History

Primitive people, who lived during the Ice Age some 500,000 years ago, were likely the first to use the
skins of animals to protect their bodies from the elements. Just as leather today is a byproduct, our ancient
ancestors hunted animals primarily for food, but once they had eaten the meat, they would clean the skin
by scraping off the flesh and then sling it over their shoulders as a crude form of a coat. They also made
footwear to protect their bare feet from rocks and thorns by taking smaller pieces of animal skin made to
fit loosely over the foot and tied at the ankle with thin strips of skin or even vines.

The main problem that primitive man encountered was that after a relatively short time the skins decayed
and rotted away. With his limited knowledge and experience, primitive man had no idea how to preserve
these hides. As centuries passed it was noticed that several things could slow down the decay of leather. If
the skins were stretched out and allowed to dry in the sun, it made them stiff and hard but they lasted
much longer. Various oily substances were then rubbed into the skins to soften them. As time passed, it was eventually discovered that
the bark of certain trees contained "tannin" or tannic acid, which could be used to convert raw skins into what we recognize today as
leather. It is quite hard to substantiate chronologically at exactly what time this tanning method materialized, but the famous "Iceman"
dating from at least 5,000 BC discovered in the Italian Alps several years ago, was clothed in very durable leather.

Somewhat later, techniques used by the American Indian are very similar to those used in this early period. These Indians took the
ashes from their campfires, put water on them and soaked the skins in this solution. In a few weeks the hair and bits of flesh came off,
leaving only the raw hide. This tanning method, which used a solution of hemlock and oak bark, took about three month

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Development of leather:-

The uses of leather: - (from primitive people to 19th century)

The making of leather goods: -

STAGES:-

The Egyptians: -

The tanning of leather was used by mankind in numerous geographical areas throughout the early periods of human civilization. As
certain leather characteristics began to emerge, men realized leather could be used for many purposes besides footwear and clothing.
The uses and importance of leather increased greatly. For example, it was discovered that water would keep fresh and cool in a leather
bag. It was also found suitable for such other items as tents, beds, rugs, carpet, armor and harnesses. Ancient Egypt, one of the most
developed civilizations in this early period, valued leather was as an important item of trade. The Egyptians made leather sandals,
belts, bags, shields, harness, cushions and chair seats from tanned skins. Many of these items are in fact still made from leather today.

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The greeks :-

Similarly, the Greeks and Romans used leather to make many different styles of sandals, boots and shoes. When the Roman legions
marched in conquest across Europe, they were well attired in leather armor and leather capes. In fact, right up until the early 18th
century, the shield carried by the ordinary soldier was more likely to be made of leather than metal.

The ancient Greeks refer to eight basic guilds of artisans, which included both shoemakers and tanners. Although tanning was
originally a cottage trade, the Greeks had full-time professional tanners who were at first employed in leather processing
establishments and became independent some time later. The barks of conifers and alder were used as tannin sources and so were the
peel of the pomegranate, sumach leaves, walnut, cups of acorns as well as an Egyptian heritage - mimosa bark. The Greeks were also
familiar with alum tanning and it appears they knew something about tanning with fish oil. The types of leathers used were as
diversified as the end users. Homer refers to the use of cowhide, goat and weasel leather by the Greeks.

The romans:-

The edict issued by the Roman emperor Diocletian which fixed ceiling prices for all kinds of goods and services included skins and
leather prepared from goats, sheep, lambs, hyenas, deer, wild sheep, wolves, martens, beaver, bears, jackals, seals, leopards and lions.
Under the edict, cowhide was even classified according to groups and qualities. A complete tannery in the famous ash-preserved ruins
of Pompeii was unearthed in 1873.

As we move into the Middle Ages, leather continued to increase in popularity. By far the cleverest craftsmen with leather in medieval
times were the Arabs. The Moors developed remarkable skill primarily in the preparation of beautiful goatskin still known as morocco
leather after the country of its origin. In fact the description 'genuine morocco' is still very highly regarded today, particularly in the
manufacture of small leather goods.

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England:-

In Medieval England, most industries were carried out by master craftsmen aided by apprentices under the supervision of the
appropriate Craft Guilds. The leather trade was represented by a large number of guilds including Cordwainers, Corriers, Fletchers,
Girdlers, Glovers, Homers (Bottle makers), Leather Sellers, Loriners, Saddlers, Skinners, Pursers, Tanners and Harness-makers as
well as others. All kinds of containers were made from leather, such as sword cases and dagger sheaths, box coverings and water
bottles, many of them beautifully decorated by punching and incising. Leather was also a favorite medium for decorative art. Leather
was used to cover books. In those days, when the horse was the principal means of transport, saddler and harness making were
important uses of leather.

Until the later part of the 19th century, there were relatively few changes in the methods used to produce leather. In fact, the process
had changed very little in over 200 years. However, the industrial revolution did not bypass tanning - one of the oldest and most basic
forms of manufacturing. Science was quickly introduced to the art and craft of leather making. A wider range of dyestuffs, synthetic
tanning agents and oils were introduced. Together with precision machinery, these changes and continued innovations to the present
day have combined to make tanning into a viable, modern manufacturing industry.

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processes of leather:

Leather, animal skin that has been chemically modified to produce a strong, flexible material that resists decay. Almost all the world
output of leather is produced from cattle hides and calfskins, goatskins and kidskins, and sheepskins and lambskins. Other hides and
skins used include those of the horse, pig, kangaroo, deer, reptile, seal, and walrus.

Leather is used for a wide range of products. The variety of skins and the way they are processed can produce leather as soft as cloth
or as hard as a shoe sole. Cattle hides, the major raw material for leather production, range from being lightweight and supple to tough
and strong. Tough hides are used in the production of the durable leather required for soles of shoes, machine belting, engine gaskets,
and harnesses. Calfskin is lighter and finer grained, and is used for making fine leather suitable for such articles as shoe uppers.
Sheepskin is soft and supple; it yields the type of leather suitable for gloves, jackets, and other apparel. Since ancient times, human
beings have used animal skins and learned to make leather. The process of using chemicals to turn skins into leather is called tanning.

Curing

The raw materials used by the leather industry originate largely as by-products of the meat-packing industry. Before entering the
tanning process, the raw skins are "cured" by salting or drying them promptly after being removed from the slaughtered animal. The
more common methods used in curing require the use of salt (sodium chloride) in one of two ways: wet-salting or brine-curing. In
wet-salting, the skins are liberally salted and piled on top of one another until they form a pack. They are left in the pack for about 30
days to allow the salt to thoroughly penetrate the skin. Brine-curing is a much quicker method. In agitated brine-curing, the method

5
most commonly used, skins are placed in large vats called raceways that contain a disinfectant and brine maintained close to full salt
saturation. After about 16 hours in the raceway, the skins are completely penetrated by the salt.

