J. D.

Birla Institute(Department of Management) Name : Rishav Bothra : 3rd Year 5th Semester

Year

Roll No.

: 17 (Section A)

Subject

: Term Paper (BBA-508)

Mentor

: Ms. Paramita Sarkar

Topic

: Leather Industry

DECLARATION
Declaration To include plagiarism and ethical statements and word count is a formal requirement. Declaration: I declare the following: 1. That the material contained in this dissertation is the end result of my own work and that due acknowledgement has been given in the bibliography and all references to ALL sources be they printed electronic or personal. 2. The word count of this term paper is around 17044 (approx) words. 3. That unless this term paper has been confirmed as confidential, I agree to an electronic copy or sections unless of the dissertation to be placed on the e-learning portal, if deemed appropriate, to allow future students the opportunity to see examples of past dissertations. I understand that if displayed on the e-learning portal it would be able to print off copies or download. The authorship would remain anonymous. 4. I agree to my term paper being submitted to a plagiarism detection service, where it will be stored in a database and compared against work submitted from this or any other school or from other institutions using this service. In the event to my service detecting a high degree of similarity between content within the service this will be reported back to my supervisor and second marker, who may decide to undertake further investigation that may ultimately lead to discipline actions, should instances of plagiarism be detected. I declare that ethical issues have been considered, evaluated and appropriately addressed in this research

Signed:

ACKNOWLEDGEMENT
It was a great opportunity for me to complete my term paper. I express my gratitude and sincere thanks to the Director of J.D. Birla Institute, Dr. Asit Datta for inculcating such a wonderful experience in our academic syllabus which has immensely helped me in developing my creative abilities. It has been a true learning experience. Not only did I get the exposure to the Leather Industry in India but it also helped me understand the various complexities it is under. An industry which I would I like to work in. I am also grateful to Ms. Paramita Sarkar, the mentor of my term paper. Without her active support, guidance and encouragement the term paper would not have been completed within the stipulated time. I also extend my gratitude to the LRC coordinator for their support and expertise in providing me with the study material, which has helped me tremendously to make the project informative and comprehensive.

INDEX
S.NO
1. 2

TABLE OF CONTENTS
INTRODUCTION LITERATURE REVIEW 2.1) Characteristics of Leather Industry 2.2) History 2.3 ) Export Performance 2.4) Slaughter Houses in India 2.5) Confederation of Indian Industry SME Cluster project 2.6) Leather Industry Networking 2.7) Competitive Advantage of Leather industry 2.8) Leather Technology 2.9) Export Potential 2.10) Economic, Social and Environmental Issues 2.11) SWOT Analysis 2.12) Strategies for Indian Leather Sector 2.13) Institutions for Leather Industry Development 2.14) Leather Industry in 11th 5-Year Plan 2.15) Governments Role and Policy Intervention

PG. NO
5 6 7,8 9,10,11 12 13-16 17,18 19-21 22 23,24 25-28 29 30,31 32,33 34-37 38 40-43 44 45 48 55

RESEARCH METHODOLOGY 3.1) Research Methodology 3.2) Hypothesis 3.2) Data Analysis and Findings

4 5

Annexure Bibliography

1. Introduction
The Leather Industry is one of the most prominent sector in the Indian Economy, apart from having a massive potential for employment and growth, it is one the top-8 foreign exchange earners for the country. India is endowed with the largest bovine population in the world and when clubbed with cheap and abundant man-power, it has a comparative advantage in the production of leather and leather goods. The leather and leather products industry is one of the oldest manufacturing industries in India. The post liberalization era has opened up a lot of opportunities for the Indian leather industry.

With global players looking for new sourcing options, India stands to gain a bigger share of the global market. Leading brands from the US and Europe is planning to source leather and leather products from India. The industry employs more than 2.5 million people and was responsible for about US$2.4 billion of exports in 2004-05, much of it to the developed countries. The exports from the leather sector constitute 7% of Indias exports. Besides being a significant earner of foreign exchange, the leather industry generates employment, ensuring jobs for over 2.5 million people, with 75 per cent of the production from small and cottage sectors. The industry has a massive potential for providing more employment, growth, and exports. Recently, the exports of leather and leather products have gained massive momentum.

The exports of Indian leather goods have registered phenomenal growth, mainly because great emphasis has been placed on the planned development of the leather industry and at the optimal utilization of available raw materials. After China and Italy, India ranks at the third place amongst the leather production and export countries. The composition of Indian leather exports has undergone a major change, from being a mere exporter of raw hides and skins, to a status of an exporter of value added leather products.

