1.

Introduction

I) The leather industry occupies a place of prominence in the Indian economy in view of its
massive potential for employment, growth and exports. There has been an increasing
emphasis on its planned development, aimed at optimum utilization of available raw
materials for maximizing the returns, particularly from exports. The exports of leather and
leather products gained momentum during the past two decades.

II) There has been a phenomenal growth in exports from Rs.320 million in the year 1965-66
to Rs.69558 million in 1996-97. Indian leather industry today has attained well merited
recognition in international markets besides occupying a
prominent place among the top seven foreign exchange earners of the country.

III) The leather industry has undergone a dramatic transformation from a mere exporter of
raw materials in the sixties to that of value added finished products in the nineties. Policy
initiatives taken by the Government of India since 1973 have been instrumental to such a
transformation. In the wake of globalization of Indian economy supported with liberalized
economic and trade policies since 1991, the industry is poised for further growth to achieve
greater share in the global trade.

2. Indian Leather Industry - Overview

I) Items produced by this sector include, in addition to bags, handbags, hand gloves and
industrial gloves, wallets, ruck sacks, folios, brief cases, travel ware, belts, sports goods,
upholstery and saddlery goods.

II) A surfeit of modern units in Chennai, Kanpur and Calcutta employing skilled human
resources and equipped with modern and sophisticated machinery account for a diversified
range of superlative small leather goods including bags, purses, wallets, industrial gloves etc.
made of quality leathers of cows, sheep, goats and buffaloes. The products meet the
requirement of bulk buyers and consumers in Europe, USA and Australia.

III) The major market for Indian leather goods is Germany, with an off take of about 25 per
cent of the leather goods produced in India followed by USA, UK, France and Italy. With
products ranging from designer collections to personal leather accessories, this sector has a
share of 20.53 per cent in the leather industry, while maintaining an average growth rate of 11
per cent recorded in the last five years.

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3. SWOT Analysis of Indian Leather Industry

I) STRENGTHS

• Existence of more than sufficient productive capacity in tanning.

• Easy availability of low cost of labour.
• Exposure to export markets.
• Managements with business background become quality and environment conscious.
• Presence of qualified leather technologists in the field.
• Comfortable availability of raw materials and other inputs.
• Massive institutional support for technical services, designing, manpower development and
marketing.
• Exporter-friendly government policies.
• Tax incentives on machinery by Government.
• Well-established linkages with buyers in EU and USA.

II) WEAKNESSES

• Low level of modernisation and upgradation of technology, and the integration of

developed technology is very slow.
• Low level of labour productivity due to inadequate formal training / unskilled labour.
• Horizontal growth of tanneries.
• Less number of organised product manufacturers.
• Lack of modern finishing facilities for leather.
• Highly unhygienic environment.
• Unawareness of international standards by many players as maximum number of leather
industries are SMEs.
• Difficulties in accessing to testing, designing and technical services.
• Environmental problems.

III) OPPORTUNITIES

• Abundant scope to supply finished leather to multinationals setting up shop in India.

• Growing fashion consciousness globally.
• Use of information technology and decision support software to help eliminate the length of
the production cycle for different products
• Product diversification - There is lot of scope for diversification into other products,
namely, leather garments, goods etc.
• Growing international and domestic markets.

IV) THREATS

• Entry of multinationals in domestic market.

• Stiff competition from other countries.(The performance of global competitors in leather
and leather products indicates that there are at least 5 countries viz, China, Indonesia,

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Thailand, Vietnam and Brazil, which are more competitive than India.)
• Non- tariff barriers - Developing countries are resorting to more and more non – tariff
barriers indirectly.
• Improving quality to adapt the stricter international standards.
• Fast changing fashion trends are difficult to adapt for the Indian leather industries.
• Limited scope for mobilising funds through private placements and public issues, as many
businesses are family-owned.

