Leather

Summary
  • The Leather industry in India holds a significant place in the Indian economy.
  • India is the 2nd largest producer of footwear and leather garment *
  • India accounts for nearly 3 bn sq.ft of world’s tannery. *
  • Women employment is predominant in Leather products industry with about 40% share. *
  • The Leather industry in India is consistent in its high export earnings and is among the top 10 foreign exchange-earners for India.
  • 7,000 small industries units are connected with Footwear sector which holds great significance to the economy.*
Reasons to Invest
  • Opportunity to set-up export units: India has trade agreements with Japan, Korea, ASEAN, Chile etc., and is negotiating Free Trade Agreement with the European Union, Australia etc.
  • The Centre has notified the Indian Footwear & Leather Development Programme (IFLDP) with an outlay of Rs.1700 crore for implementation during 2021- 26.*
  • The new vision for leather research and industry during the next 25 years will focus on sustainability, net-zero carbon footprint, gaining total recyclability of leather-based materials, bio-economy of animal skin-derived products, and ensuring income parity for workers, besides brand building.*

 

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Key Achievements
  • Second largest exporter of leather garments.
  • Third largest exporter of saddlery & harness*
  •  India is expected to product almost 3 bn units by 2024 and is expected to grow at 8% CAGR. The per capita footwear consumption in India is estimated to have grown from 1.7 pairs in 2016 to 2.3 pairs in 2021.
Recent Announcements

9th Jul 2023: Indian Footwear & Leather industry a major foreign exchange earner, employs 4.5 million people, 40 percent women: Sh. Piyush Goyal

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14th June 2023: Quality Control Orders (QCOs) are a game changer for the leather sector: Shri Piyush Goyal

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23rd Jan 2023: Quality Control Order (QCO) for leather and non-leather footwear will be implemented with effect from 1 July 2023: Shri Piyush Goyal.

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4th Jan 2023: India has the potential to become a world leader in Footwear and leather : Shri Piyush Goyal.

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Statistics
  • India is the 5th largest exporter of leather goods and accessories in the world. India’s exports of leather, footwear and leather products touched $4.87 bn during 2021-22. Footwear (leather and non-leather) export accounts for about 52% share in Indian leather and footwear industry’s export (2021-22).
Growth Drivers
  • High growth potential for exports
  • The ready availability of leather
  • The abundance of essential raw materials
  • Rapid strides in the areas of capacity modernisation and expansion
  • Skill development and environment management
  • Favourable government policies
  • Additional steps have been taken to increase the export of leather and leather products:*
    1. About 2% across the board enhancement of duty credit scrip under Merchandise Exports from India Scheme (MEIS) for shipments made from 1 November 2017
    2. GST concessions for leather industry items –
      • Finished leather from 12% to 5%,
      • Certain leather chemicals, leather goods, leather garments and saddlery items from 28% to 18%,
      • Common Effluent Treatment Plants (CETPs) from 18% to 12%,
      • Job work from 18% to 5% Footwear from 18% to 5%.
  • GOI is preparing customised footwear for Indians by using 3D technology to scan the feet of the person to prepare their footwear. 73 districts in the country are included to implement the project in the first phase.*
  • Union Minister, Dr Jitendra Singh offered attractive financial support from DST to Start-ups to come up with innovative and market friendly leather products.*
FDI Policy
  • Leather products manufacturing is allowed 100% FDI through an automatic route.
  • The government of India has allowed 100% FDI in single-brand retailing in India, with a clause of 30% mandatory local sourcing. *
  • The Leather industry in India is de-licensed, facilitating expansion on modern lines with state-of-the-art machinery and equipment. *
  • The cumulative FDI equity inflow in the Leather, Leather Goods and Pickers industry is USD 255.47 mn during the period April 2000 to March 2023. *

 

