Marketing

strategies
for
domestic
sale of
laether
products.
Project Report
1. Market scenario
Introduction
Indian Leather industry is spread over organized as well asunorganised sector. The unorganised
sector i.e. Small scale cottage and artisan sectors account for over 75% of the total production.
Though traditionally the industry has been an exporter of tanned hides and skins, from the
early seventies itself, it set its sights on becoming a major player in the leather product
segments. The industry uses primarily indigenous natural resources with little dependence on
imported resources.

Licensing Policy

After de-reservation of 11 items in leather sector, which include semi-finished hides and
skins, leather shoes, leather washers and laces, moulded rubber soles and heels for footwear,
flexible polyurethane foam, polyurethane shoes soles, show-tacks & eyelets and leather pickers
and other leather accessories for textile industry, vide Notification No SO 603(E) dated 29th
June, 2001, no industrial licence is required for manufacture of most of the items of the leather
industry. However, the location of industrial projects will be subject to Central or State
environmental laws and regulations including local zoning and land use laws and regulations.
Industrial undertakings desiring to set up industrial undertakings for manufacture of these
itemshave to only file an Industrial Entrepreneurs' Memorandum (IEM) in the prescribed format,
with requisite fees to Secretariat for Industrial Assistance in the Department of Industrial Policy
& Promotion, Government of India, Udyog Bhawan, and New Delhi-110011.
However, some of the items of the Leather industry viz. leather shoe uppers (closed),
leather sandals and chappals leather garments, industrial leather gloves, leather suitcase and
travel goods, leather purses and hand bag, fancy leather goods and novelty items, watch
straps and leather straps of all type are still reserved for exclusive manufacture by the small
scale sector. Small scale sector units are defined in terms of investment in plant and
machinery. Non-small scale units can manufacture these items after obtaining industrial
licence, which is granted subject to an export obligation of 50% of the production in each
year.

Indian Leather Industry: Perspective and Potential

World Livestock Population
Hides and skins are the basic raw materials for the leather industry, which originate from the
source of livestock. There was an upsurge in the number of bovine animals and goats and kids
during 1990-2005, while population of sheep and lambs was on a decline. Developing countries
accounted for around 78% of the total population of bovine animals and 93% of world
population of goats and kids in 2005. World bovine animal’s population stood at 1,529 million
heads in 2005. India had the largest number of bovine animals (283 million heads) with a share

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of 19% followed by Brazil (13%), China (9%) and USA (6%). World sheep and lambs population
stood at 1,079 million heads in 2005. With a total population of 170 million heads, China had a
share of 16% in the world sheep and lambs population. India (6%) lagged behind at third
position, with a population of 62 million heads. World goats and kids population stood at 807
million heads in 2005. China has the highest population of goats and kids, which stood at 195
million heads in 2005. Although in 1990, India had the highest population of goats and kids (21%
of the total), it was overtaken by China in 1995 and the gap between the two countries has been
widening.

World Raw Hides and Skins Production

World production of raw hides and skins was nearly 7 million metric tonnes, of which production
of bovine hides and skins alone accounted for 90% in 2004. Developing countries are the major
producers of raw hides and skins. China played a significant role in turning developing countries

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 as the major source of global imports of raw hides and skins.

Products

 Handbags
 Belts
 Wallets
 Travel bags
 Sports goods
 Harness & saddlery

Industry

 80% of the players in the unorganised sector

 Major production centres are Calcutta, Mumbai, Chennai, Delhi, Jullandar & Kanpur
 Calcutta & Chennai accounts for 70% of the total production in the country
 Raw material cost & labour shortages affecting the industry
 One major brand is ‘Hidesign’ in Pondicherry

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Production

 Total value of production: Rs. 2750 crs. (US$ 640  mn.) (including saddlery and harness)
 Total export value: Rs. 1970 crs. (US$ 460  mn.)  for 98 - 99
 Domestic market around Rs. 780 crs. (180 mn)
 Outsourcing  not very high

Market Characteristics
Industry

 Products not up to international standard

 Highly competitive market
 Domestic market expected to grow by 15% in the next year
 East a major production centre for leather goods

Prices

 Wide variation in product prices

 Branded products relatively more expensive

Customer Segments

 Ladies bags and wallets account for majority of the sales

 Wide range in quality & prices
 Price sensitive market
 Consumer becoming more choosy about fashion trends & design

Sales

 No organised channel for distribution

 Unorganised sector presence localised

Domestic sale scenario

In India the sale of leather goods is usually restricted to the unorganised sector. Non-branded items are very
huge percentage of the domestic sale in our country. There is a very wide range of quality of goods and its
cost. The sale of branded goods is limited to men’s shoes and ladies purses and wallets that too targeting the
upper middle class and higher class. But then too there is a lot of potential demand in the market which need
to be identified and targeted to increase the sale and awareness towards the branded leather products.