From 1991-92, India has been exporting only finished leather because of export restriction on semi finished leather. Total leather and leather manufactures exports stood at Rs.10, 286 crores in 2004-05. Indias major export markets for leather are USA, Germany, UK and Spain. The major production centers for leather and leather products are located at Chennai, Ambur, Ranipet, Vaniyambadi, Trichy, Dindigul in Tamil Nadu, Kolkata in West Bengal, Kanpur in Uttar Pradesh, Jalandhar in Punjab, Hyderabad in Andhra Pradesh and Bangalore in Karnataka and Delhi.

2. Literature Review 2.1 Characteristics of the leather sector in India

Employs 2.5 million persons. A large part (nearly 60-65%) of the production is in the Small/Cottage Sector. Annual export value poised to touch about 2 billion US dollars. Amongst top 8 export earners for India. Endowed with 10% of the world raw material and export constitutes about 2% of the world trade. Has enormous potential for future growth. Very high value addition within the country. A source for 10% global leather requirement Annual production value over Rs. 186.56 billion (3.354 billion Euros) Annual export value over Rs. 125.46 billion (2.225 billion Euros) Export growth CAGR (compound annual growth rate) 8.61% (5 years) Promising technology inflow and Foreign Direct Investment

2.2 History of Leather Industry in India

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The concept of leather art came to the human mind when they used to kill animals for their food. Gradually they found the usage of leather with the intention of using leather for clothing .In India, leather industry was headed by the "Mochis" who by processing dead animals would take the skin of the animals for tanning. Mainly people from the rural parts of India are engaged in the ancestral craft of leather art, designing and manufacturing. The trade of leather tanning was inaugurated in the distant past and developed in India by the period around 3000B.C. Leather and the leather industry have been around a long while - there are those who claim it is the second oldest profession in the world. Going back a few millennia, when the earliest ancestors decided that sitting on hard rock wasn't a soft option, they turned to other materials to create more comfortable seating, as well as warmer bedding and some more acceptable form of clothing to go out in. Animal skins became the fabric of choice and, at some time or another, they discovered that various treatments applied to the raw hides and skins helped to stop the destruction, through bacterial action, of the by-product of their food supply. The reputation of the leather industry across the centuries could be described as one of tolerated usefulness, with a wonderful end product. As the industry enters the 21st Century, it is now recognized as a major industry of great economic importance on an international scale. Yet there are those who still wish to tar it with a negative brush, unwilling to recognize it as a modern, even high tech, sector. Leather has played an important role in the development of civilization. From prehistoric times man has used the skins of animals to satisfy his basic needs. He has used hides to make clothing, shelter, carpets and even decorative attire. To the Egyptian lady, a fur piece was highly prized as her jewellery. From leather, manmade footwear, belts, clothing, containers for liquids, boats and even armor. The principle protective armor of the Roman soldier was a heavy leather shirt. In recorded history, pieces of leather dating from 1300 B.C. have been found IN Egypt. Primitive societies in Europe, Asia and North America all developed the technique of turning skins into leather goods independently of one another. The Greeks were using leather garments in the age of the Homeric heroes (about 1200 B.C.), and the use of leather later spread throughout the Roman Empire. During the middle Ages, the Chinese knew the art of making leather. The Indians of North America also had developed great skills in leather work before the arrival of Westerners. At some time, by accident or by trial and error, man discovered methods of preserving and softening leather treating animal skins with such things as smoke, grease and bark extracts. The art of tanning leather using the bark of trees probably originated among the Hebrews. In primitive societies, the art was a closely guarded secret passed down from father to son. As civilization developed in Europe, tanners and leather workers united in the trade guilds of the middle Ages, as did the craftsmen in other fields. Royal charters or licenses were issued permitting people to practice leather tanning. In the nineteenth century, vegetable tanning, i.e., tanning using the extracts from the bark of certain kinds of trees, was supplemented by chrome