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Financial Support

Indian Footwear, Leather & Accessories Development Programme (IFLADP)*

  • Indian Footwear and Leather Development Programme (IFLDP) has been approved for continuation from 2021-22 with an approved financial outlay of INR 1700 crore. 
  • IFLDP aims at development of infrastructure for the leather sector, address environmental concerns specific to the leather sector, facilitate additional investments, employment generation and increase in production.
  • Under IFLADP, the following assistance is provided:
    • Sustainable Technology and Environmental Promotion (proposed outlay INR 500 crore):- Special Purpose Vehicle constituted for each CETP would be provided assistance @ 80% of the total project cost for Northeastern Areas with industry’s/beneficiary share to be 20% of the project cost and @ 70%  of the total project cost for other areas with industry’s/beneficiary share to be 30% of the project cost with a limit of INR 200 crore.
    • Integrated Development of Leather Sector (IDLS) sub-scheme (proposed outlay INR 500 crore):- Assistance would be provided to the sectoral units for their modernization/capacity expansion/technology up-gradation on or after 1st January 2020 @30% to MSME units and 20% to other units. Financial assistance is being proposed to North-Eastern Areas also @40% of cost of plant & machinery to MSME units and 30% of the same to other units with additional 5% financial assistance for the domestically manufactured plant and machinery. 
    • Mega Leather Footwear and Accessories Clusters sub-scheme (proposed outlay INR 300 crore):- The sub-scheme aims at world-class infrastructure and to integrate the production chain in a manner that caters to the business needs of the leather and footwear industry so as to cater to the domestic market and exports. 
    • The Department has approved the project for setting up of MLFAC at Calcutta Leather Complex, Bantala, Kolkata with project cost of INR 178.84 crore and GoI assistance of INR 89.42 crore. ‘In-principle’ approval has been accorded for the proposal for setting up of MLFAC at Ramaipur, Kanpur Nagar, Uttar Pradesh with tentative proposed cost of INR 451 crore. This is mainly for the establishment of Mega Leather Clusters to boost infrastructure facility and support services for production and export.
    • 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. 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 India including eight branches. Another 4 branches are being set up.12
    • Graded assistance is proposed to be provided @50% of the project cost or @70% of the project cost in Northeastern areas, for land development, core infrastructure, HRD and social infrastructure, production facilities including ready to use sheds with plug and play facility, R&D support and export services  excluding cost of land with maximum Government assistance being limited to INR 125 crore.
    • During the period 2017-18 to 2019-20, primary skill development training has been provided to 3,24,722 unemployed persons and 2,60,880 trainees provided placement in leather & footwear sector. 12947 workers were provided skill upgradation training in 2019-20.
    • Leather Technology, Innovation and Environmental sub-scheme: The help is provided for upgradation/installation of Common Effluent Treatment Plants (CETPs) @ 70% of the project cost. The sub-scheme also offers support to national level sectoral industry council/ association and support for preparation of vision document for Leather Footwear and Accessories Sector.
    • Approval has been accorded for upgradation of twelve Common Effluent Treatment Plants (CETPs) at Dindigul, Ranipet, Ambur, Vaniyambadi, Vellore, Pallavaram, Trichy, Erode districts of Tamil Nadu, Jalandhar (Punjab) and Bantala (Kolkata). As on 15th February 2022, financial assistance amounting to INR 132 crore has been released in respect of ten CETP projects with total GOI assistance of INR 284 crore. INR 152 crore is the committed liability which would be released in the coming years.
    • During the period 2017-18 to 2020-21, financial assistance amounting to INR 307.84 crore provided for modernization and technology up-gradation of 714 units in leather & footwear sector. 
    • Promotion of Indian Brands in Leather, Footwear and Accessories Sector sub-scheme (proposed outlay INR 100 crore):- The GoI assistance is proposed to be 50% of total project cost subject to limit of Rs 10 crore for each brand in next three year to promote 10 Indian brands in the International Market in 3 years. 
    • Additional Employment Incentive for Leather, Footwear and Accessories Sector scheme: Employers contribute 3.67% to employees provident fund for all working in the leather, footwear and accessories sector.  The employees are enrolled in Employees' Provident Fund Organization (EPFO) for first 3 years of their employment.
    • Development of Design Studios in Footwear and Leather Sector:- Central assistance would be restricted to 50% of the total subject to a limit of INR 10 crores to each design studio. The share of beneficiary would be balance 50% of the project cost.
    • Establishment of Institutional Facilities (EIF):- Assistance would be provided as a one-time grant-in -aid for establishment/upgradation of the institutional infrastructure of Footwear Design and Development Institute (FDDI).*
    • Brand Promotion of Indian Brands in the Footwear and Leather Sector:- Central assistance would be  provided 50% of total project cost subject to limit of INR 3 crore for each brand, each year for the next three years. The share of the Indian Manufacturer would be balance 50% of the project cost.

