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Since the ancient times, leather has always held a certain appeal among the general populace. The sheen, the strong material which can be stained by nothing and does not tear off so easily, has always been a sought after material. Producing leather was actually one of the world’s first profession. The liking towards leather has followed us all the way to 2018. Even today, a leather jacket is a style symbol and leather boots are a formidable look. Due to the fashion quotient, as well as the several different uses of leather, industries producing it have been flourishing like nothing else.

Leather is one of the most widely traded commodities in the world. The leather and leather products industry plays a prominent role in the world’s economy, with an estimated global trade value of approximately US$100 billion per year.

Leather has to be one of the most traditional industries running at this moment. Skin and hides sourced from animals are used to produce leather. It is an important industry. As of today, leather-making requires a lot of science, but the old-worldly charm and mystery surrounding this craft still prevails.  Animal skin is processed within an inch of its life and comes out to be more flexible, tough and water resistant. All the steps involved in this process together comprise of the procedure called leather tanning. Tanning is the final step of the whole process. Many mechanical and chemical things are involved in this complex process.

Probably the most important step is the tanning, where a certain material is chemically attached to the protein residing within the body part of an animal. This material makes the animal hide stronger and resistant. Various processes taken care of by a tanner include liming, tanning, dyeing and unhairing.  The hair are removed from the animal body parts. Other non-structured fats and protein are also taken out. When tanning agents are attached to it, the end results become much more strong and resistant to environment.

After an intense process involving preparation, tanning and then finishing, leather is finally produced. This process makes great use of various chemicals as well as chrome salts.

An average leather industry consists of the following:

  • A tannery where animal skins and hides are converted into leather
  • The already produced leather is then molded and cut into several other consumer items, such as clothes, shoes, belts, car upholstery etc.

 

The designing, the patterns, colors and the overall product development also plays a very important role in the leather industry. Once the production of raw leather is over, the above mentioned activities are the ones that decided the price range of any given item. As the world is all about fashion, quality and brand name, these things need to be taken very seriously.

Our country has been able to earn a lot of money from the amount of leather we have exported to other countries. As we have the advantage of abundant raw material and skilled but inexpensive labor, leather is certainly in our court. All one needs, is some innovation, some creative thinking and a good business sense. No one can stop you from owning and running a successful business in the Indian leather industry.

World population grew dramatically in the 20th century and it continues to grow at present. This growing population and the general increase in wealth have led to increases in the demand for meat, which in turn have kept the supply of leather raw material fairly constant. The current predictions are that the supply of leather raw material will continue to grow in step with population growth, but that higher costs and a decreasing availability of land for raising cattle and for growing grains to feed the cattle, as well as an increase in pork and poultry consumption in Asia and Africa, are now becoming apparent. At some stage, these developments may generate tighter traditional supplies and raise the importance of such non-mainstream sources of raw material as camel, kangaroo and deer.

Leather raw materials have increasingly become available in the developing world, while in the developed countries, a declining per capita consumption of red meat has reduced the supply of hides and skins. Now, more than half of the world supply of leather raw material comes from the developing world and, increasingly, those countries with large supplies are seeking to process them through to finished leather articles.

About 65% of all leather comes from bovine material. Climate and adequate husbandry acount for the fact that the best bovine raw material generally comes from the developed countries. The shift in raw material origins has prompted the industry to use more hides with surface defects or other structural deficiencies. This trend is expected to continue. It has already led to changes in finishing techniques to disguise defects, and to greater efforts to explain to consumers that some defect types are natural and should be accepted. The demand for high-quality hides for products such as automobile upholstery has helped, at least until now, to retain highly efficient upholstery leather tanning in the developed world.

Pigskin accounts for over 10% of all leather made currently in the world. China is now by far the dominant producer of pigskins and pigskin leather. Although this material may become important for the industry in the future, the structure and fat content of pigskin makes it very difficult to process. Moreover, of all leather raw materials, pigskin is the one most closely connected with the food industry. Consequently, for cultural or cost reasons, the skin is often left on the carcass or used in the production of gelatine.

At the same time, animals such as pigs and poultry are increasingly bred in factory-like facilities, which entails a higher danger of diseases and epidemics, such as the blue-ear pig disease in China. These issues could have dramatic effects on supply and demand, as well as on prices.

China has been, by far, the most significant player in all sectors of the leather industry in recent years.

China has been, by far, the most significant player in all sectors of the leather industry in recent years. The country now dominates every category of manufacture by a considerable margin. Lately, China has recognized that it has allowed development without proper environmental safeguards, and it is now starting to take corrective action. It has also reduced its support for footwear manufacture since it hopes to make similar progress with products with a higher level of value added.