4. Structure of the industry

I) Footwear Components
Shoes: 100 million pairs
Leather shoe uppers: 78 million pairs
Non-leather shoes/chappals etc.: 125 million pairs
Leather Garments: 6 million pieces
Leather Products: 70 million pieces
Industrial Gloves: 40 million pairs
Saddlery : 6000 pieces

II) The major production centres for leather and leather products are located at Chennai,
Ambur, Ranipet, Vaniyambadi, Trichi, Dindigul in TamilNadu, Calcutta in West Bengal,
Kanpur in Uttar Pradesh, Jalandhar in Punjab, Bangalore in Karnataka, Delhi and Hyderabad in
Andhra Pradesh.

5. The Most Important Stages Of The Leather Production And Supply Chain Management
Process:

1. Warehousing and sorting

In the raw material area the skins are preserved in salt,
stored in controlled cool rooms and before processing,
presorted for quality and weight.

2. Soaking
The skin is soaked to remove dirt and salt.

3. De-Fleshing
During this process tissue, flesh and fat remnants are
removed by a roller mounted knife

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 4. Liming
By adding lime and sulphur compound the hair is
removed from the skin.

5. Bating, pickling, tanning

During bating and pickling the skins are treated with
acid and salt in preparation for tanning. During tanning
the skin fibres absorb the tanning agents. That's when
the skin becomes leather.

6. Samming
During this process water is removed.

7. Splitting
In order to achieve an even specified thickness the
leather is reduced in substance. The resulting split-
leather can than be processed further as suede.

8. Skiving
The grain leather is brought to an even thickness.
Irregularities are removed from the reverse side and the
leather is separated into colour-batches.

9. Sorting
The leather is sorted into various quality grades.

10. Neutralising, filling out, dyeing and greasing

The acid resulting from the tanning process is
neutralized. Dyeing than takes place, where appropriate
with anilin-dye-stuffs. The greasing procedure will
finally achieve the correct softness.

11. Drying
Two methods are used to dry leather. The vacuum
process during which moisture is removed by suction
and the hanging process, when leather is hung and taken
through ovens.

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 12. Staking
Following drying the leather is mechanically staked in
order to soften it. Further processes take place in
preparation for finishing.

13. Finishing
Here the leather is given its final surface treatment and
look. Through processes of base coat, colouring,
embossing, ironing the leather becomes, depending on
the demands of fashion, matt or shiny, two-tone or uni-
coloured, smooth or grained. The art of finishing lies in
working in wafer-thin layers without disturbing the
natural look of the leather and its characteristics such as
suppleness and breathability.

14. Quality Control

In between every process quality is controlled. Final
control checks to ensure each individual production is to
specification and sortation into various trades.

15. Despatch
The leather is measured electronically, wrapped and
despatched.

Diagram 1 - Stages in leather production

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Diagram 2 - Processing, usage of IT and Marketing in conversion of leather into
footwear.

6. Literature survey

I) The leather industry occupies a place of prominence in the Indian economy in view of its
massive potential for employment, growth and exports. There has been an increasing
emphasis on its planned development, aimed at optimum utilization of available raw
materials for maximizing the returns, particularly from exports. The exports of leather and
leather products gained momentum during the past two decades. There has been a
phenomenal growth in exports from Rs.320 million in the year 1965-66 to Rs.69558 million
in 1996-97.

II) Indian leather industry today has attained well merited recognition in international markets
besides occupying a prominent place among the top seven foreign exchange earners of
country.

III) The leather industry has undergone a dramatic transformation from a mere exporter of
raw materials in the sixties to that of value added finished products in the nineties. Policy
initiatives taken by the Government of India since 1973 have been instrumental to such a
transformation. In the wake of globalization 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.

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 Diagram 3- Footwear value creation

IV) Apart from a significant foreign exchange earner, leather industry has tremendous
potential for employment generation. Direct and indirect employment of the industry is
around 2 million. The skilled and semi-skilled workers constitute nearly 50% of the total
work force.

