This action might not be possible to undo. Are you sure you want to continue?
Brief on New Publications
EXIM BANK: RESEARCH BRIEF
Indian Leather Industry: Perspective and Export Potential
March 2006 EXPORT-IMPORT BANK OF INDIA
Visit us at www.eximbankindia.com
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 Livestock Population in 2005
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.
major source of global imports of raw hides and skins.
World Leather Exports
World leather exports grew moderately, by a CAGR of 7.3%, from US$ 46 billion in 2000 to US$ 61 billion in 2004. World leather exports can be categorised in to raw hides and skins (40%), leather articles (49%) and furskins (11%). China, Hong Kong, Italy, USA and France are major exporters of leather in the world. World leather articles exports increased by a CAGR of 8.06%, from US$ 22 billion in 2000 to US$ 30 billion in 2004. China constitutes 34% of the total leather articles exports. Hong Kong (17%), Raw hides and skins (Metric tonnes) 2002 2003
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 as the
World Raw Hides and Skins Production
Source: FAO, 2005
Year Total World Developing Countries Developed Countries World Developing Countries Developed Countries World Developing Countries Developed Countries Source: Compiled from FAO
2004 6,667,937 6,018,291 3,460,311 2,557,980 384,932 210,264 174,668 264,714 250,363 14,351
World bovine animals population stood at 1,529 million heads in 2005. India had the largest number of bovine animals (283 million heads) with a share 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
6,535,454 6,806,099 Bovine Hides and Skins 5,895,375 6,147,035 3,315,001 3,547,112 2,580,374 2,599,923 Sheep and Lambskins 382,459 390,712 202,345 209,020 180,114 181,692 Goat and Kidskins 257,620 268,352 243,660 254,120 13,960 14,232
Exim Bank : Research Brief No. 22 March 2006
USA.89% in 2004-05. Nearly. World imports of leather articles is estimated to have grown marginally from US$ 27 billion in 2000 to nearly US$ 34 billion in 2004.3 billion. Spain. 22 March 2006 Sp-1-2SP-2-2SP-3-2 .163 2004-05 2. A survey by Central Leather Research Institute (CLRI) estimated that about 1. Due to the two bans imposed by Germany on imports from India. The concentration of tanning industries is mainly in Tamil Source: DCGI&S Source: RBI & DGCI&S 2 Exim Bank : Research Brief No.99% in 1990-91 to 2. Hong Kong.286 crores in 2004-05.323 Source: Economic Survey. Washington and the World Bank to support small and medium enterprises in the leather sector. Mexico.5 million people earn their livelihood from this sector. India has been exporting only finished leather because of export restriction on semifinished leather. The Indian leather industry consists of 42.449 1995-96 1. Destination of Indian Leather and Leather Manufactures Exports Indian Scenario With about 15% of the world livestock population.8% export growth to reach a level of US$ 2. leather exports have increased in absolute terms. the industry recorded a satisfactory 5. the largest importer of this product. Exports to USA.910 2002-03 1. Small scale sector accounts for large processing capacity ranging from 70-87% for different leather products.033 million in 2004. Leather footwear is the largest component of leather exports. HS. China’s share in USA’s import of leather articles has increased gradually. is predominantly captured by China. Leather Travel Goods and Leather Garments) Year Exports (US$ million) 1960-61 59 1970-71 106 1980-81 493 1990-91 1. with a share of 38%. install pollution control and environmental safety systems of internationally accepted standards and develop export market for value added products through strategic export market development plans.000 small-scale industry (SSI) units. UK and Belgium. Leather articles is predominantly imported by USA.951 2001-02 1. with a share of 26%. which was US$ 343 million in 200001. Slowly and steadily. whereas China. from 54% in 2000 to 70% in 2004. USA and Italy are chief importers of furskins. Italy. 2. it picked up pace and stood at US$ 326 million in 2004-05. Indian Leather Exports In 2004-05. Turkey and Romania are mainly into imports of raw hides and skins. UK and France. ITC/ UNCTAD World Leather Imports World leather imports can be classified in to raw hides and skins. dropped to US$ 243 million in 2002-03 and was at US$ 266 million in 2004-05. to a status of an exporter of value added leather products. India’s exports of leather articles have stabilized around US$ 1. USA. From 1991-92. Top Exporting Countries of Leather Articles in 2004 Nadu. Exim Bank implemented Agency Line of Credit and Export Development Project. 2004-05 & RBI Exim Bank of India’s Role in Promoting Indian Leather Sector Export Import Bank of India (Exim Bank) has helped the leather exporting units to modernize and upgrade their production facilities. Composition of Indian Leather Exports in 2004-05 Major Export Markets The main export markets for India are Germany.Brief on New Publications Indian Leather Industry: Perspective and Export Potential Italy (11%) and France (9%) are other major exporters. joining hands respectively with International Finance Corporation (IFC). Total leather and leather manufactures exports stood at Rs. leather articles and furskins. with a share of 52%. Composition of Indian Leather Exports Composition of Indian leather exports has undergone a radical change. Although. from being a mere exporter of raw hides and skins. Other states where tanning industry is concentrated include West Bengal and Uttar Pradesh.10. Export of Leather and Leather Manufactures (including Leather Footwear.600 tanneries were present in India in 2000. Source: PC-TAS. respectively. which account for 75% of the total production.731 2000-01 1. 55% and 7% of the total world leather imports.848 2003-04 2. India accounted for only 8% of the leather production in 2002. its share in total exports have declined in percentage terms from a high of 7. there was a lull in India’s exports in 2002-03.
