Leather Product

8/2/2019 Leather Product

1/17

ASSIGNMENT

Leather Import Export

(Submitted in the partial fulfillment for the degree of

Masters in Business Administration)

Submitted to: Submitted by:

Mr. Amanpreet Singh Anurag Bishnoi

Roll no: 5460

MBA-II (B)

SCHOOL OF MANAGEMENT STUDIES

PUNJABI UNIVERSITY, PATIALA


2/17

Leather export import in India

Leather is a durable and flexible material created via the tanning of putrescible aniamal rawhide

and skin, primarily cattlehide. It can be produced through different manufacturing processes,

ranging from cottage industry to heavy industry.

History

The history of leather tanning in India dates back to 3000 BC. Tanning in the rural areas is done

by indigenous techniques, making the use of this material easier.

The most popular Indian leather products include footwear and hand bags. The footwear comes

in various designs of traditional embroidery, brocade or textile. Bright colors and unique designs

are used. The all time favorite, kholapuri chappals of Maharashtra, are soft and very comfortable

to wear. A special type of thickish shoes, called mojadis are designed in Rajasthan. They are

decorated with silk, beads and metal embroidery. Jaipur is famous for its fancy and sophisticated

footwear.

Bengal is famous for its handbags in batik style with cracks, bold curves, and traditional motifs.

Being very ornamental, Kashmiri leather items are very popular among buyers the world across.

The red leather embroidered with gold and silk is done in Madhya Pradesh. In Hoshiarpur

(Punjab), appliqu work is made in colored leather pieces. Leather with silvery finish or metallic

gold is done in Karnataka.

The post liberalization era has opened up floodgates of opportunities for the Indian leather

industry. With global players looking for new sourcing options (in addition to China), the

country is uniquely positioned to gain a bigger share of the global market. Renowned brands

from the US and Europe are planning to import leather and leather products from India. Global

players who took part at the India International Leather Fair, 2005, consider India as the market

to be in.


3/17

Overview of the Industry

The Leather Industry holds a prominent place in the Indian economy. This sector is

known for its consistency in high export earnings and it is among the top ten foreign

exchange earners for the country. With an annual turnover of over US$ 7.5 billion, the

export of leather and leather products increased manifold over the past decades and

touched US$ 3.84 billion in 2010-11, recording a cumulative annual growth rate of about

5.87% (5 years). The Leather industry is bestowed with an affluence of raw materials as

India is endowed with 21% of world cattle & buffalo and 11% of world goat & 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. The leather industry is an employment

intensive sector, providing job to about 2.5 million people, mostly from the weaker

sections of the society. Women employment is predominant in leather products sector

with about 30% share.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 of US$ 115.58 billion (2009).

The major production centers for leather and leather products in India are located

in Tamil Nadu - Chennai, Ambur, Ranipet, Vaniyambadi, Vellore, Pernambut, Trichy,

Dindigul and Erode ; West Bengal - Kolkata ; Uttar Pradesh - Kanpur, Agra, Noida,

Saharanpur; Maharashtra - Mumbai ; Punjab - Jallandhar ; Karnataka - Bangalore ;

Andhra Pradesh - Hyderabad ; Haryana - Ambala, Gurgaon, Panchkula, Karnal and

Faridabad; Delhi; Madhya Pradesh - Dewas ; Kerala - Calicut and Ernakulam / Cochin


4/17

Strengths of Indian leather sector

Own raw material source - 2 billion sq ft of leather produced annually

Some varieties of goat / calf / sheep skins command premium position

Strong and eco-sustainable tanning base

Modernized manufacturing units

Trained / skilled manpower at competitive wage levels

World-class institutional support for Design & Product Development, HRD and R & D.

Presence of support industries like leather chemicals and finishing auxiliaries

Presence in major markets - Long Europe experience

Strategic location in the Asian landmass

Emerging strengths

Design development initiatives by institutions and individuals

Continuous modernization and technology up gradation

Economic size of manufacturing units

Constant human resource development programme to enhance productivity

Increasing use of quality components

Shorter prototype development time

Delivery compliance

Growing domestic market for footwear and leather articles

Products

Hides, skin, leather footwear, leather shoe uppers, non-leather footwear, leather garments,

leather goods, industrial gloves, saddler & harness.