The few points to be considered by the organised sector to serve the latent middle class demands the biggest
segment in India:

1) Introduction of economy range to target especially middle class.

2) Promotion of benefits of branded leather.
3) Suit the taste of Indian consumers.

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4) Try to attract the customers using resin based products substituting the leather consumption.
5) Attract the class of customers using local base leather goods.
6) The industry is labour intensive and is concentrated in the small and cottage industry sectors. While
leather shoes and uppers are concentrated in large scale units.
7) The sandals and chappals are produced in the household and cottage sector.
8) In the case of chappals and sandals, use of non-leather material is prevalent in the domestic market.
9) The major production centres India are Chennai, Rapine, Amber in Tamil Nadu, Mumbai in Maharashtra,
Kanpur in U.P., Jalandhar in Punjab, Agra and Delhi. To cater the needs of the such big consumers base.
10) The semi-skilled labour cater the needs of domestic market.
11) India produces more of gents’ footwear while the world’s major production is in ladies footwear.

Key Domestic Players

Superhouse Leathers

Superhouse Leathers Ltd. was incorporated in 1980 by a private Indian party to produce shoe
uppers. The company has plants at Jaimau (Kanpur Dehat, Uttar Pradesh) producing leather goods,
at Kanpur (Uttar Pradesh); shoe uppers, at Noida (Ghaziabad, Uttar Pradesh); leather and textile
garments, at Sikandra (Agra, Uttar Pradesh); shoes at Unnao (Uttar Pradesh) shoes and sole leather,
at Unnao (2 plants; in Uttar Pradesh) producing chrome leather and chrome leather (skins). Revenue
for the year 2004-05 was US$ 45 million. Mirza International Mirza Tanners Ltd. was incorporated in
1979 by the Mirza Tanners Group to produce leather shoes. The company has plants at Juhi, Kanpur
Nagar (in Uttar Pradesh), for manufacturing shoe uppers and shoes; at Magarwara, Unnao (Uttar
Pradesh) for bags, finished leather, shoe uppers and shoes; at Noida, Ghaziabad, in Uttar Pradesh,
which produces shoe uppers and shoes and another at Shahjani, Unnao (Uttar Pradesh) which
produces bags, finished leather, shoe uppers and shoes. Its revenue for the year 2004-05 stood at
US$ 57 million.

Bata India Ltd.

Bata India Ltd. was incorporated in 1931 by a private Indian party and mainly produces leather
shoes. The company has plants at Bangalore (Karnataka), Bataganj (Patna, Bihar), Hosur,
(Dharmapuri, Tamilnadu) and at Batanagar (North 24 Parganas, West Bengal) producing leather
footwear; at Faridabad in Haryana producing rubber & canvas footwear and at Mokamehghat
(Patna, Bihar), which produces finished leather from hides. Bata India Ltd. is an affiliate of the
Toronto based Bata Shoe organisation. Bata India had revenues of US$ 158 million in the year 2003-
04. Liberty Shoes Ltd. Liberty Shoes Ltd. was incorporated in 1996 by a private Indian party and
produces shoes. The company has plants at Kutail, (Karnal, Haryana) producing Eva co-polymer

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compound, lshoe uppers, leather shoes, non leather shoes and rubber chappals (slippers). The
revenue for the year 2004-05 was US$ 44.5 million and the profit stood at US$ 2.2 million.

Bhartiya International Ltd.

Bhartiya International Ltd. was incorporated in the year 1987 by a private Indian party. The company
mainly produces leather apparel and clothing accessories. The company has a plant at Bangalore,
Karnataka, producing leather garments. The revenue and profit for the year 2004-05 was US$ 21
million and US$ 1 million respectively.

Lakhani India Ltd.

