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8/2/2019 Leather Product
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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
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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.
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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
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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.
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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
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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
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% 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.
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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
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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
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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.
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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.,
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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
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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
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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.
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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.
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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.