Domestic leather industry: Pace picks up

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A leather tannery unit.
A leather tannery unit.

Our Bureau

New Delhi, Jan. 1

THE domestic leather sector saw a slew of policy announcements by the Government last year to unleash its potential.

The industry too responded fittingly by reporting a several-fold increase in orders from European and US retailers.

The Government, in its National Foreign Trade Policy, announced several measures, including a Rs 400-crore development package for the industry.

Besides earmarking an outlay of Rs 290 crore for modernisation of the industry, the package envisaged an outlay of Rs 110 crore for setting up five leather parks two in Chennai and one each in Nellore, Agra and Kolkata. Under the leather parks package, Chennai would have one for footwear and the other for components.

The Nellore park is to be exclusively for tanneries, the Kolkata park within the Calcutta Leather Complex will concentrate on leather goods, while the component park will be in Agra.

The domestic leather sector, which over the years has been turning into a production and tanning hub for the $85-billion (around Rs 3,83,690 crore) global leather industry, has consolidated on this role in 2004.

According to industry players, several European manufacturers have shut down manufacturing in their geographies due to the overall cost implications and stricter environmental norms, and are now shifting base to either India or China. The pace picked up noticeably in the year gone by.

Several large European retailers, including Clarks, Next and Hush Puppies are among those who are increasingly procuring products from India, while a number of US retailers, including Wal-Mart and JC Penney, are looking to tap the Indian supplier base in a big way.

"Indian suppliers have carved out a niche for themselves in the mid-segment market, while China is catering to the low-end mass market. The margins are significantly higher for Indian suppliers due to higher marked-up prices," a leather exporter said.

And with the tanning and processing hub shifting to India, domestic leather industry is on a high and order books have been swelling. In fact 2005 may bring it even more cheer.

(This article was published in the Business Line print edition dated January 2, 2005)
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