Soaking And Unhairing

The cured skins are soaked in pure water to eliminate salt, blood, and dirt, and also to replace moisture lost in the curing process. After
the skins have soaked for a period varying from two hours to seven days, the flesh is removed mechanically from the inner surface. To
loosen the hair, the skins are then immersed for one to nine days in a solution of lime and water containing a small amount of sodium
sulfide. Following this operation the hair is easily removed by a dehairing machine, and the distinctive pattern known as the grain can
be distinguished on the outer surface of the skin. To ensure clear, clean surfaces, any remaining flesh and hair is scraped off, usually
by hand with a dull knife, by a process called scudding.

Deliming And Bating

The next operation involves deliming the skins by soaking them in a weak solution of acid, which reduces the swelling caused by the
lime. Simultaneously, most types of skins are treated with a "bating" material consisting of enzymes to give a smoother grain and
render the skin soft and flexible. The amount of bating varies greatly, from none at all for sole leather to a concentrated treatment for
leather to be used in kidskin gloves. After the deliming and bating operations, the stock can be tanned.

Each type of skin may be treated by several tanning processes. The process is chosen according to the use for which the leather
is intended. The two principal tanning processes are mineral, or chrome, tanning, and vegetable tanning. Chrome tanning often can be
completed in a single day, whereas vegetable tanning requires many weeks or months. Vegetable tanning results in a firmer leather
with greater water and stretch resistance. Chrome tanning shrinks the stock and produces a longer-wearing leather with greater
resistance to heat. The processes are sometimes combined to derive some of the advantages of each.

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Vegetable Tanning

In this process the tanning agent, which renders the skin immune to decay and prevents shrinkage, is a substance known as tannin.
Tannin is extracted from the bark, wood, fruit, and leaves of trees. Chestnut wood, oak bark, and hemlock bark are the major domestic
sources of the tannin used by the United States leather industry. Foreign sources, which provide more than 80 percent of the tannin
supply, include the wood of the quebracho tree of South America, mangrove bark from the island of Borneo, wattle bark from South
Africa, and myrobalan fruit from India.

In vegetable tanning the hides are suspended from rocking frames in a series of vats containing increasingly stronger tannin solutions,
called liquors. After several weeks the hides are transferred to a "layaway" section, which consists of larger vats containing still
stronger liquors. Each week more tannin is added to the liquor, until the hides have absorbed enough tannin to complete the process.
The last stages of the process may be Flexible vegetable-tanned leathers to be used for belting, luggage, upholstery, or harnesses are
less heavily tanned than the leather intended for shoe soles.

Mineral Tanning

The mineral tanning process is known as chrome tanning because the tanning agent used most frequently is a salt compound of
chromium. Chrome-tanned leathers, which stretch more than vegetable-tanned leathers, are suitable for handbags, shoe uppers, gloves,
and garments.

To prepare the stock for chrome tanning, the bated skins are pickled in a solution of salt and acid. The skins are then immersed
in a basic chromium-sulfate solution within a large revolving drum that tumbles the skins. This type of liquor penetrates the skins so
rapidly that tannage is accomplished in less than a day. The chrome process originally involved the use of two different liquors, both
solutions of compounds of chromium, and required substantially more time. Known as the two-bath process, it is still used for some
varieties of leather. Aluminum or zirconium compounds may be used in place of chromium in the production of white leather. Alum,
formaldehyde, gluteraldehyde, and synthetic tannins (Syntans) are also used to impart special characteristics.

In the production of combination-tanned leather, the skin is first chrome-tanned and then retained with vegetable tannins. The
modified applications of both processes produce leather with some of the advantages of each type.

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Combination tanning

Combination tanning involves the use of both the chrome-tanning and vegetable-tanning methods. Combination tanning is
used for leathers with special qualities, such as extremely soft garment, glove, or shoe upper leathers. In today’s tanneries, most
leather is chrome tanned, either as the complete tanning process, or as a preten for vegetable tanning. Pertaining speeds up the
vegetable-tanning process ands also gives vegetable-tanned leather more flexibility. Some shoe sole are vegetable tanned, but usually
they are per tanned with a chrome tan.

Oil tanning

Oil tanning is used for the chamois leather that is made from sheepskin. First the wool is removed from the sheepskin and the
skin is split into layers. The flesh split is used for chamois, and workers being by shaving the split to remove the cells. Next, they put
the shaved split into a machine that hammers cod-liver oil into the skin. After the oil has penetrated it, the skin is removed from the
machine and dried. It is then buffed to soften it and to give it a nap. Saddle leather and leather seals used on some machinery are also
oil tanned. However, they are pretanned with chrome before being oil tanned

Final process
Dyeing

After tanning, all types of leather undergo various operations that differ according to the use of the desired product. Vegetable-
tanned leather for shoe soles is first bleached a lighter color. Next, it is infused with such materials as epsom salts, oils, and glucose,
and then lubricated with hot emulsions of soap, greases, and sometimes wax. Finally, the stock is run through rolling machines to give
the leather a desired degree of firmness and a high gloss. Chrome-tanned leather intended for shoe uppers is split and shaved to the
desired uniform thickness. It is then placed in a rotating drum for the dyeing process, which usually involves the use of several types
of coloring materials to achieve color fastness and durability. Before or after dyeing, the leather is rolled in a "fat liquor," which
contains emulsified oils and greases. More than 100 leather colors exist, ranging from traditional tans and browns to such exotic
shades as fuchsia and turquoise.After dyeing and fat-liquoring, the stock is stretched for drying. Workers paste the stock on frames
made of glass or ceramics or "toggle" it on perforated metal frames. The frames are then conveyed through drying tunnels with
controlled heat and humidity.

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Finishing
Heavy leathers are finished by coating the grain surface with a finishing compound, and finally by brushing it under a
revolving, brush-covered cylinder. The grain surface of light leathers is buffed, or sandpapered, to correct imperfections in the skin.
Buffing the flesh side of leather raises the nap and produces the popular leather known as suede. For smooth finishes, most light
leather is seasoned, or treated with a mixture of such materials as waxes, shellac or emulsified synthetic resins, dyes, and pigments.
Pigments are used sparingly to avoid a painted look. Glazing gives the grain a highly polished surface. Several coats of thick, oily
varnish are required to give patent leather its characteristic high gloss.

Leather Substitutes

Today, many artificial substances are produced and sold as "leather goods." These modern synthetics include such plastics as
polyvinyl chloride and nonwoven fibers impregnated with binders. These materials lack leather's porous quality, pliable nature, and
resilience. However, the artificial materials cost less to produce than leather and have come to command a large share of the leather
market, particularly in shoe soles.