Lakhani India Ltd. was incorporated in 1981 by the Lakhani group and produces leather shoes. The
company has plants at Faridabad in Haryana for producing leather shoes. The revenue and profit for
the year 2004-05 was US$ 28 million and US$ 0.6 million respectively. Forward Group

The company generated revenues of US$ 25 million in 2003. Nearly 90 per cent of its revenue comes
from the UK market. The Forward group has entered into a first-of-its-kind joint venture with
Conceria Virginia Italy (CVI), a 10-year-old Italian tannery, specialising in leathers for shoes and
leather goods, and has set up a six million sq. ft state of- the-art leather manufacturing facility in
Chennai. This is the first FDI in the tanning sector in India with investments by both partners, ‘raw
material resourcing expertise’ & ‘technology transfer’ from Italy and marketing by the joint venture
partner.

Future outlook

India has distinct advantages in the leather industry. These are primarily low costs, widely available
raw material and well-developed quality and research and development facilities. These have
enabled India to ecome a significant player in the world leather market, with exports growing at 8
per cent CAGR. Multinational companies in this sector are increasingly looking at India and many of
them have also entered India in different ways. For example:

 International fashion chain Fossil has already picked up a minority stake of 2.5 per cent in
domestic fashion accessories major Crew B.O.S. Products, while a Spain-based fashion chain
is in talks with Worldwide Leather for a joint venture.

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  The Forward group has entered into a joint venture with Conceria Virginia Italy (CVI), a 10-
year-old Italian tannery specialising in leathers for shoes and leather goods; the joint venture
has set up a six million sq. ft state of- theart leather manufacturing facility in Chennai.

 TATA INTERNATIONAL

Established in 1962, Tata International is an international marketing company with a global

turnover of US$ 850 million in 2006-07. It is a trading company with business lines that
include leather, engineering and pharmaceutical products. It has a worldwide reach provided
by a well-integrated network, that encompasses its subsidiaries, offices, joint ventures and
alliances, with business hubs in South Asia, South East Asia, Europe and Africa catering to
its markets in Europe, SAARC, ASEAN, the Far East, and Africa.

Tata International is India's leading leather and leather products exporter. As a leather and
leather products exporter, the company operates its leather business in India from Dewas,
Chennai, Delhi, Calcutta, as well as, from China, South Asia and the Middle East, leveraging
our global network. We source wet blue worldwide and have world-renowned clients for our
finished leather and leather products.

Our state-of-the-art manufacturing facility at Dewas in Central India is among the top three
worldwide for goat skin. Our units have ISO 9001 certification from RW TUV CERT of
Germany since 1994, making ours the first leather-manufacturing facility in India to receive
this certification. The leather unit in Dewas is the first in the industry in Asia to be ISO 14000
certified. Our facilities are governed by International Labour Organization laws.

Our R&D department has made internationally acknowledged break-through in the

production of chrome free leather and processing of solid waste. We have established and co-
ordinate a highly flexible supply chain for sourcing leather, footwear, garments and leather
goods.

As a leather and leather products exporter our main markets are the quality stringent markets
of Western Europe, North America and the Far East.

As leading leather garments exporter from India flexibility is our strength. With 25 years of
experience in this fashion industry, we as leather garments exporter are aware that one must
respond quickly to a change in needs. We cater for this through our capacity to produce 1000
garments per day, with the aid of our well-trained in-house designers, world class
manufacturing processes and special sample lines to meet customer's requirements.

We became a leather garments exporter in 1975. The Dewas based (in Madhya Pradesh,
India) Leather Garments division of Tata International, adopted best in class manufacturing
processes and systems in collaboration with one of the premier leather manufacturers of
Germany - Lederman.

Today Tata International has one of the most modern and well-equipped manufacturing
facilities on the South Asian subcontinent. Apart from being the first leather garments unit in
India to boast ISO 9001 and ISO 14001 certification (certificates awarded by RW TUV of

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Germany), we as a leather garments exporter also enjoy the patronage of an established
international clientele that includes names like Betty Barclay, Escudo, Karlstad, Kaufof,
C&A, Marks & Spencer’s, Talenti, Gerry Weber, Mango (Spain), Stallman and Mauritius.

Tata companies operate in seven business sectors: communications and information

technology, engineering, materials, services, energy, consumer products and chemicals. They
are, by and large, based in India and have significant international operations. The total
revenue of Tata companies, taken together, was $70.8 billion (around Rs325,334 crore) in
2008-09, with 64.7 per cent of this coming from business outside India, and they employ
around 357,000 people worldwide. The Tata name has been respected in India for 140 years
for its adherence to strong values and business ethics.