7. Indian Leather Goods Industry

I) Items produced by this sector include, in addition to bags, handbags, hand gloves and
industrial gloves, wallets, ruck sacks, folios, brief cases, travel ware, belts, sports goods,
upholstery and saddlery goods.

II) A surfeit of modern units in Chennai, Kanpur and Calcutta employing skilled human
resources and equipped with modern and sophisticated machinery account for a diversified
range of superlative small leather goods including bags, purses, wallets, industrial gloves etc.
made of quality leathers of cows, sheep, goats and buffaloes. The products meet the
requirement of bulk buyers and consumers in Europe, USA and Australia.

III) The major market for Indian leather goods is Germany, with an off take of about 25 per
cent of the leather goods produced in India followed by USA, UK,France and Italy. With
products ranging from designer collections to personal leather accessories, this sector has a
share of 20.53 per cent in the leather industry, while maintaining an average growth rate of 11
per cent recorded in the last five years.

Chart 1 - India’s Footwear Export Growth over the last Four Decades

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Footwear export has increased from US$40.15 million in 1977-78 to US$ 1475.83 million in
2007-08

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

Chart 2 - Major Markets for Indian Footwear

8. Export Trends

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I) If the Indian economy grows at the same pace, India would most definitely export goods
worth US $500 billion by 2013 and may supersede the exports of other large developing
countries like Brazil. The Way Ahead India needs the right mix of policy formulation sector
focus and industry led initiatives to move up the value chain in the global export basket.

II) It is very clear that Indian exports have still not achieved their true potential and there exists
immense opportunities for expanding the basket of India’s exports. With a strategic attention on
the new markets that are evolving due to free trade, India is witnessing a boom in both
manufacturing and services.

III) Problems of the Indian Export Sector

There are few problems which need to be solved before India makes a mark for itself in the
export sector. The Indian goods have to be of superior quality. The packaging and branding
should be such that countries are interested to export from India. At the same time India must
look for potential market to sell their goods. The government should frame policies which gives
boost to the exports.

IV) Directional Change In Exports

India has seen massive directional change in the context of origin of demand for Indian
products. Till 2001-02 North America and the EU markets shared nearly 21% and 23.2 %
respectively of total exports and the remaining to the rest of the globe. By 2006-07, North
America had a share of only 16% of the total exports and the EU's share was 21.2%.

9. Top ten Indian leather exporters

• Tata International Ltd.

• Florind Shoes Ltd.

• Punihani International

• Farida Shoes Ltd.

• Mirza Tanners Ltd.

• T. Abdul Wahid & Company

• Hindustan Lever Ltd.

• Super House Leather Lt d.

• R SL Industries Ltd.

• Presidency Kid Leather Ltd.

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10. Contributions

S.No Topic Name

Introduction Abhishek Das (10MBA0059)

1 Indian Leather Industry - Overview

SWOT Analysis of Indian Leather

2 Arun S (10MBA0171)
Industry

SWOT Analysis of Indian Leather

3 Armugam (10MBA0120)
Industry

4 Structure of the industry Sabarish (10MBA0098)

Stages Of The Leather Production And

5 Arun S (09MBA007)
Supply Chain Management Process

Khushboo P Shah
6 Literature survey
(10MBA0023)

7 Indian Leather Goods Industry Goutham (07MBI0102)

8 Export Trends Tamizhelakiya (10MBA0164)

Top ten Indian leather exporters

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11. References

http://www.supplychainbrain.com/content/sponsored-channels/weber-logistics-third-party-
logistics/single-article-page/article/leather-goods-maker-buxton-awards-weber-three-year-
storage-and-distribution-contract-1/

http://www.euroleather.com/process.htm

http://footwearsinfoline.tripod.com/leather_swot_analysis.htm

http://www.clri.org/

http://www.toeholdindia.com.

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