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The leather industry comprising of tanning & finishing,
footwear & footwear components, leather garments, leather goods including saddler & harness etc. segments is the fourth largest
foreign exchange earner for India. Leather industry in India is spread over organized as well as unorganized sector. Though
traditionally the Indian leather industry has been an exporter of tanned hides and skins, in the early seventies itself, it set its sights on
becoming a major player in the leather products segments. The industry uses primarily indigenous natural resources with little imports.

Leather industry employs 2.5 million persons. A large part (nearly 60-65%) of the production is done by the Small/Cottage Sector.
The annual export value of Leather industry is poised to touch about 2 billion US dollars. Leather industry is amongst top 8 export
earners for India. An estimated 15% of total purchase of leading global brands in footwear, garments, leather goods & accessories in
Europe, is outsourced from India. Most companies in India are ISO Certified Leather industry has a large scope to grow in near future.

Export Potential

Union commerce and industry ministry has identified the leather industry as a thrust sector in view of significant export growth
prospects and enormous employment potential, particularly in semi-urban and rural areas. It is visioned that the industry would
generate a revenue of $7 billion by 2010 through exports from the present level of $2.3 billion, besided generatingover one million
additional jobs in the country.

Value-added leather products at present constituted nearly 80 per cent of India's leather exports, with footwear alone (both leather and
non-leather) accounting for 36 per cent marking the transition of India from an exporter of raw hides and skins to a reliable source of
value-added leather products.

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Foreign Trade Policy and Export Promotion

The Foreign Trade Policy (FTP) announced on 31st August 2004 takes an integrated view of the overall development of India’s
foreign trade. The Policy sets the core objectives, identifies key strategies, spells out focus initiatives, outlines export incentives, and
also addresses issues concerning institutional support including simplification of procedures relating to export activities during the
next five years starting from 1st September, 2004. Other measures suggested in the policy include :

i. Duty free entitlements of import trimmings, embellishments and footwear components for Leather industry increased to
3percent of FOB value of exports.
ii. ii, Duty free import of specified items for leather sector increased to 5 percent of FOB value of exports.
iii. iii. Machinery and equipment for Effluent Treatment Plants for Leather industry shall be exempt from Customs Duty

The threshold limit of designated ‘Towns of Export Excellence’ has been reduced from Rs.1000 crore to Rs.250 crore in these thrust
sectors.

India’s top industries

West Bengal is one of the country's top state for export of finished leather goods. 70% of the country's leather goods are exported from
West Bengal. Bata India Limited is India's largest manufacturer and marketer of footwear products. Bata India sells 60 million pairs of
footwear products per year throughout India and in overseas markets such as USA, UK, Europe, Middle East and Far East. Its
registered office is at S.N.Banerjee Road, Kolkata. It has 5 plants near Kolkata. Main plant is located in Bata agar near Kolkata. Bata
India secures its leather supply from two tanneries in Mokamehghat (Bihar) and Bata agart6 (West Bengal).

The numbers of manufacturing industries engaged in leather products are 538. West Bengal Leather Industrial Development
Corporation provides market facilities for the leather products manufactured by small scale industries located in the state.

The export market for leather products is very high for good quality leather footwear's and leather crafts and articles. The exports are
mainly to European countries as Germany, Italy, UK, France etc.

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Leather Material

One of the major determinants of the quality of a leather upholstered piece is the type of leather used. All leather is the product of
animal hides. However, these hides vary greatly in their quality. The origin of the hides, the way in which they're converted to leather
and the method used to dye the hides all contribute to their value. Leather can be of various types depending on the animal hide used
and the method of processing.

Leather material has the following categories:

 Cow Leather
 Embossed Cow Leather
 Pig Split Suede
 PU Synthetic Leather
 PU Shoe Leather
 Synthetic Leather
 Garment PU Leather
 Semi PU Artificial Leather
 PU Leather for Sofa
 Dry Salted Sheepskin
 Raw Frozen Red Deer Skin
 Full Grain Leather
 Pig Split Leather
 Upholstery Split Leather Crust
 Finished Leather
 Dorper Skin
 Cattle Head Skin
 Coloured Rabbit Skin
 Raw Leather
 PVC Leather

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  Crocodile Skin
 Tannery Leather

Performance of Leather Industry

Introduction

Indian Leather industry is spread over organized as well as unorganised sector. The
unorganised sector i.e. small scale cottage and artisan sectors account for over 75% of the
total production. Though traditionally the industry has been an exporter of tanned hides and
skins, from the early seventies itself, it set its sights on becoming a major player in the leather
product segments. The industry uses primarily indigenous natural resources with little dependence
on imported resources.

Licensing Policy

After de-reservation of 11 items in leather sector, which include semi-finished hides and skins, leather shoes, leather
washers and laces, moulded rubber soles and heels for footwear, flexible polyurethane foam, polyurethane shoes soles, show-tacks
& eyelets and leather pickers and other leather accessories for textile industry, vide Notification No SO 603(E) dated 29th June,
2001, no industrial licence is required for manufacture of most of the items of the leather industry. However, the location of
industrial projects will be subject to Central or State environmental laws and regulations including local zoning and land use
laws and regulations. Industrial undertakings desiring to set up industrial undertakings for manufacture of these items have to only
file an Industrial Entrepreneurs' Memorandum (IEM) in the prescribed format, with requisite fees to Secretariat for Industrial
Assistance in the Department of Industrial Policy & Promotion, Government of India, Udyog Bhawan, New Delhi-110011.

However, some of the items of the Leather industry viz. leather shoe uppers (closed), leather sandals and chappals
leather garments, industrial leather gloves, leather suitcase and travel goods, leather purses and hand bag, fancy leather goods and
novelty items, watch straps and leather straps of all type are still reserved for exclusive manufacture by the small scale sector.
Small scale sector units are defined in terms of investment in plant and machinery. Non-small scale units can manufacture these
items after obtaining industrial licence, which is granted subject to an export obligation of 50% of the production in each year.

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Export Potential

Leather industry has been identified as one of the thrust areas of exports. Footwear sector has been identified as an area
of extreme focus. Exports from leather sector accounts for about 4% of India's total exports. Backed by a strong raw-material base
and large reservoir of traditionally skilled and competitive labour force, the Indian leather industry has made significant strides
during the past two decades. Export performance of the leather sector went up from Rs. 3,036 crore during 1991-92 to Rs. 9,004
crore in 2000-01. The export of leather and leather products during April 2001 to October 2001 is Rs. 5411 crore.

