Over the years Indian leather industry has become a major exporter in value

added finished leather products from the raw material supplier in 1960’s. The
Indian government is continuously upgrading and nurturing leather industry
through its proactive and effective policies. The action done by the
government would be a major reason of getting global opportunity of
exporting quality finished goods from India. Currently, Indian leather industry
achieved a prominent place in the country’s overall exports. It stands at 7th in
the hierarchy of top earning foreign exchange earning industry of India. Since
1991, India started its steps towards globalization and restructured the
liberalized economic policies. Such inputs from the government eventually led
the leather industry to step in the global world and dive into the south- east
Asian market. The strong grip of industry in economy attracted government as
well as several private entities to invest in and build trust for their long term
returns. Currently, the industry holds on of the major share in global trading
market.

Indian Leather Industry stands in top 8 in total export revenue generation in India
holding nearly 10% of the global raw material and 2% of the global trade. India
is endowed around 21% of the world’s cattle and buffalo and 11% of the
world’s goat and sheep population resulting in the capacity of 3 billion square
feet of leather every year. The domestic market contributes $12 Bn in leather
consumption while holding $5.85 Bn transaction in exports. India is the
2nd largest producer of footwear, 2nd largest exporter of Leather Garments,
3rd largest exporter of saddlery and harness items and the 5th largest exporter
of Leather Goods and provided emplyement for 4.42 Mn people.

Indian leather industry has the credit of being one of the oldest manufacturing
industries catering to the global market from the 19th century. The age of the
industry has linked it with social and organizational structure, and emerges as
a complex one with elements of continuity and traditional structures. The
ultimate quality of the Indian leather combined with efficient craftsmanship
has secured a sturdy place for Indian leather goods in the global market. Indian
leather industry is getting more organized, with a springing capacity for
expansion.

Evolution
Among all the industries the footwear industry in particular holds greater
potential for investments in India. Today India produces approx 700 million
 pairs of leather footwear every year and accounts for an 18% share of the total
Indian leather export.
Indian Leather industry Today has capacity to produce l776 million pairs; 112
million pairs of Shoe Uppers; Non-leather footwear - 960 million pairs of non-
leather footwear's which includes shoes made of rubber, moulded PVC and
other material.

Leather hubs

Sales
3%1% Leather Production centers for
4% leather products are located in Tamil
53%
Nadu - Chennai, Ambur, Ranipet,
39% Vaniyambadi, Trichy, Dindigul ; West
Bengal - Kolkata ; Uttar Pradesh -
Kanpur, Agra & Noida ; Maharashtra -
Tamil Nadu Uttar Pradesh Mumbai ; Punjab - Jallandhar ;
West Bengal Maharashtra Karnataka - Bangalore ; Andhra
Himachal Pradesh Pradesh - Hyderabad ; Haryana -
Ambala, Gurgaon, Panchkula and
Karnal; Delhi
Main leather exports comprise of skins and hides such as cow, sheep nappa, goat
skin and wet blue. Footwear, garments, handbags, leather gloves, purses,
wallets, and briefcases are some of the products exported. Ranipet, Ambur,
and Chennai in Tamil Nadu, Mumbai in Maharashtra, Kanpur in Uttar Pradesh,
Agra, Delhi, Ludhiana, Sonepat, Pune, Kolkata, Calicut and Ernakulum are the
major production centre in India.

Leather Products

The leather and leather products sector consists of the following activities: The
process of raw material production, i.e., carcass collection and flaying, production
of leather from the raw material, i.e., tanning, and manufacture of leather
products from finished leather. Of these, carcass collection and flaying are
dispersed across rural and urban areas all over the country whereas tanning and
product making which constitute the manufacturing activities in the industry
have come to be concentrated mostly in urban centres in the form of industrial
clusters.
The first stage in the chain is the production of raw hides and skins from either
dead or slaughtered animals. The major species of livestock that supply hides and
 skins to the leather industry are cattle,
buffaloes, goats and sheep. India has the
largest livestock population in the world,
accounting for about 15% of the world’s
population of cattle, 56% of buffaloes, 20%
of goats and 5% of sheep4 . However, raw
material availability and quality are one of
the main constraints that the sector is
faced with in an overall sense. Many of the
problems that affect raw material
availability seriously and have serious implications for export performance and
quality in the sector are linked to the methods of procurement of raw hides and
skins, their flaying and curing. In spite of the largest livestock population in the
world, the availability of hides and skins in India is constrained by a low rate of
recovery. Available livestock are scattered and diffused throughout the country
and their collection practices vary from region to region. Recovery takes place
from both slaughtered as well as fallen (dead) animals and in a country where
cow slaughter is not permitted in large parts, as well as where very often
livestock that die are not recovered for days and sometimes weeks on end, the
recovery rates are much lower than their potential.

