LEATHER INDUSTRY OF INDIA

Leather is one of the most widely traded commodities globally. The growth in demand for leather is driven by the
fashion industry, especially footwear. Apart from this, furniture and interior design industries, as well as the automotive
industry also demand leather. The leather industry has a reputation in the Indian economy due to substantial export
earnings and growth.

The leather industry has gone through a dramatic transformation from a mere exporter of raw materials in 1960s to
that of value added finished products in 1990s. Policy initiatives taken by the Government of India since 1973 has
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.

The leather industry is spread in different segments, namely, tanning and finishing, footwear and footwear components,
leather garments, leather goods including saddles and harness, etc.

The Indian leather industry accounts for around 12.93% of the world’s leather production of hides or skins. The country
ranks second in terms of footwear and leather garments production in the world and accounts for 9% of the world’s
footwear production.

Leather industry in India is spread over organised as well as unorganised sector. The small scale, cottage and artisan
sectors account for over 75% of the total production. Though traditionally and in the beginning, the Indian leather
industry has been an exporter of tanned hides and skins, in early 1970s itself, it set its sights on becoming a major
player in the leather products segments. The industry uses primarily indigenous natural resources with imports to fulfill
its exports.

RICH NATURAL RESOURCES

India is rich in natural resources and ranks first among major livestock holding countries and its accounts for about
10 per cent of global supplies of raw skins and hides.

The annual availability of 235 million pieces of hides and skins is the main strength of India’s leather industry. It is
endowed with 21% of the world cattle and buffalo and 11% of the world goat and sheep. The annual average rate
of the growth of cattle is around 1.5% in India, helping it to maintain its leading position. Around 2 billion sq. ft of
leather is produced annually. Leather industry in India plays a vital role in the national economy in terms of export
earnings and employments generation.

Tamil Nadu is popular for leather and leather products. Leather manufactured by the members of Association has
a good reputation and attract many a buyers from all over the world. The major markets are USA, UK, and European
countries.

Confidential Draft - Not for circulation Page - 2

HEREDITARY BUSINESS
The leather industries are almost two centuries old and the business is passed on one generation to another. The
existence of excellent traditional skills in tanning and finishing and manufacturing has made the Indian tanning
industry self-sufficient, sustainable.

To add this, strong and eco-sustainable tanning base, trained and skilled manpower support from Design and
Products Development, HRD and Research and Development, increasing use of quality components delivery
compliance has made the industry competitive.
Importers all over the world have shown keen interest for Indian leather goods. They are sourcing their requirement
of leather and leather goods from India.

The Indian leather industry and the Members of the Association are setting up modern world class production
facilities to meet the growing demand of the importers of leather and leather products from all over the world. The
production of leather and leather products are also free from pollution and child labour.

TANNING INDUSTRY

The entire range of activities covering recovery of fallen animals, processing hides and skins and their conversion
into footwear, garments and leather goods and other agricultural implementation were carried out in the past as an
integrated operation.

There has been a major change in the complexion of tanning industry during the last few decades. The organised
tanning sector has gained significance in the industrial process and grown in Tamil Nadu, Kolkata and Kanpur.

With the power of technology and resources, the organised sector is able to mobilise the raw hides from entire
country.

Confidential Draft - Not for circulation Page - 3

The growth of organised leather sector has taken place
through large number of small scale tanneries and a few
medium and large scale units. A consistent progressive
policy has been followed for the last five decades with
the objects of promoting value added products and
discouraging the export of processed intermediates. The
process of transformation has been faster since 1973.

The tanning industry has grown in clusters of Tamil Nadu,

West Bengal, Uttar Pradesh and Punjab.

FDI POLICY
The entire leather product sector is de-licensed, facilitating
expansion on modern lines with state-of-the-art machinery
and equipment. 100% Foreign Direct Investment is
permitted through the automatic route.

SKILL DEVELOPMENT INITIATIVES BY

GOI
The Indian government has put in place an array of
measures for skill development and skill up-gradation of
the workforce.

Skilled Labour at your Doorstep: The Human

Resources Development sub-scheme under the
Indian Leather Development Programme (ILDP)
implemented by the Department of Industrial Policy
and Promotion (DIPP) is providing skill development
training to the unemployed for placement in the
leather industry while upgrading skills of the existing
workforce at the shop floor level and imparting
training to trainers. 0.282 million youths have already
been trained out of which 0.228 million such trainees
have been employed in the industry in the last 2
years with 0.144 million more expected to be trained
annually.

In addition Skill up-gradation is being done under

National Skill Certification and Monetary Reward
Scheme of the National Skill Development Corporation
and Pradhan Mantri Kaushal Vikas Yojna (PMKY)
under which 0.1 million unemployed youth have been
trained for various job roles in leather and footwear
industry and 80% of them have been employed in the
industry.

Training Institutions: The Footwear Design and

Development Institute (FDDI) has established itself
as the premier training institute for the provision of
skilled manpower in the leather industry. It has 55
training centres across the country including eight
branches. Another four branches are being set up.
Central Leather Research Institute (CLRI), one of

Confidential Draft - Not for circulation Page - 4

 the largest institutions of leather sector, is playing
significant role in various areas like education,
research, training, testing, designing, forecasting,
planning, social empowerment etc.

FISCAL INCENTIVES
• Excise duty reduced to 6% from 12% on leather
footwear (footwear with uppers made of leather)
with retail sale price of more than INR 1000 per pair
(Budget 2015-16).
• Services by Common Effluent Treatment Plants
(CETPs) exempted from service tax with effect from
April 1, 2015.
• Interest rate reduced to 3% on Rupee Export Credit
to MSME units and all footwear units under Interest
Equalisation scheme launched on April 1, 2015.

To know more about the Leather industry, watch this

video:
https://www.youtube.com/watch?v=OgGSNXYyC80

© 2017 Gajra Pai and Zhu Pvt. Ltd.

Published in India. All Rights Reserved.

This publication contains information that has been obtained or derived from sources believed by Gajra Pai and Zhu Pvt.
Ltd. to be reliable; therefore intended for general guidance only. It is not intended to be a substitute for detailed research
or the exercise of professional judgment. Neither Gajra Pai and Zhu Pvt. Ltd. nor any other member of the Gajra Pai
and Zhu Pvt. Ltd. can accept any responsibility for loss occasioned to any person or company, acting or refraining from
action as a result of any material in this publication. Any opinions or estimates contained in this publication represent
the judgment of Gajra Pai and Zhu Pvt. Ltd at this time and are subject to change without notice. Readers of this
publication are advised to seek their own professional advice before taking any course of action or decision, for which
they are entirely responsible, based on the contents of this publication.

Market AccessConsulting Policy Advocacy Compliance Accounting

GAJRA PAI & ZHU

TM

info@gajrapaizhu.com CHENNAI MUMBAI GURGAON BRUXELLES

+91 8882758759
http://www.gajrapaizhu.com