National Leather Development Programme (NLDP)

A UNDP assisted National Leather Development Programme (NLDP Phase-I) has been executed by the Department from
1992 to 1998. The UNDP had contributed about US $ 17 million for the Programme. The Government of India provided counterpart
funding of about US $ 11.065 million. The Programme was aimed at integrated development of leather industry through
selected institutions/ agencies in the country.The Programme was successful in upgrading training systems for design and
manufacture of footwear garments and leather goods. Research and Development work has got a fillip under the Programme.
The response from the artisan community and small enterprises clusters has been very encouraging towards the Programme.
Small Industries Development And Employment Programme in Leather Sector Based on the perceived needs of the leather sector,
the second phase of NLDP, namely Small Industries Development and Employment Programme in the Leather Sector (SIDE-
NLDP) had commenced with UNDP assistance from August, 1998. The SIDE-NLDP is executed by the Department for the
development of the leather sector with focus of promoting poverty alleviation and sustained livelihood and building linkages
between the organised and unorganised sectors. The present UNDP allocation towards the SIDE-NLDP is US$ 7.15 million.
Present term of SIDE-NLDP is upto 31st March, 2002. Indian Leather Development Programme

To complement and supplement the ongoing NLDP/SIDE-NLDP, a new Plan scheme titled Indian Leather Development
Programme (ILDP) has been in operation during the Ninth Plan (1992-97) period. The objectives of ILDP are mainly to bridge
critical gaps in infrastructure for integrated development of leather industry,to activate national agencies towards tackling
perceived gaps in the industry, to promote and accredit productivity, value addition and employment, to undertake investment /

14
trade development activities and build up an information base for leather industry. From 1997-98 to 2000-01, under ILDP,
decentralised common facility centres and design studios have been supported. INTECHMARTs (investment cum technology
promotion events) were also sponsored during the important leather fairs held at Chennai and Delhi. Productivity improvement
programmes have been launched for improving the manufacturing processes of footwear in the organised sector. Assistance is being
provided for growth of footwear component industry in the country. One Display Centre for components is operational at
Hyderabad.

A Scheme for Tannery Modernisation was launched under ILDP in January, 2000. The scheme seeks to provide the much
needed financial help to the tanneries of India for adoption of more efficient and cleaner process technologies for improving their
performance in terms of productivity and pollution control. The scheme has been well received by the industry and has generated
visible results in terms of quality of leather being produced by modernized units.

Women Entrepreneurs in the Leather Industry Women are employed in large numbers in Indian leather industry and are
making important contribution to the national economy as well as to exports. Women are involved in footwear production in
Athani (Karnataka), Rajasthan, Agra (UP) and Chennai, Ambur, Ranipet and Vaniambadi (Tamil Nadu). Their entry into
productive work has helped considerably in improving their household situation.With the `take off' of the footwear industry,
especially in the last 20 years and the rapid rise of exports,women's employment has increased. Source: Annual Report 2001=-02,
Department of Industrial Policy and Promotion)

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Leather Industry (Ambernath)

The leather industry is poised for major growth, in the coming decade. It is hoped that Maharashtra will play a significant role in
increasing India's share of international leather trade. In fact, because of globalization of the Indian economy, numerous opportunities
are available for the state's sustained growth in this sector. The leather and product industries of Maharashtra are centered around
Mumbai, the inherent strengths being a comfortable raw material base, skilled labor and the already well established leather/leather
goods industry. Some of the positive signs are :

Visible signs of international leather industries shifting their manufacturing bases from Europe to Asia is imminent,
Attractive government incentives for value addition and
Keenness amongst large industrial houses to invest in the leather sector.
Leather Complex at Mumbai (Addl. Ambernath)
The tanning industry at Maharashtra is functioning under severe constraints and sub-optimal working conditions, besides widespread
environmental degradation. The proposed leather complex at Additional Ambernath is expected to resolve most of these problems
with basic infrastructural facilities that are required for significant growth of the leather and leather product sector. Another major
problem confronting the state's leather industries, i.e. treatment and disposal of wastewaters, will be solved with common treatment
facilities. This Leather complex initiative would also provide new vitality to the local ancillary industries.

The Additional Ambernath Export Promotion Leather Complex Zone is 90 minutes away from Mumbai at a distance of 65 km and
admeasuring about 80 Hectares. The complex has state-of-the-art infrastructure and a readymade tenements-cum-work place for
footwear leather goods manufacturing; besides it has full concern for environmental regulations.

The basic objectives of the Ambernath Leather Complex are:-

 To create a basic, concentrated capacity for converting raw hides and skins into economical and quality finished leather, and
for providing a cost effective raw material base for the leather products industry.
 To affect quality control from the grass root level.
 Cost effective processing of raw materials with minimal inventory levels.
 Assured delivery schedule for exports

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  Swift adaptation to changing fashions in the international markets for leather products.

Dharavi leather shops

One would hardly expect anything but sludge, squalor, and stench in Dharavi — Asia’s largest slum.

And you definitely wouldn’t expect an entire market of shops selling exclusive leather items at
practically half the price. So if shopping for a trendy leather jacket or hand-bag at a place like The
Hilton Towers or Hidesign burned holes in your pocket, then the Dharavi leather shops are sure to ease
the strain off a limited budget.

Road, over 150 leather goods shops constitute Dharavi’s leather market. These slums are home to the
largest number of leather tanneries in the city, which is why Dharavi is the focal point from which the
Mumbai’s leather industry radiates.

While most retail themselves, they also sell in bulk to larger stores. “Buyers often come from outside the city and the country to buy
these leather goods,” says Vakeel Shaikh of Gag-Bit Leather Boutique. “In fact, some of our export quality stuff isn’t even put up for
sale in these shops, they are directly transported outside the country,” he adds.

The prices of the goods here depend largely on the quality of leather, which is categorised into gradations of A, B, and C, with
A being the finest. Premium leather primarily comes fro Situated near the ONGC office; stretching over a large expanse of the Sion-
Bandra Link m places like Kolkata and Kanpur, while the more average qualities are procured from the Dharavi tanneries.
Texture-based variants also exist ranging from soft leather, dry leather, shiny/Dharavi leather, and finally hard leather, which is
considered to be of top quality, and most expensive.

So, while cheap leather jackets may start at Rs 1000, the best, export quality variety may cost anywhere up to a whopping Rs
4000. Women’s handbags vary from Rs 300 rupees to Rs 1500 rupees, depending on size, quality, and finish.
So don’t be surprised if the very same leather overcoat you spent a hefty Rs 3500 rupees on at a fancy, well-reputed, leather shop in
town, is hanging at a shop in Dharavi for a mere sum of Rs 1500. The place, thus, is definitely worth a visit.