Germany and Japan were the largest importers of leather garments in the world in 2004. WTO Related Matters With the advent of WTO.22 33.07 0. ITC/ UNCTAD World Exports 24323.04 1033.32 29.25 6. as its unit price of leather garments is cheaper than that of India.10 Share of India (%) 2.00 0. Impact of PETA Campaigns by NGOs. Global standards set by importing countries affect the entry and increase the cost of market access to products of Comparison of Leather Exports by China and India to the World in 2004 Commodity Raw hides and skins Raw hides of bovine animals Other raw hides and skins Leather of bovine animals Leather of sheepskins and lambs Leather of goat and kidskins Parings and other waste leather Chamois leather Leather Articles Trunks.21 0.76 0.57 15226. In UK and Spain.48 231.51 1. related to cruelty against animals have led to boycott of Indian leather products by many foreign companies.34 0.01 0.03 2304. India is the largest sourcing partner of leather garments to Spain and Italy. China has overtaken Italy and emerged as major exporter in markets like USA.97 1.56 40.21 39.10 1.99 0. India must be cautious of China.42 0.26 1384.00 0.88 74.45 38. USA and France.91 1692.04 Share of China (%) 5. USA. UK and Spain. Many developed countries are implementing Technical Barriers to Trade (TBT) as Non-Tariff Barriers to restrict leather exports from developing countries like India.00 0. Footwear is a critical segment for the Indian leather industry as this is expected to be the engine of growth for the Indian leather sector. as it has unique advantage of economies of scale and capability of producing niche products.57 6802. Usage of many chemicals has been banned by various countries.33 24.64 5303.00 37. World leather garments exports have increased over the years. the average and bound tariffs for leather products remain relatively high.18 481.39 9.68 0.21 10259.31 157.51 0.10 0. Testing and certification requirements add to the (US$ million) Major Issues Affecting the Sector The issues that are hindering the export growth of the Indian leather industry are as follows: Environmental Issues The leather industry is traditionally considered as a polluting industry in the tanning and finishing stages of the production chain.03 74. suitcases.81 48.20 4. India’s exports of footwear components have dropped from US$ 238 million in 2000-01 to US$ 164 million in 2004-05.67 1148.32 8.00 0.02 297. Top importers of leather footwear uppers in the world are China. But. the trend in export of Indian footwear has been encouraging.64 70.15 0.00 3953. However.15 9.13 0.76 0.66 0.19 299. such as People for Ethical Treatment of Animals (PETA).04 0. However.37 124.67 2590.43 3986. Cost Escalation Leather exporters have to meet domestic as well international environmental norms. Canada. the average and bound tariffs for manufactured products have fallen in the developed countries.90 1.02 53.01 635.03 222.39 22.25 30. etc.99 95.62 1018.17 1103.02 0. etc.90 58.03 3. 22 March 2006 3 Sp-1-3SP-2-3SP-3-3 .90 8.68 21377.Brief on New Publications Indian Leather Industry: Perspective and Export Potential Analysis of India’s Export Potential India’s major export markets for leather handbags are USA. Germany. which are the major markets for Indian leather garments.41 0. developing countries.03 1.41 1. Leather garments Leather used in machinery Articles of gut.55 18. Italy is the top exporting country of leather handbags. leading to greater stringency. United Kingdom and Canada.26 2.81 29.69 2007.44 5. HS.78 1. Further. India’s other major export markets are Germany.13 0. The product specifications for leather are constantly under review. India has lot of potential in these markets.43 0.13 Exports from China 1400.10 7. India was placed among the top three exporting countries of leather garments in these markets.81 Exim Bank : Research Brief No.83 Exports from India 587. Currently.72 10.279. however the trend for footwear components exports has been declining. Saddlery and harness Furskins Raw furskins Apparel’s of furskins Artificial fur and thereof Source: Compiled from PC-TAS.10 1.53 10. Hong Kong and Russia.