5/17

Highlights of Leather Product Segments:

Tanning SectorAnnual production 2 billion Sq.ft. Accounts for 10% of world leather

requirement. Indian colors continuously being selected at the MODEUROPE Congress

Footwear Sector Second largest footwear producer after China. Annual Production

2065 million pairs. Huge domestic retail market 1950 million pairs (95%) are sold in

domestic market. Footwear export accounts for 45.05% share in Indias total leather &

leather products export. The Footwear product mix Gents 54%, Ladies 37% and Children

9%

Leather Garments SectorSecond largest producer with annual production capacity of

16 million pieces. Third largest global exporter. Accounts for 10.43% share of Indias

total leather export

Leather Goods & Accessories Sector including Saddlery & HarnessFifth largest

global exporter. Annual production capacity - 63 million pieces of leather articles, 52

million pairs of Industrial gloves & 12.50 million pieces of Harness & Saddlery items.

Accounts for 23.44% share of Indias total export


6/17

Productwise Brands sourced from India:

Footwear Leather Garments Leather Goods / Accessories

Acme, Ann Taylor, Bally, Charter Club,Clarks, Coach, Colehann, Daniel Hector,Deichmann, DKNY, Double H, Ecco,Elefanten, Etienneaigner, Florsheim,Gabor, Geoffrey Beene, Guess, Harrods,Hasley, Hush Puppies, Kenneth Cole, LizClaiborne, Marks & Spencer, Nautica,Next, Nike, Cole Haan, Nunn Bush,Pierre Cardin, Reebok, Rockport,Salamander, Stacy Adams, TommyHilfiger, Tony Lama, Versace, Yves St.Laurent, Zara, Johnston & Murphy,Docksteps, Timberland, Armani, Geox,Diesel, Ted Baker, Lacoste, Kickers,Calvin Klein, Sioux, Brasher, Zegna,Massimu Dutti, Buggatti, Lloyd, ChristianDier, Salamander, Camper, Bata, Espirit,French Connection, Legero, Mercedez, H& M and many more famous brands

Armani, Zegna,Abercrombie & Fitch,Marco Polo, Mango,Colehaan, AndreMaarc,Guess Pierre Cardin,Tommy Hilfiger,Versace, DKNY, LizClaiborne, Ann Taylor,Nautica, Kenneth Cole,Charter Club, DanielHector

Coach, Liz Claiborne,Harrods, Yves St, Laurent,Tommy Hilfiger, EtienneAigner, GeoffreyBeene,Marks & Spencer,Guess, Next, Pierre Cardin,Prada, GAP, Levis, H & M,British Home Stores, BananaRepublic, Furla, AmericanEagle Outfitters, Bracciliani,Walmart etc.

Besides, major brands are sourced from India, MNC brands are sold in India and Indian

brands sold in India.

MNC Brands Soldin India

Indian Brands soldin India

Aldo, Bally, Clarks, Ecco, Florshiem,

Ferragammo, Hush Puppies, Leecooper, Lloyd, Marks & Spencer,Nike, Nine West,New Balance,Reebok, Rockport, Stacy Adams,Tods, Geox , Louis Vuitton

Red Tape, Bata, Liberty,Khadims, Lakhani, Metro,Action


7/17

% Share of Leather Products in Export Performance (2010-11)

% share of various countries in Indias Leather & Leather Products Exports (2010-11)

Major Markets:

The major markets for Indian leather products are Germany with a share of 14.34%, UK 12.80%,

Italy 11.52%, USA 8.72%, Hong Kong 8.11%, France 7.07%, Spain 6.31%, Netherlands 3.98%,

Belgium 2.02%, U.A.E.1.92%, Australia 1.30%. These 11 countries together accounts for nearly

78.09% of Indias total leather products export.

Indias Export of Leather & Leather Products to the European Union touched US$2517.51 mn in

2010-11, accounting for a share of 65.48% in Indias total leather export trade of US$ 3844.86

mn.


