PROJECT REPORT ON LEATHER GOODS

Leather Goods form an important segment of the leather industry in India. Leather goods
production capacity is estimated to be 63 million pieces annually.  

The different types of Leather Goods and accessories are manufactured in India i.e., Trunks, suit-
cases, vanity-cases, executive-cases, brief-cases, school satchels, traveling bags / luggage,
Portfolio and similar such items,  Hand Bags, shopping bags and similar such items, Wallets,
Purses, Pouches, Passport Holders, Credit Card Holders, Diary covers and similar such items,
Leather Belts, Caps etc.  India also produces Leather Upholstery – Sofa Seat Covers, Car Seat
Covers etc.

Most of the units manufacturing leather goods are located in Kolkata, Chennai, Mumbai,
Kanpur, Bangalore and Puducherry.  Industry is situated in few other clusters also. 
   
India is the fifth largest exporter of leather goods and accessories (inclusive of Gloves) in the
world.  India’s share in global leather Goods & Accessories segment is 4.84% in 2008. Leather
Goods and accessories manufactured in India bear brand names like Coach, Pierre Cardin, Yves
St Laurent, Etienne Aigner, Geoffery Beene, Harrods, Marks & Spencer, Liz Caliborne, Guess,
Next, Tommy Hilfiger, Kieffer, Waldhausen, Biemen, Nederinum, Zaldi, Kallquists, Shires,
GFS, Millers, Eisers, Weco, Ukal and Decalthon.

With the availability of quality raw materials coupled with skilled craftsmanship, India is now
poised to make itself a major destination for global sourcing of leather goods and accessories.
State-of-the-art production units and in-house Design Studios will strengthen the industry in
producing products with exquisite design and quality.  The industry’s accelerated development
and growth is being aided by the ambitious capacity expansion & modernization plans of private
industry and the Indian Government’s encouraging policy measures.

Global Import and India’s share

Global import of Leather Goods including Gloves increased from US$ 10786.59 million in 2004
to US$ 18034.94 million in 2008, growing at a CAGR of 13.71%. During 2008, the India’s share
in the global leather goods & accessories import is 4.84%.

(Value in Million US$)

           
Leather Goods
(Including  2004  2005  2006 2007  2008 
Gloves)          
WORLD IMPORT 10786.59 12278.19 13743.57 16386.40 18034.94
INDIA'S EXPORT 585.72 660.17 706.29 800.47 873.44
% SHARE OF INDIA 5.43% 5.38% 5.14% 4.88% 4.84%

Source: ITC, Geneva & DGCI &S, Kolkata

India’s export of leather goods & accessories including Gloves touched US$ 756.02 million in
2009-10, with a share of 22.23% in India’s total export.

The major markets for Indian leather goods are the USA, Germany, the UK, Italy, Spain, France,
Russia, Netherlands, UAE and Australia.  Nearly 79.36% of India’s export goes to these
countries.

EXPORT OF LEATHER & LEATHER PRODUCTS - APRIL TO NOV 2010 VIS-À-VIS APRIL-NOV
2009

(Value in Million Rs)

Product Apr-Nov Apr-Nov % Variation
2009 2010
Finished Leather 18333.79 21838.31 19.12%
Leather Footwear 32341.11 37034.1 14.51%
Footwear Components 7505.04 7043.63 -6.15%
Leather Garments 11821.35 11861.45 0.34%
Leather Goods 20425.84 21291.09 4.24%
Saddlery & Harness 1286.22 1371.57 6.64%
Non-Leather Footwear 515.76 555.48 7.70%
Total 92229.11 100995.67 9.51%

(Value in Million $)
Product Apr-Nov Apr-Nov % Variation
2009 2010
Finished Leather 381.05 485.30 27.36%
Leather Footwear 672.19 822.98 22.43%
Footwear Components 155.99 156.53 0.35%
Leather Garments 245.70 263.59 7.28%
Leather Goods 424.54 473.14 11.45%
Saddlery & Harness 26.73 30.48 14.01%
Non-Leather Footwear 10.72 12.34 15.15%
Total 1916.91 2244.35 17.08%
 INDIAN FOOTWEAR INDUSTRY

 The footwear sector is a very significant segment of the Leather Industry in India.

 Footwear is the engine of growth for the entire Indian leather industry and India is the
second largest global producer of footwear after China, accounting for 14% of global
footwear production. of 14.52 billion Pairs.

 India Produces 2065 million pairs of Different Categories of Footwear (Leather Footwear
909 million pairs, Leather Shoe uppers 100 million pairs and Non-leather footwear 1056
million pairs)

 India exports about 115 million pairs. Thus, nearly 95% of its production goes to meet its
own domestic demand.