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Investment Opportunities
  • As per the World Bank Doing Business 2020 report, India is ranked 63. Many initiatives under National Trade Facilitation Action Plan (2017-2020) have upgraded the productivity of cross-border trade, reducing border and documentary compliance time for both exports and imports.*
  • The National Manufacturing Policy identifies leather as a special focus sector, for growth and employment generation. The policy aims at a GDP of 25% along with a creation of 100 mn jobs in all sectors by the year 2025.*
  • Presence of huge production centres in the form of Mega Leather Clusters (MLC) with all required infrastructure, where investors can set-up one of these MLCs.*

 

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Sector Reports
  1. Year End Review 2022: Department of Textiles
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)
Sources
  1. Potential for Growth of Leather Based Industries, Ministry of Commerce & Industry, PIB, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=95785
  2. Council for leather exports, Export Performance of Leather and Leather Products from India, http://leatherindia.org/analysis-export-performance-of-leather-and-leather-products-during-april-august-2019-20-vis-a-vis-april-august-2018-19/ 
  3. Council for leather exports, Export Performance of Leather and Leather Products from India, http://leatherindia.org/analysis-export-performance-of-leather-and-leather-products-during-april-august-2019-20-vis-a-vis-april-august-2018-19/ 
  4. Council for leather exports, Industry at a glance, http://leatherindia.org/industry-at-a-glance/ 
  5. Growth of Leather Industry, Ministry of Commerce & Industry, PIB, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=186811
  6. Council for leather exports, Export Performance of Leather and Leather Products from India, http://leatherindia.org/analysis-export-performance-of-leather-and-leather-products-during-april-august-2019-20-vis-a-vis-april-august-2018-19/ 
  7. Council for leather exports, Indian Leather Industry, http://leatherindia.org/indian-leather-industry/ 
  8. Department for Promotion of Industry and Internal Trade, Promotion of leather industries, https://dipp.gov.in/sites/default/files/lu_4316.pdf 
  9. Consolidated FDI Policy, Government of India, https://invest-india-revamp-static-files.s3.ap-south-1.amazonaws.com/2020-04/FDI%20Policy%202019%20revised_19%20April%202020.pdf
  10. Consolidated FDI Policy, Government of India, https://invest-india-revamp-static-files.s3.ap-south-1.amazonaws.com/2020-04/FDI%20Policy%202019%20revised_19%20April%202020.pdf
  11. Status of Leather Industry, Ministry of Commerce & Industry, PIB, https://pib.gov.in/PressReleseDetailm.aspx?PRID=1594913 
  12. Year End Review 2018- Ministry of Commerce & Industry, PIB, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=186255
  13. Statement of Activities 2018-19, Ministry of Commerce & Industry, https://commerce.gov.in/writereaddata/uploadedfile/MOC_636850524269073529_Statement_of_Activities_2018-19.pdf 
  14. "Doing Business 2020: Reforms Boost India’s Business Climate Rankings; Among Top Ten Improvers for Third Straight Year", Press Release, The World Bank, https://www.worldbank.org/en/news/press-release/2019/10/24/doing-business-india-top-10-improver-business-climate-ranking 
  15. National Manufacturing Policy, DPIIT, https://dipp.gov.in/sites/default/files/po-ann4.pdf

  16. Four Projects Approved in Tamil Nadu under IFLADP, Ministry of Commerce & Industry, PIB, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=184110

  17. Achievements of Ministry of Commerce and Industry 2018, PIB, https://pibindia.wordpress.com/2018/12/12/achievements-of-ministry-of-commerce-industry-during-2018/ 

  18. Factsheet on FDI - April 2000 to December 2020, Department for Promotion of Industry and Internal Trade, https://dpiit.gov.in/sites/default/files/FDI%20Factsheet%20December%2C%202021.pdf

  19. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1684674

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