Every Tata company or enterprise operates independently. Each of these companies has its
own board of directors and shareholders, to whom it is answerable. There are 27 publicly
listed Tata enterprises and they have a combined market capitalisation of some $60 billion,
and a shareholder base of 3.5 million. The major Tata companies are Tata Steel, Tata Motors,
Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Tea, Indian Hotels and
Tata Communications.

Tata Steel became the sixth largest steel maker in the world after it acquired Corus. Tata
Motors is among the top five commercial vehicle manufacturers in the world and has recently
acquired Jaguar and Land Rover. TCS is a leading global software company, with delivery
centres in the US, UK, Hungary, Brazil, Uruguay and China, besides India.  Tata Tea is the
second largest branded tea company in the world, through its UK-based subsidiary Tetley.
Tata Chemicals is the world’s second largest manufacturer of soda ash and Tata
Communications is one of the world’s largest wholesale voice carriers.

In tandem with the increasing international footprint of Tata companies, the Tata brand is
also gaining international recognition. Brand Finance, a UK-based consultancy firm, recently
valued the Tata brand at $9.92 billion and ranked it 51st among the world's Top 100
brands. Businessweek magazine ranked Tata 13th among the '25 Most Innovative Companies'
list and the Reputation Institute, USA, recently rated it 11th on its list of world's most
reputable companies.

Founded by Jamsetji Tata in 1868, Tata’s early years were inspired by the spirit of
nationalism. It pioneered several industries of national importance in India: steel, power,
hospitality and airlines. In more recent times, its pioneering spirit has been showcased by
companies such as TCS, India’s first software company, and Tata Motors, which made
India’s first indigenously developed car, the Indica, in 1998 and recently unveiled the world’s
lowest-cost car, the Tata Nano.

Tata companies have always believed in returning wealth to the society they serve. Two-
thirds of the equity of Tata Sons, the Tata promoter company, is held by philanthropic trusts
that have created national institutions for science and technology, medical research, social
studies and the performing arts. The trusts also provide aid and assistance to non-government
organisations working in the areas of education, healthcare and livelihoods. Tata companies
also extend social welfare activities to communities around their industrial units. The
combined development-related expenditure of the trusts and the companies amounts to
around 4 per cent of the net profits of all the Tata companies taken together.

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Going forward, Tata is focusing on new technologies and innovation to drive its business in
India and internationally. The Nano car is one example, as is the Eka supercomputer
(developed by another Tata company), which in 2008 was ranked the world’s fourth fastest.
Anchored in India and wedded to traditional values and strong ethics, Tata companies are
building multinational businesses that will achieve growth through excellence and
innovation, while balancing the interests of shareholders, employees and civil society.

Finished Leather:

Tata International's Finished Leather range includes Full Aniline and Semi Aniline finishes
in Kid, Goat, Sheep, Cow and Buffalo. We also offers Patent leathers from Cow, Goat and
Sheep, plus Suede and Nubuck from Kid and Cow. Our experience of over 25 years in
Finished Leather has made us the largest supplier of Kid and Goat skin Finished Leather from
India. We are capable of exporting finished leather items as per your need, in any quantity
and are capable to meet your import requirements round the year.

Products offered and capacity:

Leather Articles: Tata International produces high quality leather products and is one of the
largest exporters of the same. The product range comprises of a wide array of leather goods
ranging from personal articles to business and travel accessories.

The medium-end is serviced by our dedicated units in Calcutta and Dewas. The Calcutta
operations cater to the German, UK and US market in the middle value segment. Here we
have dedicated units capable of producing in excess of 50,000 pcs of small leather goods per
month.

Tata International products are created taking into consideration style, aesthetics,
craftsmanship and functionality. Our talented crafts-persons hand craft the creations from
some of the finest Indian and Imported leathers with the most stringent in-process checks and
refinements to ensure the right quality.

Tata International brings to leather goods manufacturing 25 years of experience in leather

tanning and sourcing, its highly skilled workforce and an understanding of customer quality
requirements developed over the years by working with our highly discerning customers. We
are proud to be associated with world renowned brands.

Footwear: Tata International is India's leading footwear manufacturer and exporter.