 The major production centers in India are Chennai, Ranipet, Ambur in Tamil Nadu,
Mumbai in Maharastra, Kanpur in U.P., Jalandhar in Punjab, Agra, Delhi, Karnal,
Ludhiana, Sonepat, Faridabad, Pune, Kolkata, Calicut and Ernakulam.

 Footwear exported from India are Dress Shoes, Casuals, Moccasins, Sport Shoes,
Horrachies, Sandals, Ballerinas, Boots, Sandals and Chappals made of rubber, plastic,
P.V.C. and other materials. 

MNC Brands sourced MNC Brands Sold in India Indian Brands sold in India
from India
Acme, Clarks, ColeHann, Aldo, Bally, Clarks, Ecco, Red Tape, Bata, Liberty,
Deichmann, Ecco, Florshiem, Ferragammo, Khadims, Lakhani, Metro,
Elefanten, Florsheim, Hush Puppies, Lee cooper, Action
Gabor, Hasley, Hush Lloyd, Marks & Spencer,
Puppies, Double H, Justin, Nike, Nine West, New
Marks & Spencer, Nautica, Balance, Reebok, Rockport,
Nike, Nunn Bush, Reebok, Stacy Adams
Salamander, Stacy Adams,
Tony, Lama, Next, Bally

 Nearly 75% of India’s Export of Footwear is to the European Countries and the USA.

 The Indian Footwear Industry provides employment opportunities to a total of 1.1 million
people, mostly from the weaker sections of the society. Out of this, about 0.2 million are
employed in the organized sector, 40% of whom are women. Remaining 0.9 million
people are engaged in unorganized footwear sector like rural artisans, cottage and
household units etc.

 The Footwear Sector is now de-licensed and de-reserved, paving the way for expansion
of capacities on modern lines with state-of-the-art machinery. To further assist this
 process, the Government has permitted 100% Foreign Direct Investment through the
automatic route for the Footwear Sector.

India’s Export of Footwear – Last 10

Years                                                                                                (Value in Million US$)

1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007-
Product 99 2000 01 02 03 04 05 06 07 08
 

1045.2 1236.9 1475.8

Footwear 575.49 606.60 638.57 655.35 625.25 767.73 910.77 4 1 3
 

- 22.79 18.63 14.76 18.34 19.32

% Growth 7.05% 5.41% 5.27% 2.63% 4.59% % % % % %
Source:  
DGCI&S                  

India’s Footwear Export Growth over the last Four Decades 

Footwear export has increased from US$40.15 million in 1977-78 to US$ 1475.83 million in 2007-08 
 Chart showing Global Import of Footwear Vs India’s Export of Footwear 

India’s Exports of Footwear – Country-wise Share in Total Exports (2007-08) – Source:

DGCI& S

Major Markets for Indian Footwear:

The European Union and the USA are the major markets for Indian Footwear accounting for
79.95% and 9.22% share respectively in India’s total footwear export. The major markets for
Indian Footwear are Germany 16.66%, UK 16.31%, Italy 15.32%, USA 9.22%, France 7.81%,
Spain 5.10%, Netherlands 4.91%, Portugal 2.50%, UAE 2.48% and Denmark 1.18%. These 10
countries together accounts for nearly 81.49% of India’s total leather products export.

Country-wise export of Footwear from India – 5 years

(Value in Million
        US$) CAGR
Growth
Country 2003-04 2004-05 2005-06 2006-07 2007-08 %
Germany 146.23 164.73 170.97 217.23 245.92 13.87%.
 UK 154.44 192.62 195.78 208.2 240.77 11.74%.
Italy 107.65 103.63 134.35 186.11 226.10 20.38%.
USA 89.17 107.34 131.07 127.15 136.01 11.13%.
France 50.84 64.84 74.48 99.81 115.24 22.70%.
Spain 38.06 46.86 63.7 64.57 75.22 18.56%.
Netherlands 20.09 20.03 32.96 48.57 72.49 37.82%.
Portugal 15.12 18.75 22.15 35.03 36.86 24.95%
UAE 14.94 18.36 25.78 34.64 36.61 25.11%
Denmark 11.7 13.75 18.37 14.65 17.44 10.49%
Australia 8.44 8.00 11.58 10.11 12.48 10.27%
Sweden 6.29 6.95 6.77 7.99 12.04 17.62%
Canada 8.71 9.84 11.95 10.91 10.41 4.55%
South Africa 7.23 6.72 8.26 12.11 8.54 4.25%
Japan 2.01 2.55 3.17 3.07 4.63 23.19%
Others 86.81 125.8 133.9 156.76 225.07 26.89%
Total 767.73 910.77 1045.24 1236.91 1475.83 17.74%
Source: DGCI&S          

Indian Footwear Industry - A Vision Document 2010

Footwear is the engine of growth of the leather industry, currently accounting for an export value
of US$1212 million, holding a major share of 41% in India’s total leather trade. Considering this
fact, we have set an ambitious target of US$ 4.5 billion in respect of Footwear export from India
by 2010-11 where the overall export of leather products will reach US$6.98 billion, wherein
footwear alone will account for a share of 65% in India’s total leather export trade.

