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.
SECTOR POLICY
  • The Integrated Development of Leather Sector (IDLS) sub-scheme implemented as part of the ILDP has significantly contributed to capacity modernisation and technological up-gradation of the leather sector.
  • No Central Excise duty and import duty on raw hides and skins, semi-processed leathers like wet blue, crust leather or finished leather.
  • Capital goods (machinery) required by the industry can be imported without import duty under the Export Promotion Capital Goods (EPCG) Scheme of Foreign Trade Policy, subject to meeting the export obligation of six times the duty saved in six years.
  • No Central Excise Duty on footwear with Retail Price upto USD 7.69. Concessional Excise duty of 6% for all footwear with Retail Price above USD 7.69 and USD 15.38.
  • Excise duty on footwear with leather uppers and having retail price more than USD 15.38 reduced from 12%to 6%.
  • Under leather technology, innovation and environment issues, a sub-scheme of the Indian Leather Development Programme (ILDP), assistance is provided for technology benchmarking and environment management for the upgradation of Common Effluent Treatment Plants (CETPs), for Solid Waste Management and for holding environmental workshops.
  • State governments have a single window clearance system in place to fast-track clearances for the establishment of production units.
  • 3% reduction in interest on Rupee Export Credit to MSME units and all footwear units under Interest Equalisation Scheme for 5 years from 1st April 2015.
  • No Central Excise duty and import duty on raw hides and skins, semi-processed leathers like wet blue, crust leather or finished leather.
  • Imported leather too is now available to the industry at competitive prices.
  • Technology Mission scheme planned for tanning sector to utilize 100% tanning capacity of existing tanneries, to upgrade Common Effluent Treatment Plants (CETPs), systematic and large collection of hides and skins etc.

Skill Development Initiatives by GoI

  • The Indian government has put in place an array of measures for skill development and skill up-gradation of the workforce.
  • Skilled Labour at your Doorstep: The Human Resources Development sub-scheme under the Indian Leather Development Programme (ILDP) implemented by the Department of Industrial Policy and Promotion (DIPP) is providing skill development training to the unemployed for placement in the leather industry while upgrading skills of the existing workforce at the shop floor level and imparting training to trainers. 0.282 million youths have already been trained out of which 0.228 million such trainees have been employed in the industry in the last 2 years with 0.144 million more expected to be trained annually.
  • In addition Skill up-gradation is being done under National Skill Certification and Monetary Reward Scheme of the National Skill Development Corporation and Pradhan Mantri Kaushal Vikas Yojna (PMKY) under which 0.1 million unemployed youth have been trained   for various job roles in leather and footwear industry and 80% of them have been employed in the industry.
  • Training Institutions: The Footwear Design and Development Institute (FDDI) has established itself as the premier training institute for the provision of skilled manpower in the leather industry. It has 55 training centres across the country including eight branches. Another four branches are being set up. Central Leather Research Institute (CLRI), one of the largest institutions of leather sector, is playing significant role in various areas like education, research, training, testing, designing, forecasting, planning, social empowerment etc.
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.
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)
ACHIEVEMENT REPORT
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