemical and the textile industry
THE DEVELOPMENT OF ARTIFICIAL COLLAGEN AND NEW
MATERIALS

• One situation is dependent upon the success of growing artificial

collagen in the sheet form. If this were to eventually succeed, and
a natural uniform material with all of the desirable properties
were produced, then very specific and improved properties might
be developed. This would side-step all of the unwanted
components that tanners receive and address as part of raw hides
and skins from meat production.


• Another situation to consider is a revolution in technology that

uses synthetic inputs to produce a better material in all properties
than leather. In this event this product would also compete other
synthetic materials, with leather and other natural materials
remaining for uses in fashion and luxury goods.

THE EFFECTS OF INCREASING DEMAND

• Ever improving living standards - both in industrialised and

developing countries – generates wealth and purchasing power.
This stimulates demand in fashion, personal preference, prestige
and luxury for materials and products made from natural
materials and genuine origin, and this includes leather.

• Increasing demand generates higher trade values, which in turn
enables better revenues within in the leather value/supply chain.
This is instrumental to provide employment and income to all
those associated with this industry - manufacture and commerce,
management and workforce, equipment and materials suppliers,
logistics and general services.

• Globalization is irreversible and stimulated by demand. This
creates conditions for different manufacturing bases depending
on ever changing social, economic and environmental conditions.
Related capacities are subject to (more-and-more frequent)
relocations that create additional business and employment
opportunities, including the leather sector. These opportunities
include constructions, equipment, evolving technologies,
improved manufacturing efficiencies, education and training, and
logistics.

RECYLEABILITY AND DISPOSAL

• For all practical purposes synthetic materials are not

biodegradable. The ultimate disposal of footwear and garment
made of synthetic materials may pose a bigger problem than
disposal of leather products. However, increasing legislative
pressure for recycling of synthetic materials (already present in
EU) may diminish this advantage especially in given the fact that
leather is not easily recycleable.

MALPRACTICE, FALSE CLAIMS AND AGENDAS

• Very aggressive campaigns based on false claims and agendas and

disregard for science are damaging to the leather industry.
Compounded with excessive legislation and the exaggeration of
risks associated with presence of Substances of Very High Concern
(SVHC) may in the long-run seriously undermine the future of the
leather sector.

• The majority of leather processing industry is responsible and
complies with social and environmental requirements. However,
there are still some producers that disregard their social and
environmental obligations. These people do serious damage to
the credibility of the industry: they propeturate an image of a
dirty, exploitive and irreponsible industry, and provide fuel to
support distorted beliefs, opinions and agendas.
RECYLEABILITY AND DISPOSAL

• For all practical purposes synthetic materials are not

biodegradable. The ultimate disposal of footwear and garment
made of synthetic materials may pose a bigger problem than
disposal of leather products. However, increasing legislative
pressure for recycling of synthetic materials (already present in
EU) may diminish this advantage especially in given the fact that
leather is not easily recycleable.

MALPRACTICE, FALSE CLAIMS AND AGENDAS

• Very aggressive campaigns based on false claims and agendas and

disregard for science are damaging to the leather industry.
Compounded with excessive legislation and the exaggeration of
risks associated with presence of Substances of Very High Concern
(SVHC) may in the long-run seriously undermine the future of the
leather sector.

• The majority of leather processing industry is responsible and
complies with social and environmental requirements. However,
there are still some producers that disregard their social and
environmental obligations. These people do serious damage to
the credibility of the industry: they propeturate an image of a
dirty, exploitive and irreponsible industry, and provide fuel to
support distorted beliefs, opinions and agendas.

However, leather offers the qualities that are recognised in

prestige goods – fashion statements, value and individuality. It is
understood as a natural product, and in the same stable as wool,
cotton and silk in the textile industry, wood in housing and
furniture, and other unique and desired materials. Substitute
materials might offer advanced properties in selected areas, but in
total the combination of properties and scope of leather in
prestige products is very significant.
 Taking this into account, it is important that leather should not
compete with synthetic/plastic materials. This places a demand on
innovation and development, especially in areas of appearance
and performance: it needs to be recognised that it is a natural
product, but it should look like leather.