Government Policy
The promotional structure for the development of the leather industry is quite
vast, with institutions set up for basic research on materials and processes (the
Central Leather Research Institute in Madras), for building a pool of technical
manpower (colleges of leather technology in different parts of the country), for
training workers through training institutes (Footwear Design and Development
Institute), national level programmes such as the UNDP assisted National Leather
Development Programme and the Leather Technology Mission, various state
level leather boards and other such initiatives. There are also a large number of
business associations, formed by entrepreneurs in different segments of the
industry, and an extremely active Council for Leather Exports (CLE) under the
aegis of the Ministry of Commerce.

Government policy towards the leather industry has been guided by the
imperatives of two primary aspects: the first aspect is based on the premise that
this is a traditional industry providing employment to a large number of people
who constitute the bottom of the 13 economic and social hierarchy, that
production based on small scale can be conducive to maximisation of
employment and harnessing of skills in the sector and that production of many
articles made of leather should therefore continue to be produced in artisanal or
small scale units; the second aspect is based on the fact that the sector has
always been a large foreign exchange earner and that exports should concentrate
on adding value to raw material such that outflow of raw material from the
country in semi-processed or finished form should be regulated and exports of
more and more value added items should be encouraged. Both policies for small-
scale sector development as well as policies for export promotion have thus
influenced the leather industry.

https://www.cec-india.org/libpdf/1437550410LeatherIndustryinIndia.pdf

Cluster based development and Indian economy

Cluster-based strategies have an economic rationale and, for the sake of

argument, let’s operate under the assumption that the approach will endure. The
question then becomes, what else does an economic development practitioner
need to know? We posit that applying the cluster framework to economic impact
studies can provide a more comprehensive picture of the potential benefits of a
cluster-based strategy.

The rise of India as a growing power not only in Asia but also at the global stage
would require not only a macroeconomic uplift but also a thorough realization of
innovation by the MSMEs. Innovation being the key solution to the various
challenges being faced by the entrepreneurs, equally important is to realize the
need of cluster based approach. As a whole, it facilitates to face market
challenges, quicker dissemination of information, sharing of knowledge and best
practices and better cost effectiveness due to distribution of common costs. It
also provides an effective and dynamic path for inducing competitiveness by
ensuring inter-firm cooperation through networking and trust. The geographic
proximity of the enterprises with similarity of products, interventions can be
made for a large number of units that leads to higher gains at a lower cost, which
in turn helps in their sustainability. The cluster approach thus aims at a holistic
development covering areas like infrastructure, common facility, testing,
technology & skill upgradation, marketing, export promotion.

With a contribution of 40% to the country's industrial output and 35% to direct
exports, the Small-Scale Industry (SSI) sector has achieved significant milestones
for the industrial development of India. Within the SSI sector, an important role is
played by the numerous clusters that have been in existence for decades and
sometimes even for centuries. According to a UNIDO survey of Indian SSI clusters
undertaken in 1996 (later updated in 1998), there are 350 SSI clusters. Also, there
are approximately 2000 rural and artisan based clusters in India. It is estimated
that these clusters contribute 60% of the manufactured exports from India. The
SSI clusters in India are estimated to have a significantly high share in
employment generation.

Some Indian SSE clusters are so big that they account for 90 per cent of India's
total production output in selected products. As for example, the knitwear cluster
of Ludhiana. Almost the entire Gems and Jewellery exports are from the clusters
of Surat and Mumbai. Similarly, the clusters of Chennai, Agra and Kolkata are well
known for leather and leather products.

However, the majority of Indian clusters, especially in the handicrafts sector, are
very small with no more than hundred workers, so specialised that no other place
in the world matches their skills and the quality of their output. This is the case,
for example, of the Paithani sarees cluster in Maharashtra. However, onlv a tiny
minority of such artisan clusters are globally competitive.

The formidable challenges created for the SSE sector bv the liberalisation of the
Indian economy, as well as its closer integration within the global economy, have
generated a great deal of interest within India on novel approaches to SSE
development. As a result, both private and public sector institutions at the
Central as well as the State levels are increasingly undertaking cluster
development initiatives.