Versatile and flexible manufacturing facilities in Dewas, Chennai and New Delhi in India,
reinforced with state of the art production units have helped Tata International emerge as a
leading footwear manufacturer and exporter.

As a footwear manufacturer and exporter we have a high-end full shoe facility, Graziella
Shoes Limited located at Chennai, established in a 50-50 Joint Venture with Pucci SRL of
Italy. This footwear manufacturing facility produces 3,000 pairs per day of Full Shoes with
Italian Unit Soles and Indian Uppers. The high-quality shoes are sold to well establish brands.

As a footwear manufacturer and exporter we also have a Hong-Kong operation where we

outsource the manufacture of shoes to China and then export these to third countries. The

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leather for these shoes is either supplied from India or purchased from Pakistan or Indonesia.
The China sourcing is only for bulk business of 10,000 - 15,000 pairs per style.

Qualified and experienced designers, trained at reputed international design schools,

proficient in CAD software and digital photography, man the in-house design centres at the
facilities of this footwear manufacturing facility in Dewas and Chennai (in India). The design
process includes last identification, pattern development, testing, prototype development and
grading. The designers cater to the customer's design requirements, which include new
developments of lasts, styles and features based on current forecasts and fashion trends.
Designers and product development engineers from our customers also visit and work with
our designers It is this committed care as a footwear manufacturer that has earned us a
clientele that includes well-established European shoe brands and catalogue houses.

Capacity:

The plant and machinery is being continuously upgraded to keep pace with the rapid
development in trade and our product development and R&D,which is manned by highly
qualified professionals enable the leather finishing unit come out with niche product and keep
itself abreast with new developments.

1,50,000 sq. ft of finished leather per day.

400 colours are processed in a month and our speciality is that we can match any pantone
shade. There is high flexibility in production lot size and computerised colour matching.

Tata International actively participates in MODEUROP and in every season colours

developed here have been selected.

Capacity: The leather garments units of Tata International located at Dewas in Central India
and Chennai in southern India have a capacity for 25,000 pieces per month of high quality
leather garments.

Workforce: The leather garments unit employs an extremely skilled workforce of 700 people
at various locations in the country. There are well-trained in-house designers and an in house
quality control, which looks after the quality systems and production systems at every single
stage of production.

Technical Hardware: The garments units are equipped with over 300 state-of-the-art
stitching machines (Pfaff, Durkopp and Adler) and other special purpose machines.

Fair and Exhibitions: Tata International Limited is a regular participant in the leading
leather fairs in the world.

 Leather Show Hongkong

 PLW, Pirmasesns, Germany
 Lineapelle, Bologna, Italy

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  GDS Fair, Dussoldorf, Germany
 British Footwear Fair, Birmingham, UK
 The Shoe Show, Las Vegas, USA

At these fairs, we display the company's range of finished leathers based on MODEUROP
shades and our range of leather footwear, garments and articles.

Our interaction with our customers at these fairs helps us forecast fashion trends and offer
Spring-Summer and Autumn-Winter colours to our customers.

2. Steps to promote brand

o Advertising

The Indian market is basically a value and brand associated market in leather products where as
there is another face of the coin a class of buyers which requires a non-branded cheap products.
This class is not focused here. The basic facts needed to be kept in mind for the advertisement are
as follows.

 Ads should appeal the targeted audience.

 It should be published in such a media which has a reach to the maximum audiences.
 It should make animpact of brand such that person must be ready to buy it.
 Ads must not be misguiding the coustomers.
o Branding
As in Indian market the name ‘TATA’ is a symbol of trust and has a very long history of relations
& values.there is no need to create a different brand image as it is already having a good brand
image in the market. Only we need to create a place in the leather market and promote our
product in the market as a high quality product at the economic price.
o Positioning
The targeted segment is higher middle class and upper class so the products and brand should
be placed as elite. The price range of the products should be price keeping it in mind.
o Sales/Schemes
As the Indian consumer is attracted towards the sale or discount so these tools should be used
from time to time occasionally but not regularly. There should be the heavy use of the
promotion vouchers initially to increase the sales in new locations there after there it should not
be used. It may heart the brand position in the mind of people.