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Indian Footwear Industry

The Footwear Industry is a significant segment of the Leather Industry in India. India ranks second among the footwear producing
countries next to China. The industry is labour intensive and is concentrated in the small and cottage industry sectors. While leather
shoes and uppers are concentrated in large scale units, the sandals and Chappals are produced in the household and cottage sector.
India produces more of gents’ footwear while the world’s major production is in ladies footwear. In the case of Chappals and sandals,
use of non-leather material is prevalent in the domestic market.
The Indian footwear industry is provided with institutional infrastructure support through premier institutions like Central Leather
Research Institute, Chennai, Footwear Design & Development Institute, Noida, National Institute of Fashion Technology, New Delhi,
etc in the areas of technological development, design and product development and human resource development.

The availability of abundant raw material base, large domestic market and the opportunity to cater to world markets makes India an
attractive destination for technology and investments.

Import
In 1999, the global import of footwear (leather and non-leather) in terms of value was around US$ 43278 million, accounting a share
of 63.42% in the total global import of leather and leather products. Out of this, import of leather footwear alone accounted for US$
26379 million and non-leather footwear US$ 16899 million.

Export
India’s export of Leather Footwear touched US$ 331 million in 1999-2000, recording an increase of 3.29% over the preceding year.
India thus holds a share of 1.25% in the global import of leather footwear. The major markets for Indian Leather Footwear are the
U.K., the U.S.A., Germany, Italy, France and Russia. Nearly 71% of India ‘s export of Leather Footwear is to Germany, the U.S.A.,
the U.K and Italy.

In 1999-2000, export of leather footwear from India constituted 21% share of its total export of leather and leather products. Nearly 33
million pairs of various types of leather footwear were exported during the year, out of which shoes / boots constituted 90%.

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The different types of leather footwear exported from India are dress shoes, casuals, moccasins, sport shoes, horrachies, sandals,
ballerinas, booties.

TATA INTERNATIONAL:-

Tata International is India's leading footwear manufacturer and exporter. Versatile and flexible manufacturing facilities in Dewas,
Chennai and New Delhi in India, reinforced with state of the art production units have helped Tata International emerge as a leading
footwear manufacturer and exporter.

As a footwear manufacturer and exporter we have a high-end full shoe facility, Graziella Shoes Limited located at Chennai,
established in a 50-50 Joint Venture with Pucci SRL of Italy. This footwear manufacturing facility produces 3,000 pairs per day of
Full Shoes with Italian Unit Soles and Indian Uppers. The high-quality shoes are sold to well established brands.

Tata International's large and well-equipped production facilities at Dewas, Chennai and Delhi are both versatile and flexible. Orders
from 500 pairs to 2,50,000 (two hundred and fifty thousand) pairs can be handled with equal ease.Annual Capacity of our Leather
Footwear division : Shoe Uppers 3 million pairs Full Shoes 2 million pairs.

Leather Tanning Industry

TATA offer the following products used in the leather

Tanning Industry:

Basic chrome sulphate

Sodium dichromate

Potassium bichromate

Water Treatment Chemicals

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Tatas to bring Lloyd to Indian market

After having established itself in the leather export markets, $1.6-billion Tata International is foraying into the retail leather segment.
As a first step, the company is launching Europe's premium luxury shoe and leather accessories brand, `Lloyd' of Germany, in India.
"We have been in the leather exports business for long, and now, we want to be an integrated player in this space. This is the first step
for us. Our strategy, as we go forward, is to double our leather business in the next three years," said Sunil Deoras, managing director,
Tata International.

Currently, the leather business accounts for Rs 550 crore, thanks mainly to exports. "There is a strong synergy between Lloyd and the
Tata brand. In India, there is a growing breed of discerning consumers who have a distinctive lifestyle and to whom understated
elegance and quality appeal." Priced in the range of Rs 9,000 to Rs 24,000 for men's shoes and Rs 8,000 onwards for women's shoes,
the brand will be available at the newly opened exclusive Lloyd's store in south Mumbai. The company is planning to open another
store in Delhi by the end of this year.

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Environmental Requirements And India’s Exports Of Leather And Leather Product

• . Environmental Requirements for Imports of Leather and Leather Products in EU and USA

Concerns about consumer safety, ecology, “unfair trade” and ethical preferences have motivated the EU and the USA to prescribe
regulations, standards, eco-labeling, compliance with domestic waste discharge standards, packaging requirements, ethical treatment
of animals and so on. Germany leads the EU in this regard. These requirements affect the entry and cost of access to products of
developing countries’ exports in the EU and the USA.

Limits have been prescribed for various toxic chemicals and metals in leather products in the EU and the USA. The restricted
substances are Pentachlorophenol (PCP), Azo dyes, Formaldehyde, Chrome IV, Short Chain Chlorinated Paraffins (SCCPs),
Tetrachlorophenols (TCP), Nickel, Cadmium, Phthalates, Specific frame retardants, Disperse dyes, Extractable chromium, Biocides,
Tri Butyl Tin, and N-methylpyrolidine (NMP) (solvent). In most cases the requirements in the USA are less stringent. Among
countries in the EU, the German requirements are most stringent. Germany prohibits, PCP, nickel and biocides in certain uses and
bans specific frame retardants and TCP. These product specifications for leather are constantly under revision, generally towards
greater stringency. Specific test protocols have been prescribed for testing consumer products for the presence of various restricted or
banned items. The responsibility of ensuring compliance with the domestic regulations for products rests on the retailer. The EU
Directive on packaging and packing waste sets certain requirements for the composition, recycling and recovery of packaging, which
the importers have to comply with. This legislation is designed to prevent the production of packaging waste and to encourage reuse
and recycling, so that the amount of waste, which is finally disposed is significantly reduced. In some cases, consumers demand
compliance with their environmental requirements. A law in force in Denmark since 1995 requires official agencies to take ecological
properties into consideration in their purchasing policies. Automotive companies in Europe have made extensive demands with
respect to the properties and production of the leather they purchase. The demands are in the forms of non-chrome leather, limits on
hazardous substances, and ISO certification. Some green activists, consumer organizations and People for Ethical Treatment of
Animals (PETA) campaign against cruelty to animals. They publish instances of cruelty to bovine animals, goats and sheeps at the
time of transportation to slaughter houses and at the slaughtering stage. Boycott of purchases of leather products from countries
allegedly indulging in cruelty to animals is becoming more frequent in recent years.