• It is most important to understand and appreciate the value of

designers as they significantly influence fashion and product
demand. It is also important to recognise that designers do not
want to be restricted to synthetics materials, or heavily coated
leathers of limited scope. Leather can always offer designers - and
in turn consumers - an attractive and flexible alternative to mass
production and materials.

• The renewability factor of leather is a key strength as it is fully
based on an unavoidable and troublesome by-product that is
continuously generated from another industry.

• However, these positive attributes are counterbalanced by
significant weakness. These are due to a lack of understanding by
general population/consumers about leather and the leather
industry. In this respect there are two threats:

i] Confusion stemming from commodity-type leathers in
comparison with synthetic/artificial replacement materials. Good
communication and promotion concerning the naturalness,
individuality and beauty aspects of true leather are absent. There
is a need to promote the material that we produce, and this is
seen as a major opportunity.

ii] The effects of false-claims and agendas. Damage is
systematically taking place. It is important to emphasise the
sustainability and responsibilities – social and environmental - of
leather production to both our customers and consumers
THE ROLE OF LEATHER INDUSTRIES IN THE

DEVELOPMENT OF OUR ECONOMY

ABSTRACT

The leather industry is one of the oldest traditional industries. It

makes significant contribution towards economic growth,
balanced regional development, employment generation and
overall poverty reduction in the field of leather and allied
product manufacturing. 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.

Keywords: Contribution, Economic growth, Employment Generation.GDP, Poverty reduction

I. INTRODUCTION
Leather sector occupies a very important place in the
development of our economy on account of its substantial
export earnings, potential for creation of employment
opportunities and favorable conditions for its sustained growth.
There is a large potential to increase the domestic production
and exports.

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$ 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).

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.
The leather sector is working the following segments are given
below:

Tanning sector
Footwear
Leather Garments
II. LITERATURE REVIEW

Leather industries play an important role in the development of

our economy, While describing some basic issues pertaining to
the leather industries in developing economies, Some review of
literature are given here.

Shetty (1963) pointed out that the technological base in the

industry was extremely primitive and a unit was rarely interested
to adopt technological modification in the process.

Usha (1985) based on Tamil Nadu Leather Tanning Industry in

Year 1978-79.she focused attention on some selected issues
related to the structure of work force, Mechanization and the
prospect of the traditional skilled and unskilled workforce in the
industry. Her Major findings were that the leather tanning sector in
Tamil Nadu, about 90.0 per cent of the total entrepreneurs‟
belonged to the Muslim Community and rest belong to the Hindu

Community. As regards the Mechanization of Industry, most of

the tanning and manufacturing units were using Labor-intensive
technique, in which the skilled hand workers formed a majority of
the workforce.
Qureshi (1990)discussed some issues of leather making artisans
of Mewat region in the district of Gurgaon, Haryana A large
Majority of Leather Products makers were facing problems of
inferior quality of goods, time consuming, less profitability, low
prices for products, non availability of credit and payment delays.

Sahasranaman (1993)pointed out some basic problems of the

leather product industry. According to this study, in the Leather
product Industry, the dominance of traditional production system,
confinement of production to a particular community, absence of
modernization of technology, were the basic problems of the
producers.

Chandramouli’s (1999)on “Leather and Social Development”

focused on some characteristics of Leather Industry. The author
stated that the production of leather and leather products involves
various socio-economic activities. The economic activities were
largely in the form of generation of income, creation of
employment, etc. On the other hand, the production of leather and
leather goods led to the social development in the form of
understanding, awareness, social equity, better health, education
and nutrition.
Bhavani (2010) highlights the issue of quality employment
generation by the SSIs and negates the short term attitude of
increasing the volume of employment generation compromising
with quality. The author argues that employment generation by
the SSIs may be high in quantitative term but very low in quality.
Technological up gradation would enable the small firms to create
quality employment improving, duration and skill. This structural
shift may reduce the rate of employment generation in the short
run but would ensure high-income employment generation in the
long run.