Overall, the industry is expected to continue to grow in many developing and newly industrialized countries, meeting a large proportion of the demand in the industrialized world as well as the needs of growing middle classes in their own markets. To do so, the industry must deliver quality, avoid commoditization, be more creative, and deal more positively with environmental matters of all kinds.

Leather industry raw material

The leather industry relies on by-products of the meat and dairy industries for over 95% of its raw materials. Consequently, raw material supplies reflected population growth throughout the 20th century.

Current data on agriculture indicates that these trends will remain stable up to 2030, but also highlights evidence of potential serious discontinuities, mostly related to land availability and other aspects of livestock development. Cattle convert grain into protein inefficiently, therefore requiring large pieces of land. Land for herd expansion is either not available, or it is quickly diminishing in many parts of the world.

As countries develop and people grow more prosperous, the overall demand for meat and dairy products grows, even though some declines in this demand have been seen in Europe and the USA. In Africa, the Middle East and Asia, the growing demand for meat is increasingly being met by intensive industrial pig and poultry farming.

As countries develop and people grow more prosperous, the overall demand for meat and dairy products grows, even though some declines in this demand have been seen in Europe and the USA. In Africa, the Middle East and Asia, the growing demand for meat is increasingly being met by intensive industrial pig and poultry farming.

The supply of leather raw material depends on the world’s demand for meat and milk, which has grown dramatically over the last three decades in many parts of the world, although it has remained flat in Africa. The growth of poultry and pork consumption has been stronger in many developing economies, including China, and the increase in the consumption of pork has been almost completely related to changes in China. Table 2 (opposite) gives an indication of growth rates in meat consumption.

China has emerged as the fastest growing producer and consumer of meat by a considerable margin.

China has emerged as the fastest growing producer and consumer of meat by a considerable margin. In 1995, the developing countries overtook the developed ones in meat production for the first time. It is anticipated that by 2050 developing countries will produce twice the amount of meat produced in the developed world. It is also believed that meat and dairy products will continue to provide an increasing share of the human diet, with poultry expanding at the fastest rate.

The relationship between meat consumption and the type of meat being consumed is also important for tanners. Bovine hides consistently represent about two thirds of the raw material used by the world leather industry, which makes them by far the most important raw material. Pigskin represents approximately 11% (slightly more than 2.5 billion sq ft/year), but this is the least well documented of the main types of raw material. This unsatisfactory documentation reflects a niche position, difficult technology, and the changing balance between the use of pigskin for leather and its consumption as food.

Export highlights

India’s leather industry has grown drastically, transforming from a mere raw material supplier to a value-added product exporter.

  1. Total leather and leather good exports from India stood at US$ 1.42 billion during April-June 2017 as against $1.43 billion in the corresponding quarter of last year.
  2. During Apr-Jun 2017, the major markets for Indian leather products were US (14.66 per cent), Germany (11.22 per cent), UK (10.05 per cent), Italy (7.03 per cent), Spain (4.63 per cent), France (5.15per cent), Hong Kong (4.52 per cent), UAE (5.04 per cent), China (3.09 per cent), Netherlands (3.05 per cent), Poland (2.23 per cent) and Vietnam 1.88 (per cent).
  3. At 47.54 per cent, footwear (leather and non-leather) and footwear components accounted for the lion’s share of leather exports in April-June 2017, followed by leather goods and accessories with 23.34 per cent share, finished leather with 16.77 per cent share, leather garments with 9.79 per cent share and saddlery & harness with 2.56 per cent share.
  4. Per capita footwear consumption in India is expected to increase up to four pairs, while domestic footwear consumption is expected to reach up to five billion pairs by 2020.

Indian Leather Footwear Industry

India is the world’s second largest producer of footwear; its production estimated over 700 million pairs per annum. At about US $ 300 million per year, footwear accounts for 18 percent share of total exports of leather exports.

Various types of shoes produced and exported from India include dress shoes, casuals, moccasins, sports shoes, horacchis, sandals, ballerinas, and booties. Major production centres are Chennai (Madras), Delhi, Agra, Kanpur, Mumbai (Bombay), Calcutta and Jalandhar.

Most of the modern footwear manufacturers in India are already supplying to well established brands in Europe and USA. The large domestic market and the opportunity to cater to world markets makes India an attractive destination for technology and investments. Equally relevant is it for the footwear components industry, at this juncture, it is posed for real growth and diversification.