3.Supply chain management

The Indian Leather Industry Supply Chain

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Raw Material Base India’s shares in the global stocks in 2001 were 20.6 percent for bovineanimals,
5.6 per cent for sheep and 16.8 percent for goats. During 1985-2001the CAGRs were 0.90 percent for
bovine animals, 1.6 percent for sheep and 1.2percent for goats. The growth rates were higher than
the world averages for bovine animals and sheep but below the world average for goats. India’s
sharein the world production of bovine hides and skins, in terms of wet salted weight, in 2001 was
only 7.1 percent. This low share is attributed to the poor off-takerate which is due to ban on cow
slaughter, poor collection rate, and lower average weight per hide. The price realization per hide is
also lower because of ante mortem and post mortem defects, the poor animal health care, neglect
when the animals became old, and cruel treatment. The Working Group on Leather and Leather
Products for the Tenth Plan estimates the augmentation of the raw material base by 50-70 percent
and value addition by quality improvement another 15 percent. India has been importing hides and
skins in recent years, but the import accounts for less than 3 percent of the domestic production.

TATA distribution channels

TATA must follow the parallel chain system which allow the dynamic and extensive reach. By two

Lines

I. Principle line
Here the main role of the company owned showrooms and outlets has to be there. They
should be opened it the tier 1 and 2 cities where the malls and hypermarts exists shows the
presence of upper class and higher middle class. Along with the store to store replenishment
makes the availability of the model in demand available on network along with no excessive
stock and dead stock.
Benefits
o Surety of success.
o Targeted customers reached.
o Wide availability.
o Cost cutting.
o Fast movement of stock.
o Less inventory levels.
o Lessening of safety stock and capital blockage.

II. Subsidiary line

Here the franchise should be given. They should be given in tier 3&4 cities where middle
class and lower number of higher middle class exists and the success rate of store is in
60’sand70 per cent.Makes it feasible for speedy market intelligence and getting the risk
minimised.
Benefits
o Wider reach
o Competitive edge andbetter focus.

4 p’s
1. Product

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 As TATA offers a wide variety of leather products it must provide the wide mix of products
as the status of the store location and spending power of the customers in the locality.
2. Price
TATA pricing must be designed to be competitive to the other fashion shoe
retailers. The pricing is based on the basis of premium segment as target
customers. TATA as a brand commands high premiums. TATA’s pricing
strategy should makes use of vertical integration in pricing wherein they own
participants at differing channel levels or take part in more than one
channel level operations. This can control costs and influence product
pricing.
3. Place
TATA products should be carried by multi-brand stores and the exclusive stores
across the country. TATA must sells its products through independent distributors,
licensees and subsidiaries. Independent distributors need not adapt to
local pressures because the 4Ps of marketing are managed by
distributors.

4. Promotion
Promotion is largely dependent on finding accessible store locations. It
also avails of targeted advertising in the newspaper and creating strategic
alliances.

Strategies for Indian Leather Sector

The Indian leather industry is targeting over US$ 5 billion exports by 2010 and is expected to add
about additional 1 million direct and indirect jobs during this period. At present, the industry
employs 2.5 million people directly and indirectly.

Shifting of Manufacturing Base

Major world tanning firms are in the process of shifting their manufacturing base to developing
countries due to high wage levels and strict environmental norms in developed countries. Factors
such as availability of leather, production know-how, processing of shoes work in India’s favour.
India could effectively use these advantages to augment its share in global production and exports.

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Government Support

Technology upgradation and modernization of the entire leather value chain should be given
priority. Recently, the Government has approved Rs. 290 crores for modernisation and technology
upgradation programme.

Strong Production Base

The industry should lay emphasis on design and technology, quality and innovation and economies
of scale. Skill development for the manpower engaged in the sector is vital for enhancing the export
potential of this sector.

Investment by Large Corporate

Indian leather industry is dominated by household and small scale sectors. Corporate presence
would enhance the capability of producing quality leather products. The large capacity would also
bring down the unit cost and increase the competitiveness in international markets.

New Markets

Diversification of export markets is another important strategy for Indian leather industry.
Consolidation in new markets such as Croatia, Slovakia and Serbia would sustain the export growth
momentum for the Indian leather industry. Imports of leather articles by these countries have
increased in the range of 20-30% in a period of five years.

New Trends

The industry needs to keep itself abreast with latest fashion trends in the sector. It is observed that
Italian buyers pay attention not only to the quality of the leather products but also to the accessories
used in the garments. It is imperative that adequate care is taken about the packing material.