III. OBJECTIVE OF THE STUDY

The proposed investigation has the following objectives:

To examine the role of leather industries in the growth of our

economy.

To investigate how the economic performance of industry

determines.

IV. RESEARCH METHODOLOGY

Data are mostly collected through desk research of online

resources, research papers, conference documents, and other
publications. Data from Council from leather export has been
used. Annual report on MSMEs, Annual report of ministry of
commerce and industry, various annual reports of State
Financial Corporation, and various financial institutions have
been used.

The data have been compiled from three types of sources:

published documents and reports, the World Wide Web and
statistical agencies. All data sources are listed at the end of
this note and Web links are provided where possible. Simple
statistical tools have been used for analyzing data.

Analysis of Export Performance of Leather and Leather

Products April-August 2015 vis-à-vis April-

August 2014

As per officially notified DGCI&S monthly export data, the

export of Leather and Leather products for the period April-
August 2015 touched US$ 2653.64 mn as against the
performance of US$ 2872.64 mn in the corresponding period
of last year (April-August 2014), recording a negative growth of
-7.62%. In rupee terms, the export touched Rs. 169367.00
million in April-August 2015 as against the previous year‟s
performance of
Rs. 172557.35 million registering a negative growth of -1.85%.

A Statement showing the Product-wise Export performance

during April-August 2015 vis-à-vis April-August 2014 is given
below:

Table 1: product wise Export Performance during

April-august 2014

Value in US $
MILLION

April -
April -Aug Aug
Category 2014 2015 % share

Finished leather 605.47 486.34 18.33%

Leather footwear 1010.22 962.75 36.28%

Footwear
component 171.61 134.68 5.08%

Leather garments 264.11 260.22 9.81%

Leather goods 606.06 590.83 22.26%

Saddlery and
hardness 74.07 63.35 2.39%

Non leather
footwear 141.11 155.47 5.86%

Total 2872.64 2653.64 100.00%

Source: ITC, Geneva & DGCI &S, Kolkata

In Rupee Terms, export of leather & leather products

have shown positive growth in all the product segments
during the period April-August 2015.

In Dollar Terms, export of leather & leather products

have shown positive growth in all the product segments
during the period April-August 2015.

Country-Wise Analysis:

Major export markets are USA 14.35%, U.K. 12.32%, Germany

11.09%, Italy 6.95%, Hong Kong 5.85%, U.A.E. 5.66%, Spain
5.56%, France 4.94%, Netherlands 3.02%, China 2.90%, Vietnam
1.81% and Belgium 1.42%.
These 12 countries together accounts for nearly 75% of
India‟s total leather& leather products export.

Export of leather & leather products to major markets like

Germany, Italy, France, Hong Kong, Russia, Netherlands,
Denmark, Greece, Canada, Switzerland, Sweden etc. Have
shown negative growth during April-August 2015. However,
export of leather and leather products to the markets viz., USA,
New Zealand, South Africa, Japan, UAE, Korea Rep. Etc., has
recorded positive growth during the reporting period.

Figure 2:Percentage share of footwear in export

Source: ITC, Geneva & DGCI &S, Kolkata

V. CONCLUSION
 Continuous export growth in the various segments of leather
industries shows that the leather industries play a vital role in
the development of our economy. India can generate
additional economic development growth by fostering leather
industries activities within its borders, particularly within its
burgeoning middle class. Not only has leather industries
been found to yield significant economic benefits in a wide
variety of nations, but India specifically has reached a point
in its development where it can achieve similar results
through other industries efforts. Among other things, India is
poised to generate new business startups in the high
technology area that can help it become a major competitor
in the world economy.