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Eco-labeling is a voluntary method of environmental performance certification based on life cycle considerations. In the EC, there is a
regulation EC No.1980/2000 of the European Parliam govern the award of European Community eco-label. International Standards
Organization (ISO) has developed four standards for environmental labels and declarations. ISO 14020 comprises general principles
for environmental declarations, formulated as a series of statements with matching specific considerations. ISO 14024 defines and sets
norms formulated by an independent third party. Compliance has to be verified by an independent third party. ISO 14021 is based on
self-declaration of environment compliance put forward by the suppliers of the product without third-party verification. In ISO 14025,
the Declaration is verified by an independent third party for a product within categories of parameters determined in advance and
based on life-cycle assessments according to the ISO 14040 series of standards. This type of standard is too complicated for small and
medium industries.

• Global Leather Industry Supply Chain

There are three stages in leather industry supply chain. They are production of hides and skins, conversion of hides and skins into
finished leather and manufacture of footwear and other leather products.

Hides and Skins Supply

The main sources of hides and skins are bovine animals, goats and sheeps. These animals are reared mainly for production of milk,
meat and draught power. We use the FAO (2003) data for raw hides and skins, leather and leather footwear for understanding
temporal changes between the annual average in the quinquennium ending 1986 and the annual average in the quinquennium ending
2001. During the 15 year period the world stock of bovine animal increased at a CAGR of 0.5 percent; the CAGRs for developed and
developing countries were – 1.6 percent and 1.3 percent respectively. In the quiquennium ending 2001, India had the largest stock
with a global share of 21.0 percent, followed by Brazil 11.7 percent, China 8.5 percent and USA 6.4 percent. During 1999-01,
developing countries had 78 percent of the bovine animals but their share in the production of hides and skins (wet salted) was less
than 54 percent. This is due to two factors – the poor off-take ratio and the low average weight per hide. The shares of China, Brazil,
and India in the world production were 11.1percent, 10.7 percent and 7.0 percent respectively. As for the availability (production + net
imports), developed countries had one third share. China’s share in the world availability was 18.6 percent, while the figures for Brazil

22
and India were 10.4 percent and 7.0 percent respectively. The developed countries were net exporters while the developing countries
were net importers. In the developed world the main net importers were Italy and Spain.

As for the sheep stock, the number for the world decreased during the period. Developed countries had an average CAGR of –2.3
percent while the developing countries had a CAGR of 0.9 percent. During 1999-01, the shares of developing countries in the world
output and availability of sheep and lambskins were 50.2 percent and 63.7 percent respectively. China’s share in the total availability
was 23.3 percent followed by Italy 8.0 percent and India 5.5 percent. Developing countries accounted for 95.5 percent of the number
of goats in the world in 1999-01. In goatskin production India comes first with a world share of 29.0 percent followed by China 25.3
percent.

Leather Production

Leather tanning – conversion of hides and skins into finished leather – is the most polluting stage. There are significant changes in the
global production patterns. As far heavy leather from bovine animals, the share of developing countries in the world output increased
from 40.6 in percent during 1984-86 to 63.2 percent during 1999-01. Among developed countries only USA and Italy increased their
shares. Among developing countries, Brazil and Mexico in Latin America and China in Far East improved their shares. During the 15
year period, the world output of light leather increased at a CAGR of 1.4 percent. The developing countries’ share increased from 40.1
percent to 59.4 percent. China became the largest producer in 1999-01 with a share of nearly 30 percent. China was also a large net
importer and it had 43.2 percent of the world availability. Among the developed countries, countries with significant shares in
the world production of light leather were Italy (11.1 percent), USA(7.2 percent) and area of former USSR (12.8 percent).

Leather Manufacturing

Between 1984-86 and 1999-01 the production of leather shoes increased at CAGRs of 5.4 percent in developing countries and –5.1
percent in developing countries, the CAGR for the world being 0.8 percent. The share of developing countries in the production had
increased from 38.8 percent in 1984-86 to 75.3 percent in 1999-01. Among developed countries only Portugal could increase its share.
In the developing world, China’s share jumped from 10.0 percent to 42.4 percent. Mexico, and Indonesia also improved their shares.
Of the total exports in1999-01, the shares of developed and developing countries were 68.2 percent (China along 51.3 percent) and

23
31.8 percent respectively. The average export values per pair of shoes in 1999-01 were US$ 20.88 for developed countries and US$
8.17 for developing countries.

Leather Exports

In order to get the overall patterns of exports and imports, we use the HS system of data for the 4 sub-groups
HS 41 – Raw hides and skins (other than furskins) and leather
HS 42 – Articles of leather, animal gut, harness and travel goods
HS 43 – Furskins and artificial fur, manufactures thereof
HS 64 – Footwear and artificial fur, parts thereof.
HS 41 lumps together hides and skins and different kinds of leather.

Using the UNSD data we could separate hides and skins from kinds of leather. The data is for 2002.leather, but not different China
was the largest exporter with a global share of 35.7 percent followed by Italy 11.8 percent and USA 3.33 percent. USA derived 45.2
percent of the export earnings from hides and skins and 23.6 percent from leather. In general, the shares of hides and skins exports in
the total exports were smaller for developing countries (the major exception being Mexico) than for developed countries. Argentina
and Brazil earned more than half of the export earning from leather. Even developed countries such as USA, Germany, UK and Italy
earn more than one-fifth of the total earning from leather exports. Even though manufacture of leather goods (HS 42) and footwear
(HS 64) is labour intensive many developed countries including France, Germany, Italy, Spain and UK derive large export earning
from these two subgroups because of their access to cleaner technologies and production of high value-added products.
Looking at the composition of the imports in 2002, two facts are obvious. Developed countries are net importers of leather and leather
products, the notable exceptions being Italy and Spain. Many countries with poor raw material base make significant contributions to
the exports by relying on imports. These include developing countries such as Mexico, China and Korea and developed countries such
as Italy and Spain. While it is generally true that there has been a shift in production of leather and leather products from developed to
developing countries because of high environmental compliance costs and high labour costs in developed countries, there are a few
exceptions. Italy and Spain, and USA continue to be important producers of finished leather. France, Italy, Spain and Belgium have
significant market shares in the world exports of leather goods. Hence, differences in raw material supplies, access to environment-
friendly technologies, and capability to anticipate and adjust to changing consumer demands, do influence the production and trade
patterns.

