ABOUT LEATHER INDUSTRY OVERVIEW 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 touched US$ 4.86 billion in 2010-14, recording a cumulative annual growth rate of about 8.22% (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$ 137.96 billion (2015). The major production centers for leather and leather products in India are located inTamil 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.

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 landmassEMERGING STRENGTHS Design development initiatives by institutions and individuals Continuous modernization and technology up gradation Economic size of manufacturing units Constant human resource development programmer to enhance productivity Increasing use of quality components Shorter prototype development time Delivery compliance Growing domestic market for footwear and leather articles

HIGHLIGHTS OF LEATHER PRODUCT SEGMENTS Tanning Sector Annual 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 42.67% share in Indias total leather & leather products export. The Footwear product mix Gents 54%, Ladies 37% and Children 9% Leather Garments Sector Second largest producer with annual production capacity of 16 million pieces. Third largest global exporter. Accounts for 11.76% share of Indias total leather export Leather Goods & Accessories Sector including Saddlery & Harness Fifth 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 24.56% share of Indias total export

PRODUCT-WISE BRANDS SOURCED FROM INDIAFootwearLeather GarmentsLeather 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, Liz Claiborne, Marks & Spencer, Nautica, Next, Nike, Cole Haan, Nunn Bush, Pierre Cardin, Reebok, Rockport, Salamander, Stacy Adams, Tommy Hilfiger, 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, Christian Dier, Salamander, Camper, Bata, Espirit, French Connection, Legero, Mercedez, H & M and many more famous brandsArmani, Zegna, Abercrombie & Fitch, Marco Polo, Mango, Colehaan, AndreMaarc, Guess Pierre Cardin, Tommy Hilfiger, Versace, DKNY, Liz Claiborne, Ann Taylor, Nautica, Kenneth Cole, Charter Club, Daniel HectorCoach, Liz Claiborne, Harrods, Yves St, Laurent, Tommy Hilfiger, Etienne Aigner, Geoffrey Beene,Marks & Spencer, Guess, Next, Pierre Cardin, Prada, GAP, Levis, H & M, British Home Stores, Banana Republic, Furla, American Eagle 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 SOLD IN INDIAAldo, Bally, Clarks, Ecco, Florshiem, Ferragammo, Hush Puppies, Lee cooper, Lloyd, Marks & Spencer, Nike, Nine West, New Balance, Reebok, Rockport, Stacy Adams, Tods, Geox , Louis Vuitton.

INDIAN BRANDS SOLD IN INDIARed Tape, Bata, Liberty, Khadims, Lakhani, Metro, ActionINDIAS EXPORT OF LEATHER AND LEATHER PRODUCTS FOR FIVE YEARS(Value in Million $)2009-102010-112011-122012-132013-114

Finished Leather807.19673.37627.95841.131023.21

Footwear1489.351534.321507.591758.672077.27

Leather Garments345.34426.17428.62425.04572.54

Leather Goods800.46873.44757.02855.781088.09

Saddlery & Harness106.1892.1583.3987.92107.60

Total3548.513599.463404.573968.544868.71

% Growth15.99%1.44%-5.41%16.57%22.68%

Source: DGCI&SMAJOR MARKETS FOR INDIAN LEATHER & ITS PRODUCTSThe major markets for Indian Leather & Leather Products are Germany with a share of 15.01%,UK 11.15%, Italy 10.85%, USA 9.02%, Hong Kong 7.38%, France 6.25%, Spain 6.08%, Netherlands 4.07%, Belgium 2.32%, China 2.54%, U.A.E.2.24%, Australia 1.39%,These 12 countries together accounts for nearly 78.30% of Indias total leather& leather products export.Indias Export of Leather & Leather Products to the European Union touched US$ 3116.52 mn in 2011-12, accounting for a share of 64.01% in Indias total leather export trade of US$ 4868.71 mn.

COUNCILS MEMBERSHIP STRENGTH FOR THE LAST FIVE YEARSREGION2007-082008-092009-102010-112011-122012-13**

SOUTH756739758849934912

NORTH500496543602706686

EAST426452465496516530

CENTRAL346344352396425445

WEST179157150158157151

TOTAL220721882268250127382724

GOVERNMENT SUPPORT MEASURES Leather sector is one of the Focus Sectors under Foreign Trade Policy of the Govt. of India Entire leather sector is de-licensed facilitating for expansion on modern lines with state-of-the-art machinery and equipments. 100% Foreign Direct Investment permitted through automatic route. Import of specified machinery for use in leather and footwear industry allowed at a 5% concessional import duty. Duty free import of raw hides and skins, wet blue chrome tanned leather, crust leather and finished leather of all kinds including splits and sides thereof. Duty free import of specified critical inputs for manufacturers of leather garments and other leather products including footwear under Duty Free Import Scheme (DFIS). Basic customs duty exempted on machinery or equipment for Effluent Treatment Plants in leather industry. Gradual lowering of import tariff current peak customs duty is 10% Simplified import/export procedures quick customs clearances.INFRASTRUCTURE DEVELOPMENT PROJECTS UNDER ASIDE SCHEMEBased on the specific requirements of the Industry, the CLE is the implementing agency for the following infrastructure projects by availing the funding support under ASIDE (Assistance to states for infrastructure Development and Exports) Scheme: Establishment of Testing Laboratory at Ranipet (Building Work is currently under progress) Establishment of Testing Laboratory at Kanpur (Building Work is progressing procurement process for machinery is under way) Establishment of Multi-Skill Development Center at Kanpur (Building work is progressing) Establishment of Common Facility Centre at Jalandhar (Engineering documents are under preparation for issue of Tender so as to appoint a building contractor.Already, one project for development of additional infrastructure at Ambur Trade Center and another project for infrastructure up gradation at Design Studio, Kolkata have been taken up and these two projects were successfully executed in the recent past.The Agra footwear industry has proposed to set up Trade Centre at Agra Cluster. As of Oct 2012, the DPR has been submitted to the Govt. of India for consideration and approval under ASIDE Scheme. Also, it is proposed to establish Testing Lab & Design Studio at Agra and the DPR will be submitted to the State Government of Uttar Pradesh for funding assistance.

