LEATHER

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SUMMARY
  • Indian leather sector stands at USD 17.85 billion
    (Exports – USD 5.85 billion, Domestic Market – USD 12 billion).
  • India accounts for 12.93% of the world’s leather production of hides/skins.
  • High Growth projected in the next five years.
  • Indian leather industry has one of the youngest workforce with 55% of workforce below 35 years of age.
  • India is the second largest producer of footwear and leather garments in the world.
REASONS TO INVEST
  • Opportunity to set-up export units: Exports are projected reach USD 9.0 billion by 2020, from present level of USD 5.85 billion. India has trade agreements with Japan, Korea, ASEAN, Chile etc., and is negotiating Free Trade Agreement with European Union, Australia etc.
  • Opportunity to tap huge domestic market in India-: The domestic market is expected to double in the next five years from present level and reach USD 18 billion by 2020.
  • Comparative advantages in cost of production and labour costs as compared to other major manufacturing countries.
  • Skilled/trained manpower available for a new production unit or existing production unit.
STATISTICS
  • Strong Raw Material Base:

    1. A strong base for raw materials – India is endowed with 20% of the world’s cattle and buffalo and 11% of the world’s goat and sheep population.
    2. India produces 2.5 billion sq. feet of leather, accounting for about 13% of global production.
  • The Indian Leather Industry comprises of major segments namely Footwear, Finished Leather, Leather Goods, Leather Garments, Footwear Components and Saddlery and Harness. All these segments have high growth potential.
  • Per capita consumption of footwear in India projected to increase upto 4 pairs and total domestic consumption is expected to reach upto 5 billion pairs by 2020.
  • Great opportunity to set-up manufacturing facility of footwear components, considering increasing demand for fashion footwear in India.
GROWTH DRIVERS
  1. High growth potential on exports, the ready availability of leather, the abundance of essential raw materials and rapid strides in the areas of capacity modernisation and expansion, skill development and environment management, coupled with a favourable investment climate has made the Indian leather industry a favourable investment destination.
  2. Youth Power: With 55% of the workforce below the age of 35, the Indian leather industry has one of the youngest and most productive workforces.
  3. Favorable government policies for promotion of leather sector.
  4. Increasing domestic market for Fashion Accessories like Hand Bags, Wallets, Purses etc.
FDI POLICY
  • The entire leather product sector is de-licensed, facilitating expansion on modern lines with state-of-the-art machinery and equipment.
  • 100% Foreign Direct Investment is permitted through the automatic route.
FINANCIAL SUPPORT
  • Under the IDLS sub-scheme of ILDP, 30% grant is provided on the cost of plant and machinery for Micro and Small units and 20% for other units, with a ceiling of USD 0.307 million for each product line.
  • Under the MLC sub-scheme of ILDP, 50% grant with a ceiling of USD 19.23 million based on size is provided for the establishment of Mega Leather Clusters to boost infrastructure facility and support services for production and export.
  • Under the Leather Technology, Innovative and Environmental Issues sub-scheme of ILDP, assistance is provided for up to 50% of the project cost with a ceiling of USD 7.69 million for upgradation/installation of Common Effluent Treatment Plants (CETPs) to address environmental pollution caused by leather units.
  • Government has approved a Central Sector Scheme, Indian Footwear, Leather & Accessories Development Program (IFLADP) with an approved expenditure of USD 400 million over the three financial years 2017-18 to 2019-20. The umbrella scheme has seven sub-schemes under IFLADP:
    • Human Resource Development (HRD) sub-scheme: An assistance for Placement Linked Skill Development training to unemployed persons is provided –USD 230 per person, for skill up-gradation training to employed workers- USD 76 per employee and for training of trainers –USD 3,076 per person.
    • Integrated Development of Leather Sector (IDLS) sub-scheme: It incentivizes investment and manufacturing including job creation by providing backend investment grant/subsidy @ 30% of the cost of new Plant and Machinery to Micro, Small & Medium Enterprises (MSMEs) and @ 20% of the cost of Plant and Machinery to other units for modernization/ technology upgradation in existing units and also for setting up of new units.
    • Establishment of Institutional Facilities sub-scheme: It provides assistance to Footwear Design & Development Institute (FDDI) for upgradation of some of the existing campuses of FDDI into "Centers of Excellence" and establishing 3 new fully equipped skill centers alongside the upcoming Mega Leather Cluster.
    • Mega Leather, Footwear and Accessories Cluster (MLFAC sub-scheme: It provides infrastructure support to the Leather, Footwear and Accessories Sector by establishment of Mega Leather, Footwear and Accessories Cluster. Graded assistance is provided up to 50% of the eligible project cost, excluding cost of land with Government assistance being limited to USD 19 million.
    • Leather Technology, Innovation and Environmental sub-scheme: The assistance is provided for upgradation/installation of Common Effluent Treatment Plants (CETPs) @ 70% of the project cost. The sub-scheme also provides for support to national level sectoral industry council/ association and support for preparation of vision document for Leather Footwear and Accessories Sector.
    • Promotion of Indian Brands in Leather, Footwear and Accessories sub-scheme: Under this scheme, eligible units approved for Brand Promotion are assisted. Government assistance is limited to 50% of total project cost subject to a limit of USD 461, 538 for each brand, each year for 3 years.
    • Additional Employment Incentive for Leather, Footwear and Accessories Sector scheme: Under the scheme, employers' contribution of 3.67% to Employees' Provident Fund for all new employees in Leather, Footwear and Accessories sector are provided for enrolling in EPFO for first 3 years of their employment.
INVESTMENT OPPORTUNITIES
  • The National Manufacturing Policy identifies leather as a special focus sector, for growth and employment generation.
  • Huge Production Centres in the form of Mega Leather Clusters (MLC) with all required infrastructure for production to be set-up in next 5 years. These include the following projects. Investors can set-up their units in one of these MLCs.

Location of the MLC

Project Approved

Kothapatnam Village, Kota Mandal, Andhra Pradesh (Area: 537 acres)

Project under consideration

IMT Rajkot, Mewat, Haryana (Area: 105 acres)

FOREIGN INVESTORS
  • Apache Group (Taiwan), Nellore, Andhra Pradesh
  • Feng Tay Shoes (Taiwan), Cheyyar, Tamil Nadu
  • Itares (Italy), Ambur, Tamil Nadu
AGENCIES
  • Council for Leather Exports (CLE)
  • Central Leather Research Institute (CLRI)
  • Footwear Design and Development Institute (FDDI)
  • National Institute of Fashion Technology (NIFT)
  • Central Footwear Training Institute (CFTI)
KEY ACHIEVEMENTS
  • Indian Footwear, Leather & Accessories Development Programme (IFLADP), a special package for employment generation in leather and footwear sector has been launched in December 2017. The package involves implementation of Central Sector Scheme with an approved expenditure of INR 2600 Crore over the three financial years (i.e. 2017-18 to 2019-20)
  • Two new branches of FDDI built in Patna and Hyderabad
  • INR 1220.32 lakh has been sanctioned under Market Access Initiative scheme for marketing programmes and activities during FY 2017-18.
  • 4.44 lakh people trained
SOURCES
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