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 • Trade Liberalization and Environmental Protection: Case Studies of Country Responses

In terms of net export values of leather and leather products in 2002, China comes first with US$ 13.237 billion, Italy second with
US$ 7.192 billion, Brazil third with US$ 2.378 billion and India fourth with US$ 1.707 billion. In 2002 Brazil had the second largest
stock of bovine animals. Brazil’s major export earnings were from wet-blue leather and leather footwear. Due to lower environmental
cost in tanning, compared with developed countries, and the import tariff structure (duty on hides export but no duty on wet-blue
leather in Brazil and tariff escalation in importing countries) Brazil has been specializing in low-value added and highly polluting
stage of leather production. Its average export prices, compared with the developed country exports, were lower both in leather and
leather footwear. Brazil has been undergoing a number of structural changes to cope up with the two challenges [Odegard (1998)].
These changes are (i) regressive restructuring of the tanning industry, (ii) concentration in tanning due to mergers and FDI, and (iii)
relocation of tanneris to reduce production costs due to regional variations in government incentives, labour costs, degree of
unionization and enforcement of environmental laws. The environmental compliance record has been poor. The tanners are reluctant
to invest in pollution technologies because they see no demand for ecological leather either at home or abroad and they could not
compete with cheap imports of leather products from China. China has developed a good early-warning system for making proactive
responses to changes in global environmental requirements. It has developed Genuine Leather Eco-Mark Leather. As for the domestic
compliance, it is only partial. There are no good methods for disposal of tannery sludge. Chinese top leather exporters complain that
the EU prohibition of use of azo dyes benefits only large foreign companies. Majority of the respondents in a survey, reported in
UNCTAD (2003), replied that foreign countries were using TBT as a tool to limit China’s exports.

• The Indian Leather Industry Supply Chain

Raw Material Base India’s shares in the global stocks in 2001 were 20.6 percent for bovine animals, 5.6 percent for sheep and 16.8
percent for goats. During 1985-2001 the CAGRs were 0.90 percent for bovine animals, 1.6 percent for sheep and 1.2 percent for goats.
The growth rates were higher than the world averages for bovine animals and sheep but below the world average for goats. India’s
share in the world production of bovine hides and skins, in terms of wet salted weight, in 2001 was only 7.1 percent. This low share is
attributed to the poor off-take rate which is due to ban on cow slaughter, poor collection rate, and lower average weight per hide. The

25
price realization per hide is also lower because of ante mortem and post mortem defects, the poor animal health care, neglect when the
animals became old, and cruel treatment. The Working Group on Leather and Leather Products for the Tenth Plan estimates the
augmentation of the raw material base by 50-70 percent and value addition by quality improvement another 15 percent. India has been
importing hides and skins in recent years, but the import accounts for less than 3 percent of the domestic production.

Production of leather

During 1985-2000, India’s share in the world output of bovine heavy leather declined from 10.8 percent to 10.4 percent, and of bovine
light leather from 6.1 percent to 5.3 percent. Her share in the world output of goat and sheep leather increased from 14.3 percent to
15.9 percent. According to the CLRI, there were 2091 tanneries in India in 1998. The number of operational tanneries in India in 2000
was estimated 1598. The estimated annual capacities in 2000 were 73.7 million pieces for hides and 182.8 million pieces for skins.
About 80 percent of the estimated capacities for hides and skins are in the cottage and small scale sector. The average capacity
utilization rate was estimated at 65 percent. The utilization rate would be lower in small scale sector because of closures and higher
environmental compliance costs for tanneries not connected to the CETPs.

Changes in industrial policies such as dereservation, abolition of export requirements for large tanneries, and permission for FDI and
JVs in tanneries provide an atmosphere for tannery modernization and FDI flows. So far only one major JV has fructified. Even
though the creation of Kolkata Leather Complex was conceived in 1996 for relocation of closed tanneries, it has not commenced its
operation at the end of 2004. Compared with China and Brazil our progress in restructuring and modernization of tanneries has been
slow.

Leather Products

In leather manufacturing also, our past policies like licensing and reservations resulted in the growth of small scale and cottage units.
Only in non-leather footwear like Hawai rubber/plastic, PVC synthetic molded footwear, production is in medium and large sector. In
all other leather products the share of small scale sector is now 80 percent or more. While the objectives of employment generation
and decentralized development have been met atleast partially, most of the units need technological upgradation to cut down unit
production costs/improve product quality to enable them to compete effectively in the global markets. Past efforts such as Leather
Technology Mission launched in 1995 yielded some benefits. The CLRI is proposing Leather Vision Beyond Mission to double unit
value realization through modernization and technological upgradation and minimization of environmental risks.

26
Investment Needs and Policy Changes

The Working Group on Leather and Leather Products for the Tenth Plan estimates the investment needs of the sector at Rs.7,441
crore. The Plan provision is only Rs.400 crore. The Working Group has recommended animal welfare measures; modernization of raw
material supply arrangements; rationalization of labour laws; infrastructure development in tannery clusters; R&D, technology and
skill upgradation; establishment of leather complexes, and support to environment protection. So far 32 new foreign participations,
mostly in footwear, have materialized.

• India’s Exports of Leather and Leather Products

Trade Policy

India’s trade policy over time has influenced the growth as well as the composition of exports of leather and leather products. The
initiatives taken from the seventies to ban export of raw hides and skins and introduction of comprehensive scheme of incentives for
exports of finished leather and leather products boosted the CAGR of the exports from 5.5 percent during 1951-52 – 1971-72 to 15
percent during 1971-72 – 1981-82 and to 19 percent during 1981-82 – 1991-92. The share of semi-finished leather in the total exports
fell from 83 percent in 1972-73 to zero in 1991-92.

In the nineties, enforcement of environmental legislations at home, creation of the WTO, global environmental requirements for the
exports, and keen competition from China, Indonesia, Thailand, and Korea, affected the growth of the exports. If we consider the post-
WTO period and compare the triennium ending with 1997-98 with the triennium ending 2003-04, the CAGR for export of leather and
leather products was only 2.63 percent. India’s leather exports as percent of India’s total exports fell from 9.34 percent in 1972-73 to
3.30 percent in 2003-04. Trade liberalization started in India since 1991-92 and serious efforts have been made to reduce non-tariff
barriers and tariff rates. The import-based weighted average tariff for consumer goods fell from 97.8 percent in 1991-92 to 49.6
percent in 2004-05; the corresponding simple averages being 141.0 percent and 25.5 percent [Mathur and Sachdeva (2005)]. India has
replaced import bans and quotas by bound tariffs. The trade policy experimented with a number of export promotion measures and

27
incentive schemes such as duty exemption schemes and duty remission schemes. The Foreign Trade Policy 2004-09 is built under two
major objectives, namely, to double India’s percentage share of global merchandise trade within the next five years and to act as an
effective instrument of economic growth by giving thrust to employment generation. It is based on the principle that the duties and
levies should not be exported. It contains many promotional measures and aims at simplifying procedures and bringing down the
transaction costs. There are six special focus initiatives for the leather sector.