Diverse Marketing Techniques

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India needs to adopt aggressive marketing techniques in order to endure global competition. The
industry could undertake business delegation to secure overseas investments and technology
partnerships, besides building brand image. Developing countries like India should have two pronged
marketing strategy of simultaneously targeting both low price and high quality markets, rather than
the traditional strategy of being a low price-low quality supplier.

Enabling Infrastructure
The development of the Calcutta Leather Complex is a positive sign as all amenities are available at
one place. Such exclusive leather complexes could be developed in other major production centers.
Improvements in efficiency of ports, internal transport, customs procedures and supply chain
management are necessary for augmenting the productivity and exports in this sector.

Fairs and Exhibitions

It is imperative that Indian exporters participate in fairs and exhibitions organized in the
international market. It could serve as a good platform to showcase our products. Lack of
information about Indian leather manufacturers also acts as a hurdle for international buyers.

Training Facilities

Training programmes should enable the industry to foresee and adapt to changing trends and
technology. It is imperative that the staff is skilled and well qualified to train the students. Further,
programmes need to be conducted to make Indian exporters aware of different standards and
requirements in the global market to ensure that Indian exports do not get rejected due to
environmental norms.

Leather Goods :Industry Structure

Products

 Handbags
 Belts
 Wallets
 Travel bags
 Gloves
 Sports goods
 Harness &saddlery

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Industry

 80% of the players in the unorganised sector

 Major production centres are Calcutta, Mumbai, Chennai, Delhi, Jullandar& Kanpur
 Calcutta & Chennai accounts for 70% of the total production in the country
 Raw material cost & labour shortages affecting the industry
 One major brand is ‘Hidesign’ in Pondicherry

Production

 Total value of production :Rs. 2750 crs. (US$ 640  mn.) (including saddlery and harness)
 Total export value :Rs. 1970 crs. (US$ 460  mn.)  for 98 - 99
 Domestic market around Rs. 780 crs. (180 mn)
 Outsourcing  not very high

SWOT analysis

Sterngths
 Leather can be treated as a renewable
resource.
 Availability of integrated production
chain from raw materials to tanneries
and leather goods.
 Availability of a large and rather
inexpensive work force relative to
other comparable manufacturing
societies.
 Price advantage of Indian leather in
international market.
 Durability of leather products.
 Favourable business environment
with existence of SEZ.
 Reduced interest rate for industrial
credit to leather sector to seven
percent since it is considered as
“thrust sector” by the
Government
weakness
 Insufficient Research &
Development facilities
 Inadequate knowledge on pro-active
marketing of local leather
entrepreneurs
 Lack of initiatives in arranging
events to promote locally produced
leather, leather goods & footwear.
 Limited access to financial
institutions.
 Poor demand in domestic market.

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 Opportunities
 Increasing global demand for leather
products.
 High potential for quality raw
materials and maximum value
addition inside the country.
 Availability of cheap labour force can
be the sustainable competitive
advantage for
the country.
Threats
 Delay in introducing integrated
government policy for the
development of leather
Industry.
 Intensive competition for gaining
market because of strong competitors
such as China, Pakistan etc.

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Growth of world footwear market has positive co-relationship with world population

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Current size of the global footwear market is still enormous because it has parallel
relationship with the increase of world population. Data obtained from Market Report,
Fashion Trends and Forecasts up to 2005 by Steve Lee clearly indicates that since 1950 till
2005 a positive relationship was observed between growth of world population and
production of footwear, as it is a basic commodity aspired to be used even at a lower
stratum of income. China is the leading country in terms of production and consumption of
footwear with its huge population. Historical data show that factors like demographic
composition and pattern of evolution, level and extent of urbanisation, and distribution of
wealth have consistently driven the growth in the footwear industry. For example, the
volume of world footwear production in 1950 was 2.1 billion pairs, then in 1970 it was 4.9
billion pairs, in 1998 it increased to 11.3 billion pairs and in the year 2005, world footwear
production was 14.5 billion pairs.

Increasing purchasing power of target prospect

Europe is the largest market for leather goods including shoes, purse, bags, travel goods, suitcases,
briefcases and fashion accessories, along with leather jackets, belts, wallets, hand bags, case holders etc.
These products are equally popular in North American countries as the purchasing power of mass
population in these developed countries is rising continuously.

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