Current Export of Footwear and Projections by 2010-11

Investment Opportunities:
  The Government of India is keen to promote investments into the Indian leather sector,
and for this purpose, it has radically simplified and rationalized the policies, procedures
and regulatory aspects.

 The current industrial policy is very conducive to the promotion of Indian leather
industry both in terms of domestic trade as well as exports. 

Taxation:

 India has a well developed tax structure. 

 Income tax, Customs duties, Central Excise, Sales Tax and Service tax are the main taxes
levied by the Central Government
 VAT, Stamp duty, State Excise, Land Revenue, Tax on professions are the principal
taxes levied by the State Governments
 Local Bodies are empowered to levy tax on properties, octroi and for utilities like water
supply, drainage etc.

Corporate Tax is currently taxed at:

 30% in the case of domestic companies and surcharge @ 10% of tax

 40% in the case of foreign companies and surcharge @ 2.5% of tax

Recent / proposed FDIs, Joint Ventures in Footwear Industry

Zahonero Virgili SL, Spain (FDI)

Conceria Virginia, Italy (Joint Venture with Forward Group)

Top Fondi, Italy (Joint venture with Farida Group)

Xie Zhan Moulds, China (Joint Venture with Farida Group)

Formas Kunz, Brazil - This facility is coming up in Footwear Component Park, Chennai

Feng-Tay Enterprises Co.Ltd. Taiwan

This is a SEZ proposed in an area of 275 acres, coming up in SIPCOT Industrial Estate,
Cheyyar(TN).  Feng Tay is a manufacturer of sports shoes, skate shoes and casual shoes for Nike
and other global brands

Apache footwear, China
This FDI is coming up in Tada Mandal, Nellore(AP), in an area of 340 acres. Apache is a
supplier of shoes for Adidas and has manufacturing facilities in China

Takplast, Italy (a company producing soles and heels) signed a JV with an Indian company in
Chennai
Suolificio Mazza, Italy (a company producing leather soles) has decided to start up production in
India also, in Chennai.

Ge.Ma.Ta, Italy (a company producing tanning machines) is currently defining a JV and will
very soon start up its activities in Ranipet

Shosen, Italy (a company producing leather goods articles, in particular high quality bags. In
Italy, it produces also for Prada) is defining a project with an Indian leather goods company to
start up activities in Kolkata

Cobaa, Italy (a company producing insoles) is concerned in investing in India (initial phase)

Bartoli, Italy (a company producing fibreboards) is studying an investment project in India

Ipr, Italy (a company producing PU and TR/ Rubber soles) is involved with seeking a partner to
invest in India

Special Economic Zone (SEZ) Parks:

 A Footwear SEZ Park is being established in Tamil Nadu, at the SIPCOT Industrial
Estate at Irungattukottai, situated at a distance of 34 kms from Chennai.

 A land of 150 acres has been earmarked for this purpose and it is proposed to make
available about 105 acres of saleable land to domestic as well as international footwear
companies.

 The State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT) is the
implementation agency for this project.

 The Footwear Park will be developed on global standards, with adequate common
infrastructure facilities such as Design Studio, testing and on-site training facilities,
Display Centre-cum-Warehouse, non-conventional energy and other energy saving
applications.

 Another SEZ for Leather Products is also under way at Ranipet in Tamil Nadu, in an area
of about 260 acres. Apart from the above, there is a proposal to setup 10 Small Integrated
Leather Parks (SILP) in different parts of the country.

Future Prospects:

Future growth of Indian footwear industry in India will continue to be market driven and
oriented towards the European and the US markets. Technology partnerships with major
merchandising houses in USA and market leaders in Europe are decided advantages in the
integrated developmental plan of India. Investment backed technology support for footwear
component industry is being sought to be outsourced.

o Footwear is the engine of growth of the leather industry, currently accounting for
an export value of US$1212 million, holding a major share of 41% in India’s total
leather trade.
o We have set an ambitious target of US$ 4.5 billion in respect of Footwear export
from India by 2010-11 where the overall export of leather products will reach
US$7 billion, wherein footwear alone will account for a share of 65% in India’s
total leather export trade.

Export Scenario for the last 5 Years

% Share of Leather Products in Export Performance

(2009-10) 

Country-wise Export Performance

(2009-10)
Region-wise Export Performance (CLE Membership Records)   (2009-10)