tanning. This process uses chemicals and today accounts for about eighty to ninety percent of all tanning done except for the leather used in the soles of shoes and tooling leathers. Leather was one of the first manufactured materials, and the leather technologist can claim to be a member of an ancient profession. The output and quality of leather has steadily increased and improved for at least the last 3,000 years. Although the leather industry has a long history, the pace of change has been rapid in the twentieth century, an accelerating in the last decade. The time required to process raw hide or skin to finished leather has decreased from over a year to a matter of days. Quality, variety and consistency of product have improved in response to customer demand. While remembering its craft past, the leather is now firmly established as a technology based on scientific principles. From the early 1900s, the scope and depth of knowledge of protein chemistry and of the other natural and synthetic products used in leather manufacture have advanced at an accelerating pace. The leather technologist has become familiar with a wide range of pure and applied sciences, and with the constitution and properties of many types of material. Understanding the reactions and processes occurring during leather manufacture involves a fascinating blend of strict disciplines of the pure sciences with the practicalities of the continuous batch production of a material whose aesthetic appeal must be maintained, whilst creating its utilitarian properties. The pure sciences involved are chemistry, physics, biochemistry and microbiology, polymer sciences, statistics, computing and management. The Central Leather Research Institute, which is considered as the World's largest Leather Research Institute was founded on 24 April, 1948. CLRI made an initiative with foresight to link technology system with both academy and industry. CLRI, today, is a central hub in Indian leather sector with direct roles in education, research, training, testing, designing, forecasting, planning, social empowerment and leading in science and technology relating to leather.

2.3 Export Performance of Leather Industry

The exports of leather and leather products increased by over 10.5% during the 1990s. The exports in 2000-01 estimated at over Rs 90 billion registered a jump of nearly 30%. The share of raw hides and skins and semi-processed leather in total leather exports, which was as high as 90% in 1960-61, has now disappeared totally. While the semi-finished leather disappeared from the scene, the expansion in exports was spread over all product categories finished leather, leather footwear, foot-wear components, leather garments and other leather goods. The most phenomenal growth was witnessed in leather garments. Exports of leather and leather products have increased manifold over the past decades, and reached USD 2.38 billion in 2004-05. The composition of the export has also been transformed with finished leather products constituting around 80% of the total leather exports, as against just 7% in 1956-57. Export of leather and leather products from India expanded by 6.4% to Rs 120 billion during 2005-2006 from (Rs 112 billion in 2004-05). The expansion of exports was about 8% in dollar terms at USD 2.69 billion in 2005-06 from USD 2.49 billion in 2004-05. The export of leather footwear expanded by 17.9% to Rs 34 billion from Rs 29.5 billion, while leather goods exports saw a growth of 9.20% to Rs 28.7 billion from Rs 26.31 billion. Leather and leather products exports from the country stood were at over Rs 140 billion in 2007-08. Of this, footwear and their components is the largest constituent with nearly a 43% share. The year 2008-09 is expected to register exports of around Rs 165 bn. The relative large markets for Indian leather products include Germany, USA, Italy, UK, Hong Kong and France. The Indian leather industry is targeting over USD 7 billion in exports by 2010 and is expected to add about a million direct and indirect jobs during this period. India has done well in the export of leather garments. India's share in global trade in garments increased from nearly 6.5% in 2002 to over 8.25% in 2006. In 2007-08 these were of the order of USD 344 million, up 11% on 200607 exports. These were expected to record a growth of around 7.5% in 2008-09 to USD 370 million. The non-tariff barriers in the form of technical specifications on product quality are fast emerging as a new threat to the Indian leather industry. Unrealistic and, at times, unscientific specifications are being imposed by industrial countries. Exports of leather footwear are expected to see the maximum growth from the current a billion dollars to USD 4 billion by 2011. Exports of leather goods, leather garments and finished leather is expected to grow from USD 650 million, USD 320 million and USD 600 million respectively to USD 1 billion, USD 400 million and 900 million over the same period. In order to promote the leather footwear industry the Council for Leather Exports (CLE) decided to set up footwear design centers in Agra and Kanpur. The major markets for Indian leather products are the USA, Germany, the UK, Italy, France, Spain and the Netherlands, accounting for almost 70% of total exports. Of these markets, USA is currently the prime target as it is the single largest importer of leather products valued at USD 21.15 bn. As per officially notified DGCI& S monthly export data, the export of leather and leather products for the period April-January 2010-11 touched US$ 3106.73 million against the performance of US$ 2795.48 million in the corresponding period of last year, registering a positive growth of 11.13%. In rupee terms, the
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export touched Rs.141767.40 million in April-January 2010-11 against the previous years performance of Rs.133482.85 million registering a positive growth of 6.21%. The major markets for Indian leather products are Germany with a share of 14.17%, UK 12.79%, Italy 11.57%, USA 8.86%, Hong Kong 8.47%, France 7.00%, Spain 6.21%, Netherlands 3.90%, Belgium 2.02%, U.A.E.1.93%, Australia 1.28%. These 11 countries together accounts for nearly 78.20% of Indias total leather products export. Like other product segments, Indian leather sector also witnessed the adverse impact of global economic recession during the last 18 months. The provisional overall export figures during the period 2009-2010 (April-March) touched Rs. 156283 million, registering a decline of about 3.85% as compared to the export figures for 2008-09 (April-March). The industry is having sufficient orders in their hands and they are fully confident to achieve or even surpass the export targets. The ongoing phenomenon of rupee appreciation is going to affect the growth of industry very badly. It is observed that at present exporters are paying the transaction cost ranging between 7% and 10% at various levels, which is affecting their price competitiveness in the international markets significantly. Any reduction in the transaction cost will not only benefit the export business but the domestic industry will also be benefited out of it. The major areas where transaction costs affecting the leather industry are delay in clearance of import/export consignments, shortage of space in the ICDs for storing the export / import consignments, shortage of customs officials, error / failure of EDI system at various ports, repetitive requirements in submission of documents to various Govt. Departments, non availability of wild life officials on all working days at various ports /ICDs, etc. The Design Capabilities is an area where Indian Exporters are losing amongst the major competing countries. Appropriate steps should be taken to set-up design studios at major industry clusters with the funding support of Govt. of India. Likewise, services of well known foreign designers should be made available to the industry for improving their designing capabilities in order to compete in the international market at subsidized cost. The main leather exporters are:
1. Tata International Ltd. 2. Florind Shoes Ltd. 3. Punihani International 4. Farida Shoes Ltd. 5. Mirza Tanners Ltd. 6. T. Abdul Wahid & Company 7. Hindustan Lever Ltd. 8. Super House Leather Ltd. 9. RSL Industries Ltd. 10. Presidency Kid Leather Ltd. 10