8/17

SWOT Analysis of the Indian leather industry

Opportunities

Rising potential in the domestic

market

Growing fashion consciousness

globally

Use of information technology

and decision support software

to help eliminate the length of

the production cycle for different

products

Use of e-commerce in direct

marketing

Strengths

High Growth

Ready availability of highly

skilled and cheap manpower

Large raw material base

Policy initiatives taken by the

Government

Capability to assimilate new

technologies and handle large

projects

Continuous emphasis on

product development and

design upgradation

Weaknesses

Threats

Major part of the industry

is unorganised

Limited scope for

mobilising funds through

private placements and

public issues (many

businesses are family-

owned)

Difficulty in obtaining

bank loans resulting in

high cost of private

borrowing

Stricter international

standards

High competition from

East European countries


9/17

Lack of warehousing support

from the government

International price fluctuation

Huge labour force resulting in

high labour charges

Lack of strong presence in the

global fashion market

Unawareness of international

standards by many players

and other Asian countries

Lack of communication

facilities and skills

Marketing of leather and leather products in Germany &

the EU

The leather sector offers a good potential which Indian entrepreneurs can exploit in Germany and

other EU markets characterized by ever growing competitiveness in terms of price and quality,

on one hand, and the environmental considerations, on the other. With a strong foothold that the

Indian leather industry has had for long in these markets, and its advantage of raw material and

labour resources, Indian leather exporters can, and should, mount a concerted marketing

campaign to wrest a share consistent with their inherent strength and potential. This has to be

done against the background of the well-known salient features of the German market:

The world's second largest import and export market

A difficult buyers' market with hyper competition and high expectations


10/17

A dynamic multi-faceted market with rapid technological development and innovations A

market where a considerable amount of buying power is devoted to satisfying individual

needs

A market influenced by the rising average age of the population and low birth rate

A market where environment awareness and eco-friendly production becomes more and

more a pre-requisite for successful marketing of products

Top ten Indian leather exporters

Tata International Ltd.

Florind Shoes Ltd.

Punihani International

Farida Shoes Ltd.

Mirza Tanners Ltd.

T. Abdul Wahid & Company

Hindustan Lever Ltd.

Super House Leather Ltd.

RSL Industries Ltd.

Presidency Kid Leather Ltd.


11/17

COUNCIL FOR LEATHER EXPORTS

The Council for Leather Exports (CLE) is the single largest and Apex trade promotion

orgnisation of the strong and rapidly growing Indian leather & leather products industry. CLE is

committed towards the overall development of Indian leather sector and achieve higher export

growth to enhance Indias share in global leather trade. CLE is functioning under the aegis of

Ministry of Commerce & Industry, Govt. of India. It is the notified Export Promotion

organization for entire leather & leather products industry.

Core Objectives of CLE:

Develop & strengthen the leather industry both industrial development as well as export

growth.

Undertake concerted and aggressive export promotion and market development activities

to extend global reach of Indian leather & leather products.

Assist importers anywhere in the world towards their sourcing needs of Indian leather &

leather products.

Provide necessary assistance/guidance to overseas entrepreneurs in establishing business

collaborations and strategic alliances with Indian companies. Serve as a vital link between the Government and the leather industry, representing

important policy measures, focusing on overall health and growth of the entire sector.

Activities and Services of CLE

Disseminating market information, trends, policy matters and publishing information on

commercial, technical and technological developments in the Indian leather industry

Facilitating export-import trade through redressal of various procedural hurdles by

representing to authorities concerned.

Participating in major international leather trade fairs & specialized trade shows across

the globe.

Organizing Buyer-Seller Meets and Mega Leather Shows, B2B meetings in potential

markets etc.,


12/17

Promoting, facilitating & attracting joint ventures, technical collaborations & strategic

alliances, FDIs etc into the Indian leather sector.

Inviting Resource persons / Experts to the trade Fairs, Seminars & Workshops held in

India, for exchange of information, knowledge, ideas and strategies.

Mooting Delegations to overseas countries with a view to identify the sources for raw

materials for augmenting availability of leather for production in India.

Perform facilitation and Coordination activities towards implementation of various

leather sector infrastructure strengthening, Human Resource Development programmes

of Government of India.