Further, several more infrastructure projects are under conception stage, to name a few: Establishment of Common Facility Centre at Ranipet, Melvisharam & Perundurai, Addition of 1 MLD capacity in the CETP at Melvisharam and Perundurai, Testing Laboratory at Mumbai etc.

INDIAN LEATHER DEVELOPMENT PROGRAMME (ILDP) OF GOVERNMENT OF INDIAThe Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, Govt. of India has been undertaking several initiatives to facilitate industrial development of the leather industry. During Tenth Five Year plan period 2002-07, DIPP implemented an Integrated Leather Development Programme with a Plan Outlay of Rs.400 Crore. The ILDP was continued in the Eleventh Plan 2007-2012 with a higher outlay of Rs.1251.29 Crore. The thrust of the ILDP scheme is on technology upgradation and modernization of production units, expansion of production capacities, creation of institutional facilities in the country, training Human Resources for the leather sector, environment management in the tanning sector, support to rural artisans for design and product development, create market linkages, support for establishment of Leather Parks etc. One of the sub-schemes of the ILDP is Integrated Development of Leather Sector (IDLS) Scheme, which provides investment grant for technology up gradation, modernization, capacity creation in all segments of the Leather Industry at enterprise levels.The Union Planning Commission has constituted a Working Group exclusively for Leather & Leather Products for the Twelfth Five Year Plan 2012-17 under the Chairmanship of Secretary-DIPP. The Working Group, in turn, has constituted six Sub-Groups on different important topics (a) Leather Technology, Innovation & Environment Issues (b) Infrastructure development (c) Skill development initiatives (d) Brand building (e) Attracting FDI in Leather Sector in India (f) Macro issues of leather sector, convergence & linkages. The Nodal Department for this Working Group is DIPP. The DIPP has taken keen initiatives in holding several review meetings with Chairmen of Sub-Groups to fine tune the reports. Based on the reports of the sub-groups, the DIPP has prepared the Draft Report of Working Group on Leather & Leather Products, which seeks an outlay of Rs.3220 Crore for the Twelfth Plan 2012-17. The Draft Report was discussed in the meeting of the Working Group which was held on 4th Oct 2011. The Industry hopes that higher outlay for ILDP will be sanctioned for the Twelfth Five Year Plan period 2012-17.

MEGA LEATHER CLUSTERS - SUB-SCHEME NOTIFIED UNDER ILDPVide Notification No. 5/4/2011-Leather dated 20th March 2012, the DIPP notified the sub-scheme Mega Leather Cluster with fund allocation of Rs.600 Crore under the ILDP. It is proposed to develop Greenfield Mega Leather Clusters in the States having large concentration of leather units and also in states having potential for growth of the leather sector. The Mega Leather Clusters will have core infrastructure, social infrastructure, production infrastructure (ready to use factory sheds with plug in facility for machinery / equipments), HRD & social infrastructure, capacity building etc. Each MLC will be implemented by a Special Purpose Vehicle, which will be a corporate body registered under the Companies Act 1956 formed by stakeholders, particularly a group of willing entrepreneurs (minimum being 7 legally independent companies) that are engaged in leather tanning, manufacturing of leather goods and components and other activities associated with the leather industry and who intend to set up production units in the proposed MLC. The SPV would conceptualize, formulate, achieve financial closure, implement and manage the infrastructure. The GOI assistance will be limited to 70% of the project cost as grant in aid for all components of the project except the cost of the land, subject to the ceilings depending upon the land area of the MLC. If the MLC land area is between 40-60 acres, the GOI assistance ceiling is Rs.50 Crore, For MLC between 61-100 acres Rs.70 crore, For MLC between 101-150 acres, Rs.105 crore. For land area more than 151 acres, the assistance ceiling would be Rs.125 Crore.The CLE has organized series of interaction meetings in the regions to discuss on the Mega Leather Cluster and create awareness amongst the industry and motivated the industry to take steps to establish MLC. In nutshell, as of Oct 2012, the leather industry through SPVs intends to establish Mega Leather Cluster in Sohna-Haryana & Agra (North Region), Ramaipur-Kanpur & Sandila-Hardoi (Central Region), Perambalur-Tamil Nadu (South Region). The land identification process is currently under progress. Once land is tied up, these SPVs are expected to commence the work of preparing Detailed Project Report (DPR) by engaging professional agencies.

FUTURE OUTLOOKThe Government of India had identified theLeather Sectoras aFocus Sectorin its Foreign Trade Policy 2004-09 in view of its immense potential for export growth prospects and employment generation. Accordingly, the Government is also implementing variousSpecial Focus Initiativesunder 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, and resultantly create additional employment opportunities for overall one million people.