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West Bengal's Leather Industry Opportunities

Market Research [MRU] ID: 81448

Regions: ANESA; Asia; South Asia; ADB

Country: India

Industries: Environmental Technologies; Apparel & Textiles; Construction, Building & Heavy
Equipment; Industrial Equipment & Supplies
Sectors: Pollution Control Equipment; Leather/Fur; Used/Reconditioned Equipment; General
Industrial Equipment/Supplies

by: Ashoke Kanjilal Report Date: 09/26/2001

approver: N/A Expires: N/A

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT
OF STATE, 2007. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

Summary:

West Bengal's leather industry employs over 200,000 people. In addition to Bata India Ltd. there are
approximately 600 small tanneries and 20,000 units manufacturing leather products. West Bengal
accounts for 65 percent of India's leather goods exports. Large investments and strenuous efforts are
required to improve the quality and increase the value of leather exports. To address pollution from
tanneries in Calcutta, the state government decided to set up an integrated world-class leather complex
outside Calcutta. Tanneries and leather industries are unlikely to move there until and unless there is
adequate infrastructure and an effluent treatment plant. This is unlikely to happen in the near future.
However, as the various segments of the CLC develop, there could be opportunities for US companies
for sales of equipment, machinery, technology and consultancy services. End summary.

Tanneries:

With its large livestock population, West Bengal produces 8 percent of India's cowhides and 11 percent of
its goatskins. Large quantities of skins from Bihar (India's second largest producer of hides) and U.P. are
also tanned here. Bata India Ltd. (BIL) has India's largest tannery (annual capacity 335,000 cow and
buffalo hides) in a Calcutta suburb. Apart from BIL, leather is tanned by 600 smallscale, family-owned
units concentrated in the Tangra, Tiljala and Topsia areas. The largest of these is the USD 7 million Taj
Leather Works (TLW).

Numerous tiny units housed in ramshackle sheds use obsolete, traditional methods of tanning. Total
annual tanning capacity excluding BIL is 300,000 tons of hides or 560 million sq. ft. (MSF) leather, but
capacity utilization is about 75 percent and annual production is about 420 MSF leather. Some
tanneries, including BIL's and TLW's -- and many tiny ones -- recycle their wastewater. BIL and TLW
have modern tanneries and effluent treatment plants.

The rest of the tanneries dump their untreated effluent in the city's sewers, which drain into the city's
canals and the Wetlands (natural water bodies covering an area of over 400 sq. km. on Calcutta's eastern
fringe). According to the director of the College of Leather Technology, 85-90 percent of the tanneries'
effluent pollutants are eliminated through reverse osmosis in the Wetlands.
India's largest leather goods producer:

Calcutta offers the leather industry several advantages: easy availability of a wide variety of leather (cow,
calf, buffalo, sheep, goat, kid); low production costs; a large pool of unskilled, semi-skilled and skilled
workers at competitive rates; and abundant water and power. An airport and two ports facilitate exports.
West Bengal is India's largest manufacturer of leather goods. In addition to BIL (annual capacity over 20
million pairs of shoes/uppers) there are approximately 20,000 small units making footwear/uppers
(12 million pairs per year); industrial gloves (50 million pairs per year); garments (800,000 pieces per
year); and accessories and luggage 35 million pieces per year).

India's largest exporter of leather products:

West Bengal accounts for 65 percent of India's leather goods exports (1999-2000 exports were valued at
USD 226 million). But its share of total Indian leather and leather goods exports is 15 percent. The
European Union and North America are the leading importers of West Bengal's leather and leather goods
(79 percent and 12 percent respectively). Unfortunately, West Bengal is generally considered a source of
low-priced, poor qulaity leather goods. Improving the quality of both leather and leather goods is a
problem as most tanneries and manufacturers are small and cannot afford the investments required to
upgrade production facilities. Only a few manufacturers have modern equipment. But most of them are
handicapped by low overall production capacity, which prevents them executing large export orders.