it is observed that small supplier firms may not be able to comply with stringent environmental standards.eximbankindia. the Government has approved Rs. Slovakia and Serbia would sustain the export growth momentum for the Indian leather industry. New Trends The industry needs to keep itself abreast with latest fashion trends in the sector. 22 March 2006 Sp-1-4SP-2-4SP-3-4 . product yield and import and export trade in the world.: (202) 223-3238 4 Exim Bank : Research Brief No. Diverse Marketing Techniques India needs to adopt aggressive marketing techniques in order to endure global competition. London: (4420) 73538830. New Delhi: 2332 6625. Export-Import Bank of India accepts no responsibility for the authenticity. Consolidation in new markets such as Croatia. in the sector is vital for enhancing the export potential of this sector. New Markets Diversification of export markets is another important strategy for Indian leather industry. Training Facilities Training programmes should enable the industry to foresee and adapt to changing trends and technology. Washington D. Improvements in efficiency of ports. Kolkata: 2229 3416. However. Due care has been taken to ensure that the information provided in the publication is correct. The large capacity would also bring down the unit cost and increase the competitiveness in international markets. Lack of information about Indian leather manufacturers also acts as a hurdle for international buyers. Chinese Competition Chinese leather industry ranks top on the raw material resources. Enabling Infrastructure The development of the Calcutta Leather Complex is a positive sign as all amenities are available at one place. Skill development for the manpower engaged Note: Indian Rupees are referred in crore and lakhs: 1 crore : 10 million 1 lakh : 100 thousand Publication is available with: Dharmendra Sachan Chief Knowledge Officer EXPORT-IMPORT BANK OF INDIA Centre One Building. Bangalore: 2558 5755. Developing countries like India should have two pronged marketing strategy of simultaneously targeting both low price and high quality markets. Guwahati: 259 9135. Chinese leather exports have increased by three-fold after its entry into WTO. World Trade Centre Complex. 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. India. quality and innovation and economies of scale. 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. 290 crores for modernisation and technology upgradation programme. Investment by Large Corporates Indian leather industry is dominated by household and small scale sectors. At present.Brief on New Publications Indian Leather Industry: Perspective and Export Potential costs of leather manufacturers. production know-how.com Website : www. However. Hyderabad : 2330 7816. Phone : +91 22 2218 2837 Fax : +91 22 2218 3070 E-mail : firstname.lastname@example.org Contact Numbers: Ahmedabad: 2657 6852. It is imperative that the staff is skilled and well qualified to train the students.400 005. Mumbai: 2283 0761. Pune: 2645 8599 Budapest: (361) 338 2833. Mumbai . Strong Production Base The industry should lay emphasis on design and technology. The industry could undertake business delegation to secure overseas investments and technology partnerships. China is one of the major competitors to India’s leather sector as it has the capability to produce large volume at low price.5 million people directly and indirectly. It could serve as a good platform to showcase our products.C. the industry employs 2. The contents of the publication are based on information available with Export-Import Bank of India and primary desk research through published information of various agencies. Cuffe Parade. Fairs and Exhibitions It is imperative that Indian exporters participate in fairs and exhibitions organized in the international market. Singapore: (65) 653 26464. Floor 21. rather than the traditional strategy of being a low price-low quality supplier. Recently. Such exclusive leather complexes could be developed in other major production centres. Further. Imports of leather articles by these countries have increased in the range of 2030% in a period of five years. customs procedures and supply chain management are necessary for augmenting the productivity and exports in this sector. High costs of compliance impose real economic costs on firms. India could effectively use these advantages to augment its share in global production and exports. Factors such as availability of leather. accuracy or completeness of such information. It is imperative that adequate care is taken about the packing material. besides building brand image. internal transport. Chennai: 2522 4714. processing of shoes work in India’s favour. 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. Johannesburg: (2711) 442 8010. Government Support Technology upgradation and modernization of the entire leather value chain should be given priority. 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. Corporate presence would enhance the capability of producing quality leather products.