India’s leather industry empowering weaker section VIA employment

Sameer Pushp**

The leather industry for economic reasons holds a prominent place in the Indian economy. Its massive potential for employment, growth and exports makes it a source of livelihood for many in India. It provides economic empowerment and employment especially to the weaker sections of the society. With an annual turnover of over US $ 7 billion, the export of leather and leather products increased manifold over the past decades and touched US $ 3.59 billion in 2008-09, recording a cumulative annual growth rate of about 9.58%. Though India is the second largest producer of footwear and leather garments in the world, India accounts for a share of close to 3% in the global leather import trade. India has multi-fold advantage which facilitates this Industry to realize its potential. India is endowed with 21% of world cattle and buffalo and 11% of world goat and sheep population. Added to this are the strengths of skilled manpower, innovative technology, increasing industry compliance to international environmental standards, and the dedicated support of the allied industries.

Leather Industry is one of the largest providers of employment opportunities in the country and about 2.50 million people are engaged in various fields. This industry also provides direct employment to 0.60 million people. Women employment is predominant in leather products sector. In footwear, leather garments, leather goods and accessories, manufacturing units, women employment is very significant, at around 30-40%. In a few footwear export units, the share of women employment is higher at more than 50%. About 0.90 million cottage, household and rural artisans are engaged in the unorganized sectors of production, producing mainly footwear and leather articles. Another about 1 million people are engaged in flaying, curing, handling and transport of raw hides and skins.

Keeping in view the past performance and industry’s inherent strengths, the leather industry is targeting export growth from the level of US $ 3.59 billion during 2008-09 to US $ 7.03 billion during 2013-14. The domestic market for leather products is also expected to grow very significantly in the future.

The leather industry in India is undergoing a transformation from a mere exporter of raw material in the sixties to that of value-added finished products in the nineties. In the wake of globalisation 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. The major markets for Indian leather products are Germany with a share of 14.12%, Italy 12.82%, UK 11.48%, USA 9.98%, Hong Kong 6.61%, Spain 6.09%, France 6.14%, Netherlands 4.13%, UAE 2.38% and Australia 1.55%. These 10 countries together accounts for nearly 75.30% of India’s total leather products export. During 2008-09, out of India’s total export of leather and leather products, export to the European Union alone accounts for a value of US $ 2359.53 million, accounting for a share of 65.57%.

Looking at the importance of the Leather Industry, the Government had identified as “Special Focus Initiatives” under Chapter 1 B of the Foreign Trade Policy 2009-14. Various measures were announced for the Leather Sector in the Foreign Trade Policy 2009-14, viz., Duty Credit Scrip under Focus Product Scheme enhanced from 1.25% to 2% of FOB; Duty Credit Scrip under Focus Market Scheme enhanced from 2.5% to 3% of FOB; Zero Duty Scheme introduced under Export Promotion Capital Goods Scheme (EPCG) for certain sectors including leather and leather products. Export obligation on import of spares, moulds etc., under EPCG reduced to 50% of the normal specific export obligation; and Leather sector shall be allowed to re-export unsold imported raw hides and skins and semi finished leather from public bonded ware houses, subject to payment of 50% of the applicable export duty.

The Government is implementing the Indian Leather Development Programme (ILDP) for the overall industrial growth of leather sector during the current 11th Five Year Plan period 2007-2012. The ILDP lays thrust on several areas such as modernization of production facilities, upgradation of technologies, expansion of production capacities, setting up of institutional facilities, skill development of fresh manpower, skill upgradation of existing manpower, development of rural artisans. It also addresses environmental concerns in the tanning sector, propagating India as an attractive destination for joint venture collaborations/FDIs in the foreign markets and assist the industry in infrastructure needs by way of implementing a specific scheme for development of Leather Parks.

As regards manpower development for the leather sector, upgradation of the facilities in the existing units has become absolutely essential so as to increase the uptake of the students and to train them in the latest technology. As per the present expansion plans, three campuses of FDDI, one each in Tamil Nadu, West Bengal and Haryana are proposed to be set up during the 11th Plan. Besides, upgradation of existing FDDI campus at Noida is also taken up. Placement-linked Skill Development / Skill upgradation training programmes are being supported under the Human Resource Development scheme of ILDP to make them employable and place the successful trainees in leather units. The scheme also proposes to upgrade the skills of the existing workforce which would lead to improvement in production as well as quality.

In order to empower the rural/urban artisans a scheme called ‘support to artisans’ is being implemented, which would provide necessary design and product development support to the artisans and also market linkages for the better positioning of the ethnic products to ensure better return to the artisans. The aim of this scheme is to promote the clusters at various forums as they are an integral part of rural Indian economy and have potential for generating local employment and export. The artisan clusters (both urban and rural) would be supported through this scheme for enhancing their designs as per the changing trends and fashion, corpus of revolving funds for obtaining bulk raw material, grant based livelihood support, marketing support/linkages and also bank linkages. The broad objective of this component would be to ensure better and higher returns to the artisans. Financial assistance under the scheme in the form of grant-in-aid to registered NGOs, industry associations, or institutions willing to take up projects in different leather clusters, is also being provided by the Government.

With the implementation of various industrial developmental programmes as well as export promotional activities, and keeping in view the past performance and industry’s inherent strengths, the Indian leather industry aims to augment the production, thereby enhance export to US $ 7.03 billion by 2013-14, and resultantly create additional employment opportunities for overall one million people. The aggressive export strategy has ushered an era of economic growth and economic empowerment for the weaker section of society.

Disclaimer : The views expressed by the author in this feature are entirely his own and do not necessarily reflect the views of INVC.

**Freelance Writer