Facilitate in availing assistance under Integrated Development of Leather Sector (IDLS)

for Modernization & Technology up gradation of production units


13/17

Highlights of Union Budget 2011-12

. The following are the major measures announced for the leather sector in this budget.

o SCHEME OF MEGA LEATHER CLUSTERS: Setting-up of Seven Mega Leather

clusters during the year 2011-12, by extending the Mega Cluster Scheme for

development of leather products.

o To encourage use of green processes, full exemption from basic excise duty is being

granted to enzyme based preparations for pre-tanning falling under tariff no. 32029030

(Central Excise Notificationtariff- No. 4/2011 dated 1st March 2011).

o Duty Free Import Scheme : The 3% Duty Free Import Scheme (DFIS) is implemented by

Council for Leather Exports as per which certain notified inputs are allowed to beimported to the extent of 3% of FOB value of export realization in the previous year by

manufacturer-exporters of leather garments and other leather products including

footwear. In this DFIS scheme, certain new inputs have been added and also the

description of certain existing inputs have been widened. Accordingly, the amendments

have been made vide Customs Notification No. 21/2011(tariff) dated 1st March 2011.

o Leather sector shall be allowed re-export of unsold imported raw hides and skins and

semi-finished leather from Public bonded warehouses, without payment of any export

duty. This will facilitate the logistics for establishment of such warehouses and easy

access to raw material for the leather sector.

o Finished Leather export shall be entitled for Duty Credit Scrip @ 2% under FPS.

o Additional 2% bonus benefits over and above the existing benefits under Focus Product

Scheme would significantly benefit the Leather Sector


14/17

Policy decision by the government to buffer the export of

leather

After the global recession the government at this juncture, wants to provide adequate confidenceto the exporters to maintain their market presence even in a period of stress. A Special thrust

needs to be provided to employment intensive sectors which have witnessed job losses in the

wake of this recession, especially in the fields of leather and leather product With a view to

continuously increasing our percentage share of global trade and expanding employment

opportunities, certain special focus initiatives have been identified/continued for Market

Diversification, Technological Up gradation, Support to status holders, in Leather industry

1.Technological Upgradation

To usher in the next phase of export growth, India needs to move up in the value chain of export

goods. This objective is sought to be achieved by encouraging technological upgradation of our

export sector. A number of initiatives have been taken in this Policy to focus on technological

upgradation; such initiatives include:

EPCG Scheme at zero duty has been introduced for leather and leather products

2.Support to status holders

The Government recognized Status Holderscontribute approx. 60% of Indias goods exports.

To incentivise and encourage the status holders, as well as to encourage Technological

upgradation of export production, additional duty credit scrip @ 1 % of the FOB of past export

shall be granted for specified product groups including leather and specific sub sectors. This duty

credit scrip can be used for import of capital goods by these status holders. The imported capitalgoods shall be subject to actual user condition.


15/17

3.Leather and Footwear

(a) Duty free import entitlement of specified items is 3% of FOB value of exports of leather

garments during preceding financial year.

(b) Duty free entitlement for import of trimmings, embellishments and footwear components for

footwear (leather as well as synthetic), gloves, travel bags and handbags is 3 % of FOB value of

exports of previous financial year. Such entitlement shall also cover packing material, such as

printed and nonprinted shoeboxes, small cartons made of wood, tin or plastic materials for

packing footwear.

(c) Machinery and equipment for Effluent Treatment Plants shall be exempt from basic customs

duty.

(d) Re-export of unsuitable imported materials such 12 as raw hides & skins and wet blue

leathers is permitted.

(e) CVD is exempted on lining and interlining material notified at S.No 168 of Customs

Notification No 21/2002 dated 01.03.2002.

(f) CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC (HS).

(g) Re-export of unsold hides, skins and semi finished leather shall be allowed from Public

Bonded warehouse at 50% of the applicable export duty.

Export of Imported

Goods

Hides, Skins and semi finished leather may be imported in the Public Bonded warehouse for the

purpose of DTA sale and the unsold items thereof can be re-exported from such bonded

warehouses at 5 0% of the applicable export duty. However, this facility shall not be allowed for

import under Private Bonded warehouse.


16/17


17/17

Future Outlook

The Government of India had identified the Leather Sector as a Focus Sector in its Foreign Trade

Policy 2004-09 in view of its immense potential for export growth prospects and employmentgeneration. Accordingly, the Government is also implementing various Special Focus Initiatives

under the Foreign Trade Policy for the growth of leather sector. With the implementation of

various industrial developmental programmes as well as export promotional activities; and

keeping in view the past performance, and industrys inherent strengths of skilled manpower,

innovative technology, increasing industry compliance to international environmental standards,

and dedicated support of the allied industries, the Indian leather industry aims to augment the

production, thereby enhance export to US$ 9.00 bn by 201314, and resultantly create additional

employment opportunities for overall one million people.

Documents

Leather Product