LEATHER SECTOR

 WHAT IS LEATHER?
• Leather is a durable and flexible material created
by tanning animal rawhide and skin, often cattle
hide.
• It can be produced at manufacturing scales
ranging from cottage industry to heavy industry.
• People use leather to make various goods—
including clothing (e.g., shoes, hats, jackets,
skirts, trousers, and belts), bookbinding, leather
wallpaper, and as a furniture covering.
• It is produced in a wide variety of types and
styles, decorated by a wide range of techniques.
 IMPORTANT LEATHER EXPORTS:
1. Leather Footwear
2. Leather Garments
3. Leather Goods (including
harness & saddlery Leather
Gloves etc.)
4. Footwear components (shoes
uppers, soles etc)
5. Finished Leather
 TYPES OF LEATHER:
• Full-grain leather refers to the leather which has not had the upper "top grain" and
"split" layers separated.
• Top-grain leather is the second-highest quality and has had the "split" layer
separated away, making it thinner and more pliable than full grain.
• Corrected-grain leather is any leather that has had an artificial grain applied to its
surface.
• Split leather is leather created from the fibrous part of the hide left once the top-
grain of the rawhide has been separated from the hide.

FULL GRAIN TOP GRAIN CORRECTED GRAIN SPLIT GRAIN

 WORKMANSHIP:
• The Leather industry is an employment intensive
industry providing job to more than 4 mn people,
mostly from the weaker sections of the society.
Women employment is predominant in Leather
products industry with about 30% share.
• The Leather industry in India has one of the
youngest workforces with 55% of the workforce
below 35 years of age.
• The Leather industry has the tendency to generate
250 jobs for every $ 0.2 mn investment.
 EXPORTS & PRODUCTION:
• The Leather industry in India holds a significant
place in the Indian economy.
• The Leather industry in India is consistent in its
high export earnings and is among the top
10 foreign exchange earners for India.
• India’s export of Leather and Leather Products for
the period April – August 19 – 20 touched USD
2276.39 Mn.
• Export of different categories of Footwear holds a
major share of about 47.59% in India’s total
leather & leather product exports.
• India is the 2nd largest producer of footwear,
2nd largest exporter of Leather Garments, the
5th largest exporter of Leather Goods and
3rd Largest Exporter of Saddlery and Harness
items.
 WHY INVESTING IN LEATHER SECTOR OF INDIA?
• Opportunity to set-up export units: India has trade agreements with Japan, Korea,
ASEAN, Chile etc., and is negotiating Free Trade Agreement with the European Union,
Australia etc.
• Opportunity to tap the huge domestic market in India: The domestic market is
expected to reach USD 18 Bn by 2020.
• Comparative advantages exist in production cost and labour costs as compared to
other major manufacturing countries.
• Skilled/trained manpower is available for a new production unit or existing
production unit.
 INCREASE IN GROWTH DRIVERS:
• High growth potential for exports
• The ready availability of leather
• The abundance of essential raw materials
• Skill development and environment management
• Favorable government policies
 Additional steps have been taken to increase the export of leather and leather
products
 About 2% across the board enhancement of duty credit scrip under Merchandise
Exports from India Scheme (MEIS) for shipments made from 1 November 2017
 GST concessions for leather industry items –
• Finished leather from 12% to 5%,
• Certain leather chemicals, leather goods, leather garments and saddlery items
from 28% to 18%,
• Common Effluent Treatment Plants (CETPs) from 18% to 12%,
• Job work from 18% to 5% Footwear from 18% to 5%
 FOREIGN DIRECT INVESTMENT:
• India's FDI policy allows foreign investment in certain sectors under the automatic
route and up to the limit set out in that sector.
• FDI is allowed through automatic route in most of the sectors, however, certain
areas such as defence, telecom, media, pharmaceuticals and insurance, government
approval is required for foreign investors.
• Under the government route, foreign investor has to take prior approval of
respective ministry/ department.
• Leather products manufacturing is allowed 100%
FDI through automatic route.
• Government of India has allowed 100% FDI in
single-brand retailing in India, with a clause of
30% mandatory local sourcing.
• The Leather industry in India is de-licensed,
facilitating expansion on modern lines with state-
of-the-art machinery and equipment.
 FINANCIAL SUPPORT FOR LEATHER SECTOR:
 Under the Indian Footwear, Leather & Accessories Development Programme
(IFLADP), the following assistance is provided:
• Integrated Development of Leather Sector (IDLS) sub-scheme: 30% grant is
provided on the cost of plant and machinery for Micro and Small units and 20% for
other units, with a ceiling of USD 0.307 Mn for each product line.
• Mega Leather, Footwear and Accessories Cluster (MLFAC) sub-scheme: 50% grant
with a ceiling of USD 19.23 Mn based on size is provided. This is mainly for the
establishment of Mega Leather Clusters to boost infrastructure facility and support
services for production and export.
• Human Resource Development (HRD) sub-scheme: An assistance for Placement
Linked Skill Development training to unemployed persons is provided - USD 230 per
person, for skill up-gradation training to employed workers - USD 76 per employee
and for training of trainers - USD 3,076 per person. 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
centers across India including eight branches. Another 4 branches are being set up.
About 25,643 persons have been trained under primary skill development training
programmE during 2018-19.
• Leather Technology, Innovation and Environmental sub-scheme: The help is
provided for upgradation/installation of Common Effluent Treatment Plants (CETPs)
@ 70% of the project cost. The sub-scheme also offers support to national level
sectoral industry council/ association and support for preparation of vision
document for Leather Footwear and Accessories Sector.
• Promotion of Indian Brands in Leather, Footwear and Accessories
Sector sub-scheme: Eligible units are approved for Brand
Promotion. Government assistance is limited to 50% of total
project cost subject to a limit of USD 461,538 for each brand,
annually for 3 years.
• Additional Employment Incentive for Leather, Footwear and
Accessories Sector scheme: Employers contribute 3.67% to
employees provident fund for all working in the leather, footwear
and accessories sector. The employees are enrolled in Employees'
Provident Fund Organization (EPFO) for first 3 years of their
employment.
 INVESTMENT OPPORTUNITIES FOR LEATHER SECTOR:
• As per the World Bank Doing Business 2020 report, India is ranked 63. Many
initiatives under National Trade Facilitation Action Plan (2017-2020) have
upgraded the productivity of cross-border trade, reducing border and
documentary compliance time for both exports and imports.
• The National Manufacturing Policy identifies leather as a special focus sector,
for growth and employment generation. The policy aims at a GDP of 25% along
with a creation of 100 mn jobs in all sectors by the year 2025.
 SOURCING HUBS:

• Pre dominantly, most of the manufacturing units for leather goods are located in
cities like Kolkata, Chennai, Mumbai, Kanpur, Bangalore, and Pondicherry.
• Kanpur is popularly known as the “Leather city of the world”.
• Kanpur leather traders export leather goods in large volumes throughout the world.
These massive amounts of leather products are shipped to new Delhi and other
major cities in India by the Kanpur leather traders. From these places, they are
exported to other nations in the world.
• Kanpur leather traders are involved in manufacturing, exporting and supplying of all
types of finished leather products.
 FOREIGN INVESTORS:
• Apache Group (Taiwan), Nellore, Andhra Pradesh
• Feng Tay Shoes (Taiwan), Cheyyar, Tamil Nadu
• Itares (Italy), Ambur, Tamil Nadu

 KEY ACHIVEMENTS:
• Indian Footwear, Leather & Accessories Development Programme (IFLADP), a special
package for employment generation in the Leather and footwear industry has been
launched in December 2017.
• The approved expenditure for this is USD 371 Mn from 2017-18 to 2019-20. Under
the programm, 4 projects have been approved with a total outlay of USD 15 Mn. This
is to facilitate upgradation of infrastructure, job creation and environmental
sustainability in Tamil Nadu.
• In-principal approval for the mega leather cluster in West Bengal with employment
potential for around 7000 people and an investment of up to USD 64 Mn.
• Under the scheme, a total of 9 projects for Common Effluent Treatment Plant
upgradation, with a gross value of USD 67 Mn and government assistance of USD 46
Mn have already been approved and are under implementation.
• During 2017-18, primary skill development training has been provided to 94,231
unemployed persons in the Leather & footwear industry and of them, 71,125
trainees have been provided placement.