Indian Leather Goods Industry

Items produced by this sector include, in addition to bags, handbags, handgloves and industrial gloves, wallets, ruck sacks, folios, brief cases, travelware, belts, sports goods, upholstery and saddlery goods.

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.

The major market for Indian leather goods is Germany, with an offtake 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.

Indian Saddlery Industry

India is one of the largest producers of saddlery and harness goods in the world. The saddlery industry was established in the 19th century primarily to cater to the needs of military and police. From then on initiatives were taken to develop, the industry and today there are over 150 units in the organised sector, out of which approximately 105 are 100% export oriented units.

Kanpur, in the state of Uttar Pradesh, is a major production centre for saddlery goods in India accounting for more than 95% of the total exports of saddlery items from India. Kanpur, because of its specialisation in tanning and finishing of buffalo hides is the only centre in the country where harness leather, which is major input for saddlery industry, is manufactured.

The export of saddlery and harn’ess items have showed an annual growth rate of about 40% reaching DM 64 million during 1998-99. The major importers of Indian saddlery are Germany, USA, UK, France, Scandinavia, Netherlands, Japan, Australia and New Zealand.

Indian Leather Garments Industry

The Leather Garment Industry occupies a place of prominence in the Indian leather sector.  The product classification of leather garments comprise of jackets, long coats, waist coats, shirts, pant/short, children garments, motorbike jackets, aprons and industrial leather garments.

Indian leather garments, which entered the world market only in the mid-eighties with exports of Rs. 15 crores in 1997-98, account for about Rs. 1530 crore in 1997-98.  The major export destination of leather garments from India is Germany.  In 1997, German imports of leather garments aggregated DM 1786 million of which DM 304 million worth of imports went from India.  India, China and Turkey were the major suppliers of leather garments for the German market, as they accounted for about 78% of the market share.

Among the three major exporting nations of leather garments, India maintains a similar level of market share of about 20%, in both German and EU markets.

Other markets for India include Italy, U.K., U.S.A. France, Spain and Netherlands.  Recently, successful attempt had been made for exports to Denmark, Switzerland and Canada.

SWOT Analysis of the Indian leather industry

Strengths

  1. High Growth
  2. Ready availability of highly skilled and cheap manpower
  3. Large raw material base
  4. Policy initiatives taken by the Government
  5. Capability to assimilate new technologies and handle large projects
  6. Continuous emphasis on product development and design up-gradation.

Weaknesses

  1. Lack of warehousing support from the government
  2. International price fluctuation
  3. Huge labour force resulting in high labour charges
  4. Lack of strong presence in the global fashion market
  5. Unawareness of international standards by many players

Opportunities

  1. Rising potential in the domestic market
  2. Growing fashion consciousness globally
  3. Use of information technology and decision support software to help eliminate the length of the production cycle for different products
  4. Use of e-commerce in direct marketing

Threats

  1. Major part of the industry is unorganised
  2. Limited scope for mobilising funds through private placements and public issues (many businesses are family-owned)
  3. Difficulty in obtaining bank loans resulting in high cost of private borrowing
  4. Stricter international standards
  5. High competition from East European countries and other Asian countries
  6. Lack of communication facilities and skills

Global Scenario

  1. The global trade in leather and leather products has been increasing over the years from mere US$ 4 billion in 1972 to US$ 70 billion in 1997.
  2. Although the exports of Indian leather and leather products have grown manifold during the past decades, our country’s share in global trade is around 3% among world imports of leather products. Whereas India’s share in world imports of leather footwear is 1%. Major exporting countries of leather footwear are China (14% share), Portugal (6% share), Brazil (5% share) and Indonesia (4% share).
  3. India’s share in world imports of leather garments is 6%. Major exporting countries of leather garments are China (36% share), Germany (9% share), Italy (7% share), Turkey (5% share) and Pakistan (4% share)
  4. India’s share in world imports of leather goods is 7%. Major exporting countries are China (22% share), Italy (22 % share), France (7% share) and Greece (5% share),
  5. India’s share in world imports of harness and saddlery is 8%. Major exporting countries of harness & saddlery are Germany (14 % share), U.K. (14 % share), China (12% share).
  6. Overall, India is facing fierce competition in international market from countries like China, Vietnam, Thailand, Indonesia, etc., which are emerging as major manufacturing countries.
  7. East European countries like Poland, Romania, Czech and Slovak Republics have re-emerged as major production centres particularly for footwear sector. These countries pose major challenge to Indian exporters as they enjoy geographical advantage.