Tariffs in the Importing Countries

The average import tariffs for leather and leather products in the EU, the USA and other developed countries are much higher than the
average rates for all industrial commodities. There is also tariff escalation in this sector. In the EU the average tariff for the raw
material is 0.1, but it is 2.4 percent for semi-manufactured items and 7.0 percent for finished products. In the USA, the tariff for the
raw material is zero, for semi- manufactured items it is 2.3 percent and for finished products it is 11.7 percent. The bound rates for
finished goods such as footwear are 17 percent in the EU and the USA. Tariff escalation implies that the effective rates of protection
for finished products are higher than the nominal rates of protection. These high rates along with Preferential Trade/Free Trade
Agreements by the developed countries reduce the marke access for the Indian exports. India has lost the tariff reduction under the
Generalized System of Tariff Preferences in the EU for leather items except forleather footwear.

Composition of Exports

The export value of finished leather fell from US$ 438.85 million in 1990-91 to US$ 239.82 million in 1999-00 and has been growing
in the last 4 years. The export of leather footwear has been increasing steadily, but the India’s share in the world footwear exports is
only 2.0 percent. The export value of footwear components reached a peak value of US$ 318.33 million in 1990-91 and fell to US$
149.82 million in 2003-04. India’s export value of leather goods grew steadily till 1993-94; after decreases during 1994-95 – 1999-00,
the value is increasing. The export value of leather garments showed steady growth, but has fluctuated after 1997-98. Saddlery and
harness and non-leather footwear are relatively minor items with their shares in baskets in the 2003-04 leather exports at 2.5 percent
and 3.2 percent respectively.

Direction of the Trade

Germany has been the largest importer of leather and leather products from India but her share has fallen from 25.1 percent in 1990-91
to 14.9 in 2003-04. The share of France has been falling, the shares of Italy and UK do not show any trend, while those of Portugal,

28
Spain, Netherlands and Hong Kong are improving. The share of USA has also fallen since 1996-97. India’s Share in the Global Trade
and Market Shares in Importing Countries India’s share in the global exports was between 2.24 percent and 2.56 percent during 1998-
2002. The share of leather footwear in the global export basket in 2002 was 37.5 percent but its share in the Indian export basket was
22.6 percent. India’s shares in the Indian export basket are far above the global shares for leather, footwear components, leather goods,
saddlery and harness.

India’s market shares in the imports of leather and leather products of major importing countries are considered from 1988-2003.
India’s market shares in Germany, USA, Italy, France, Netherlands and UK are falling in recent years, but in Hong Kong it is
increasing. In terms of market shares in 2002, product-wise, India’s relative position is as follows: eighth in leather, thirteenth in
leather footwear, fifth in footwear components, third in leather garments, fourth in leather goods, third in saddlery & harness and
twenty eighth in non-leather footwear. Italy comes first in leather, leather footwear and footwear components, and China occupies the
first position in all other products. The factors affecting India’s ranking were also indicated.

• Perceptions of the Indian Leather Exporters

A survey of the 100 top exporters of leather and leather products in India in 2002 was conducted with the cooperation of CLE in 2003-
04 to find out the exporters’ awareness of the environmental requirements abroad and their impact on their exports, their views on the
roles of government, the industry associations and the technical institution in creating an enabling environment to boost the exports,
and the transaction costs of the exports. 74 exporters responded from southern, central, northern and eastern regions. There was no
response form the two exporters in the western region.

• Export Prospects: What Needs to be Done

The Target

In order to double the share of India’s export of leather and leather products in the global leather trade by 2008-09, India’s export must
grow at a CAGR of 19.46 percent. If the domestic demand increases at a CAGR of 6.0 percent, then the value of the production in
2008-09 must be 93.55 percent above the 2003-04 level to meet both the domestic demand and the foreign demand. Even though the
CAGR in the export value, in US dollars, from 1996-97 to 2002-03, was 2.12 percent, the high growth rate in the export values of 11.7
percent during 2003-04 and of 16.2 percent between April-September 2004 and April-September 2003 have raised the prospect of
realizing the target.

29
Domestic Policy Options

There is a potential for augmenting the quantity of raw hides and skins by 40 percent and increasing its value by quality improvement
by another 20 percent. As hides and skins are by-products of bovine animals, sheeps and goats the price signals are weak and hence
we need institutional measures to realize the potential. We need a mission type programme focusing on awareness building, stressing
the social and economics costs of inaction and decentralized institutional solutions based on local conditions and local initiatives.
India can import hides and skins to augment the domestic supply. In the tannery sector we need policy initiatives to tackle the
problems of uneconomic units, technological obsolescence and environmental compliance. The existing small isolated units must be
closed with specially designed safety nets to take care of the displaced workers. New tanneries should be allowed only if their
designed capacity is above a specified level and they have the facilities for pollution prevention and control. Preferably all the new
units should be located in leather complexes to make use of the common facilities.

As for the CETPs, the government should consider low interest loan rather than capital subsidy. Government subsidies for installation
of metres at tannery outlets for measurement of volume and concentration of pollutants in the effluents, development of environmental
management system in the CETPs, introduction of technologies for recovering/reuse of water and materials, disposal of solid wastes,
and combined treatment of municipal and tannery
waste water are desirable because of the external benefits and the need for assisting the small units to enhance their competitiveness.
In the CETP management, top priority should be given to design and implementation of incentive based cost sharing arrangements.
Such a scheme will encourage primary treatment and adoption of waste minimization methods at the member units. Hence expansion
of tanning capacity is possible without burden on the existing CETPs.

Amendments to the existing environmental legislations are needed to introduce economic instruments for pollution control. These will
facilitate levy of charges/fines proportional to the violations. In case of members connected to CETPs, the monitoring by PCBs can be
at the CETP level and not at the tannery level. India can learn and adapt from the experiences of developing countries. See World
Bank (2001) and MoEF, World Bank and CII (2003). There is unexploited opportunities for value addition in leather footwear and

30
other leather products. India has the technical expertise and a number of specialized institutions for design and development of new
products. Changes in industrial policies have encouraged technology transfer and joint ventures mainly in leather footwear. The
opportunities do exist in other leather products too.

High Tariffs and Tariff Escalations

The Doha Declaration on reduction on peak tariffs and tariff escalations in industrialized countries on products of export interest to
developing countries received a set back at the Cancun Conference, but the WTO Framework Agreement of August 2004 revived
hopes that the these negotiations are back on track India. As leather and leather products are of export interest to India and as the
industry contributes to rural development and livelihood security, India must bargain for substantial tariff reductions. India must also
explore the feasibility of signing new bilateral/free trade/preferential trade agreements to retain/access to the export markets. This is a
second- best solution.

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