Labor issues:

As far as working conditions are concerned, BIL, TLW and a few other units are the exception. In addition
to salubrious working conditions, BIL's workers enjoy subsidized housing, medical facilities and numerous
other benefits. TLW has modern machines with devices to prevent accidents and injuries to workers.
In contrast, working conditions in the tanneries and the leather manufacturing units are generally
appalling and there is scant regard for workers' safety or health.

The Calcutta Leather Complex: A Grandiose Project

In response to the 1996 Supreme Court order banning polluting industries in municipal areas, the
Government of West Bengal (GOWB) decided to set up a modern, integrated leather complex at a site
about 25 km from where most of the tanneries -- and leather manufacturers -- are currently located. A
private company was selected to set up the Calcutta Leather Complex (CLC) on a build-operate-transfer
basis. The USD 90 million CLC is a grandiose project: it aims to provide "synergistic" facilities for all
aspects of leather production with environmentally friendly technology within a pollution-free environment.
It is designed to house the entire gamut of activities associated with the leather industry: abattoirs,
facilities for processing rawhides, tanning (with a common effluent treatment plant - CETP), designing
and manufacture of all leather products, and recycling of waste products --skin, hair, bones and water.
CLC plans include permanent exhibition halls, a design center, R and D centers, schools, shopping
centers, a training center, a hotel complex, a captive standby power plant, warehousing, a housing estate
and state-of-the art telecommunications.

The CETP will have 6 modules, each capable of treating 5 million litres a day (MLD) of wastewater. The
GOI will provide a soft loan to cover 50 percent of the total CETP cost; UNIDO will provide USD 500,000
for the CETP's first module. In June the GOI sanctioned funding for the CETP and a tender for it
would be issued before the end of the year. The CLC will also have a common chrome recovery plant;
UNIDO will provide USD 140,000 for purchase of machinery and equipment for it.

Thus far, of the total 1100 acres agreed upon, the GOWB has handed over 950 acres to the CLC
authorities. This land has been leveled, some roads and water storage tanks built, and light posts
installed. Plots have been demarcated. A two-lane road connects the city with the CLC. Additionally,
telecommunication facilities and civic and social infrastructure would also come up in due course
of time. Although no timeframe for the installation of the CETP has been established, the GOWB
Environment Ministry would not allow any tanneries to be set up at the CLC until the CETP was in place.
Therefore, the CLC and GOWB authorities are actively searching for the potential technology providers
for the CETP.

Comments:

The raison d'etre of the CLC was the elimination of pollution caused by tanneries within the Calcutta
municipal limits. The CLC was scheduled to be operational within 36 months from the date of initial
handing over of land to the promoters. Although the first tranche of land was handed over in 1997, the
project is way behind schedule. Tanneries cannot be set up until at least the first CETP module is
functional. The setting up of the various facilities at the CLC, especially the CETP, the chrome recovery
plant and plants for manufacture of various chemicals, could offer opportunities to US companies for
sale of machinery, equipment, technology and consultancy services.

For additional details on this project U.S. companies could contact the following addresses:

a) West Bengal Industrial Development Corporation Ltd.

Address: 5 Council House Street, Calcutta 700 001, India
Ph.: (91-33) 248-6583, 248-6695
Fax: (91-33) 248-3737, 243-0130
Email: mdwbidc@vsnl.com
Contact: Mr. D. P. Patra (IAS), Managing Director

b) Government of West Bengal -- Commerce & Industries Department

Address: Writers' Building, B.B.D. Bagh, Calcutta 700 001, India
Ph.: (91-33) 214-5487
Fax: (91-33) 214-4371
Email: secind@wb.nic.in
Contact: Mr. Jawhar Sircar (IAS), Principal Secretary - C&I

To the best of our knowledge, the information contained in this report is accurate as of the date
published. However, the Department of Commerce does not take responsibility for actions readers may
take based on the information contained herein. Readers should always conduct their own due diligence
before entering into business ventures or other commercial arrangements. The Department of Commerce
can assist companies in these endeavors.

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