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Leather Industry Looking for Sunnier Days
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 The demand for leather goods will hopefully pick up in the context of the global economy showing signs of recovery.
by
Radhakrishna Rao
Like other industrial enterprises
in the country, the thriving
Indian leather industry has
been hit hard and deep by the
ongoing global economic slowdown.
There is a slump in the
demand for finished leather products
in West Europe and North America.
Not surprisingly then, India’s leather
export logged an almost flat growthrate
during 2008-09.
Export during the year registered a
paltry 1.7% growth to touch $ 3.53 billion
as against $3.45 billion during
2007-08. Even so, India’s Council for
Leather Export (CLE) is optimistic
about the demand for leather goods
picking up in the context of the global
economy showing signs of recovery.
A strong production base, high
quality of products and competitive
manufacturing cost could be advantageous
factors for the Indian leather
industry that is looking at boosting the
exports to the non traditional areas.
For instance, in recent years, Spain has
emerged as a major market for the
high quality Indian leather goods.
As pointed out by Dr
K.Elangovan, Executive Director of
CLE, the apex body for development
of the Indian leather industry,
exports in the last 2 years have
remained stagnant due to the global
economic melt down. But he is optimistic
over Spain becoming a large
and lucrative market for the Indian
leather goods.
At the moment, Spain imports a
major chunk of leather goods from
China and Brazil. With a view to
enter the Spanish market, a slew of
promotional activities, including
road shows and meetings with buyers,
have been held in Spain.
The low manufacturing cost of the
Indian leather industry, as compared
to China, would be a plus point for
the Indian exporters aiming at highvalue
West European market.
Meanwhile, in a development of
significance, United Nations
Industrial Development Organisation
(UNIDO) has declared the Chennai
leather cluster as one of the top 10
dynamic industrial locations in the
world. Indeed, this long overdue
recognition has come as a shot in the
arm for leather units spread across
the State of Tamil Nadu.
In its International Development
Report 2009, UNIDO verified whether
these locations, while competing
effectively in the international market,
is also able to provide enhanced
social and economic benefits to the
people in terms of employment,
skills, wages and better environmental
practices. Employment and average
wages in the surveyed firms in
Chennai and surrounding areas rose
from 4,643 workers and $ 174 a
month in 2000 to 7,754 workers and $
187 in 2006, said the report.
Upgrading mode
The well-documented and factfilled
UNIDO report drives home the
point that the Chennai leather complex
enjoys the highest rank in the
employment elasticity of export
among the top 10 global locations. As
it is, the Chennai leather complex
scored an elasticity rate of 1.3, which
means that, for every 1% increase in
export, the employment avenue went
up by 1.3%.
“Chennai leather cluster contributes
6% of the world’s total finished
leather goods. Such clusters are
important entry-points of industrial
development,” observes Phillippe
Scholtes, Head of UNIDO in South
Asia region.
The UNIDO report was also
appreciative of the dynamic and
proactive role of the Tamil Nadu
Government and institutions concerned
with the “eco image” of the
leather industry, in bringing down
the pollution in leather- production
units in the State. Interestingly, no
tannery in Tamil Nadu, the hub of the
Indian leather industry, functions
without it either being connected to a
common effluent-treatment plant or
having built the requisite system for
its use.
As it is, the Chennai-based Central
Leather Research Institute (CLRI)
has, in recent years, undertaken
extensive research work aimed at
equipping the leather industries in
the State with safe working practices
and pollution-abating treatment.
Historically, the tanning industry
has flourished in and around presentday
Chennai on account of the presence
of a large number of British businessmen
in Chennai, then known as
Madras. Other parts of Tamil Nadu,
where tanning and leather industry
had a sound growth, include Ranipet,
Ambur, Vaniyambadi, Erode, Dindigul
and Tiruchirapalli.
The leather units in Kolkata have
also taken a hit from the slow-down
in export due to global recession.
Low production cost due to the
employment of young boys and girls
for stitching and cutting leather by
unregistered, small-scale tanneries
has contributed to the popularity of
leather goods that have its origin in
Kolkata.
“The downturn has surely impacted
the employment scenario in the
leather goods industry. However, as
the industry is largely unorganised,
situation on job losses are not readily
available but there is a deep concern,”
says P.P.Roy Chowdhuri,
Executive Director of Indian Leather
Producers’ Association.
Facing hurdles
The small-scale leather production
units in Kolkata have also been
affected by the West Bengal Pollution
Control Board’s initiative. They have
been forced to adopt environmentally-
sound production practices, which
implies a huge investment in new
pollution-control equipment.
Law-enforcing agencies in
Kolkata are also forcing small, unregistered
leather production units to
move to the new 1,100-acre Calcutta
Leather Complex (CLC) in the city
outskirts of Bantala. Significantly,
way back in the year 2000, the Indian
Supreme Court had directed all the
tanneries in Kolkata to move to CLC.
In Kanpur, another thriving
leather goods production centre,
most of the tanneries have taken to
eco-friendly production techniques.
Kanpur turns out a range of leather
goods — suiting every taste and
every pocket — for both the domestic
and global market.
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