Tamil Nadu has emerged on top with highest share of about 35% in total leather and leather products' exports from India as of 2012-13, according to a recently concluded sector-specific study by apex industry body Assocham.
"About 42% of the registered factories in leather and related products' category are concentrated in Tamil Nadu alone," according to the study titled 'Leather & leather products sector in India: Strategy to facilitate exports,' conducted by The Associated Chambers of Commerce and Industry of India (Assocham).
"However, growth of leather and leather products' exports from Tamil Nadu has declined by over 7% year-on-year (Y-o-Y) i.e. from 17.6% in 2011-12 to 10.5% in 2012-13," according to the study prepared by the Assocham Economic Research Bureau (AERB).
Besides, Tamil Nadu is also ranked third after Uttar Pradesh and West Bengal in terms of per-capita labour productivity worth about Rs 10 lakh, highlighted the study.
Tamil Nadu is also ranked third in terms of per-factory employment as on an average each leather factory in the state provides employment opportunity to about 61 workers as against 101 in Uttar Pradesh and 64 in West Bengal.
With an overall market size worth about Rs 250 billion, India's leather industry provides direct and indirect employment to about 20 lakh people. Besides, with an annual turnover worth over USD 10 billion, leather exports have increased manifold during the course of past decades thereby touching about USD 6 billion in 2013-14.
Financial constraints, high interest rates, lack of infrastructure facilities and others are key factors making the leather industries in India uncompetitive and impeding its growth, noted the Assocham study.
Besides, Persisting Euro Zone crisis, intense competition from China and other South East Asian and neighbourhood countries like Pakistan and Bangladesh; emergence of synthetic/textile winter garments as an alternate to leather garments; removal of anti-dumping duty on Chinese and Vietnamese leather footwear and the rising prices of chemicals/inputs required by the leather/tanning industry also pose great challenges to the sector.
With a view to provide relief to the leather industry, Assocham, in its study has urged the Government to cut down interest integrated supply chain infrastructure (material markets, tanneries), production infrastructure (water supply, drainage facilities, power supply, effluent treatment plants, factories for ancillary products) and support facilities (design and product development studios, testing laboratory, training institutes, buyer interaction showrooms and others) rate to reduce the overall expenditure, upgrade the existing infrastructure in leather clusters.
Assocham has further suggested that Government should review and revise the interest subvention scheme for all leather and leather products; establish mechanism for smooth refunds of duty drawback, focus product schemes, VAT and Tax refund; provide small and medium enterprises and leather goods manufacturers to participate in international fairs and exhibitions to familiarise with global designs and standards.
