Leather

May I Help You?

*All the fields are mandatory

Powered By ChronoForms - ChronoEngine.com
 

OVERVIEW

Leather industry holds a place of prominence in both global and domestic markets. The demand is driven by its luxurious and grand appeal. In recent years, the demand for leather and leather products has grown, and the production largely comes from the informal sector.

The Indian leather industry comprises of Footwear, Finished Leather, Leather Goods, Leather Garments, Footwear Components and Saddlery and Harness. All these segments have high growth potential. Apart from retail items, leather is also used extensively in other industries such as interior designing, automotive and sports. The sector provides employment to about 4 million people, 30 per cent of whom are women.

India’s transformation, from being a raw material supplier to a finished good exporter has been remarkable. In the early 1900s, India was the eighth largest leather footwear producer. Its performance in the international market has improved remarkably over the years, especially after the government reduced tariffs and non-tariff barriers, and removed restrictions in foreign direct investments. Today, the country ranks second in terms of footwear and leather garments production in the world and accounts for approximately 9 per cent of the world’s footwear production.

Indian leather industry accounts for about 13 per cent of global production. The leather garments sector has an annual production capacity of 16 million pieces, and accounts for 9 per cent share of India’s total leather exports. Annual production capacity of leather saddlery and harness items is 12.5 million pieces while that of industrial gloves is 52 million pairs.

India is one of the few large global manufacturers of leather products, particularly leather footwear. In 2018-19, the total value of exports from the industry stood at US$ 5.3 billion. The sector witnessed slowdown of -2.66% in 2018-19 as compared to 2.58 % growth in the previous year, mainly due to external factors like recession in the major market of European Union (to which about 55% of exports are directed), instability in middle-east and stiff competition from Polyurethane Garments to the Leather Garments segment.

Export of Leather and Leather products from FY 14 – FY 18

(Value in US$ millions)
DESCRIPTION 2014-15 Value 2015-16 Value 2016-17 Value 2017-18 Value 2018-19 Value % Change
Leather Goods 1,453.20 1,370.86 1,316.59 1,365.79 1431.31 4.80
Leather Garments 604.58 553.98 535.37 519.32 468.32 -9.82
Leather Footwear 2,279.00 2,148.41 2,127.90 2,194.73 2198.07 0.15
Leather Footwear Component 361.94 285.12 298.71 335.32 319.63 -4.68
Saddlery And Harness 162.85 146.48 142.37 155.99 159.38 2.17
Finished leather 1331.76 1049.72 887.02 873.97 723.44 -17.22
TOTAL 6,193.33 5,554.57 5,307.96 5,445.12 5,300.14 -2.66
Source: DGCIS

The leather product sector is entirely de-licensed, which facilitates expansion along modern lines with state-of-the art machinery and equipment. Currently, 100 per cent FDI is allowed under the direct route. FDI in leather, leather goods and pickers from the period April 2000 to March 2019 was estimated at US$ 193.72 million, which accounted for 0.05 per cent of total FDI inflows.

Leather sector has been included as one of the focus sectors under the ‘Make in India’ program. 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.

Challenges to develop and expand exports of the leather industry are likely to increase, since leather is being replaced in many markets with other synthetic materials. The growth of these technical and synthetic materials, may cause leather exports to plunge.

Despite these concerns, positive growth is projected in the next five years, owing to rising labor costs in China. The government, through its incentives, focus initiatives, industrial development programmes and export promotional activities, has deployed full support to promote exports of the leather sector.

 

SELECT GOVERNMENT INCENTIVES

The following steps have been taken by the government to enhance the growth of exports in this sector-

  • The Foreign Trade Policy promises to ease trading for exporters in the country and highlights leather sector as one of the ‘Focus Areas.’
  • MEIS (Merchandise Export from India scheme) incentives have been raised by 2 per cent to 4 per cent, which will largely benefit the leather industry.
  • Additional annual incentives of Rs. 749 crores have been sanctioned for the leather sector.
  • The Integrated Development of Leather Sector (IDLS) sub-scheme has been implemented as part of the Indian Leather Development Programme (ILDP), which has significantly contributed to capacity modernization and technological up-gradation of the leather sector.
  • Central excise duty and import duty on raw hides and skins, semi-processed leathers like wet blue, crust leather or finished leather has been deposed.
  • Excise duty on footwear with leather uppers and having retail price more than US$ 15.38 has been reduced from 12 per cent to 6 per cent.
  • Under Leather Technology, Innovation and Environment Issues, a sub-scheme of the ILDP, assistance is provided for technology benchmarking and environment management for the upgradation of Common Effluent Treatment Plants, for Solid Waste Management and for holding environmental workshops.
 

SELECT EXPORT MARKET REGULATIONS

To maintain the quality of leather imports, certain standards have been mentioned by the technical body CEN TC 289 of the European Committee for Standardization. There are currently 143 standards with relevance to leather products. These standards cover a number of fields including test methods, recommended values for upholstery leather for furniture, requirements and characteristics to any intended end use in the field of row hides and skins, tanned hides and skins and finished leather, with the typical shape given by the animal or part of it, etc., among others.

Some additional EU regulations -

  • Regulation (EC) No 1907/2006 on the Registration, Evaluation, Authorization and restriction of Chemical substances (REACH), as the industry is an important downstream user of a wide variety of chemical preparations.
  • Directive 2010/75/EU on industrial emissions according to which permit conditions, including emission limit values, must be based on the Best Available Techniques (BAT). The BAT reference document (BREF) for tanning of hides and skins was adopted in 2013. BREF or ‘BAT reference document’ is a document, resulting from the exchange of information organized pursuant to Article 13 of the Industrial Emissions Directive (IED) (2010/75/EU). BREFs are drawn up for defined activities and describe, in particular, applied techniques, present emissions and consumption levels and also techniques considered for the determination of best available techniques.
  • Regulation (EC) 1069/2009 and Commission Regulation (EU) 142/2011 on animal by-products and derived products not intended for human consumption, as hides and skins are materials of animal origin that are used outside the food chain.

As of 1 September 2015, a new set of standards – Technical Specification for Export Footwear in leather (SN/T 1309-2015) – has been applicable to the inspection of China’s footwear imports and exports, replacing the previous SN/T 1309.1 – SN/T 1309.7 series of standards.

For more information on regulations and policies, link to ‘China leather industry association’
http://en.chinaleather.org/Expand/Share/Page/NSCMoreList.aspx?NSCID=977

The government of UK has provided certain regulations and checks for importing leather and leather products. The relevant link has been provided below.

https://www.gov.uk/guidance/classifying-leather