The Leather Value Chain

The leather industry utilizes the by products of slaughterhouses and transforms the raw
material into various types of leather and manufactured end products. The leather
production consumption chain has three processing stages, each requiring different
combinations of materials, inputs, labour and capital.
The first stage is the recovery of raw materials that has direct links with animal
production activities. Hides and skins are recovered from dairy, draught animals or
animals from slaughter houses.
The second stage is leather tanning and finishing, which involves capital intensive
operations.
The third stage is the production of leather products, which is a labour intensive activity.
These three processing stages are linked to key commercial components of the chain,
such as the marketing of intermediate inputs, components and end products, trade and
consumption. The various inputs to the chain without which the chain cannot operate
competitively are qualified labour, design and art centers, components production,
access to chemicals, technical and administrative support institutions, research and
development, training and a set of adequate policies.
India accounts for approximately two percent of the world trade in leather and leather
products. To be on the fast track of growth and to have a larger cake in the international
business, continuous technology up gradation and modernization are the most powerful
driving forces like in any other manufacturing sector that dreams steady growth and
expansion. With this being the primary objective, India's Council for Leather Exports
(CLE) has taken a number of initiatives. To propel the combined efforts of the tanning
and manufacturing sectors, the Central Leather Research Institute (CLRI), the Fashion
Technology and Development Institute and CLE as the main cog in the wheel, an action
plan has been chalked out. The growing international demand apart, the action plan
also suggested measures to face Indian leather's industry's major competitors in Asia:
China, Indonesia, Korea and Taiwan.
To boost the country's leather industry, the Indian federal government has earmarked a
Rs 4.5 billion (US$ 95 mn) grant to be made available to the industry over a span of five
years but that's not without any string. The fund availability is conditional upon the
sector's attracting an annual investment of Rs 2.2 trillion. In 2002, investments in the
leather sector stood at Rs 410 million. Footwear and their components account for
about 25 percent of India's total leather products exports. These two markets also offer
Indian leather industry vast scope for exports of saddler and harness.