The Council of Leather Exports (CLE) undertakes various export promotion and market developmental activities under Market Development Assistance (MDA) scheme and Market Access Initiative Scheme (MAIS) of the Department of Commerce, Ministry of Commerce and Industry, Government of India. Keeping in view the current export performance of leather sector and the signs of revival of international markets from the impact of global economic crisis, continuation of core export promotion activities assumes greater significance, with the view to sustain the exports in the existing markets as well as venture into some new Non European and Non American markets. With this broad objectives the Council, as in the past, proposes to undertake the following code and other activities in overseas countries under MDA scheme during 2010 2011. International Fairs Buyer Seller Meets Focus Country Programmes Major Leather Centres in India Southern Region Tamil Nadu: Chennai, Ambur, Ranipet, Vaniyambadi, Trichy and Dindigul Andhra Pradesh: Hyderabad Karnataka: Bangalore Northern Region Punjab: Jallandhar Delhi: Delhi Eastern Region West Bengal: Kolkata Central Region Uttar Pradesh: Kanpur and Agra Western Region Maharashtra: Mumbai

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2.4 Slaughter houses in India

There are 2702 slaughterhouses in the country, which are recognized or authorized by local bodies. In addition a considerable number of animals are slaughtered in unauthorized places. A rough estimate indicates up to 50 percent of animals slaughtered in any urban center are from unauthorized slaughter. Over the years, the facilities and hygienic conditions in most of the slaughterhouses have deteriorated. Compared to 1951, livestock population increased by about 62 percent and human population increased by 134 percent but the number of authorized slaughterhouses have not increased to meet the demand for meat production. The increased demand for meat is met either through overcrowding operations in the existing slaughterhouses operating at much higher capacity than feasible in the facilities or through unauthorized slaughter at many places. In both these situations not only meat hygiene is a casualty, increased pollution and adverse public reactions are observed. The existing slaughterhouse capacity in the country is unable to meet the growing public demand for clean and hygienic meat. This can be achieved by improving existing slaughterhouses to accommodate higher capacities and creating new slaughterhouses with modern facilities.

Major source of cattle for slaughterhouses Several head of cattle are reportedly being transported from Karnataka to slaughterhouses in Andhra Pradesh, Maharashtra and Kerala. It is estimated that more than three million cattle head are being transported out of the State annually. It is said that Karnataka has emerged as a major source of cattle for slaughterhouses as they are available at cheaper rates. The demand for beef in Kerala is said to be one of the reasons for the transportation of a large number of cattle to slaughterhouses there. While the domestic consumption in that State is said to be around two lakhs tonnes, the slaughterhouses also cater to the international market. Though Kerala has a high count of cattle, some experts say these cannot be sent to slaughterhouses as they are expensive hybrid cattle.

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2.5 Confederation of Indian Industry SME Cluster project for leather

In order to enhance the internal competitiveness of the small and medium enterprises (SMEs) a dominant and fast growing segment of the Indian economy - the Confederation of Indian Industry (CII), Southern Region is extending its unique SME Cluster initiative to Hyderabad, Madurai, Chennai, Pondicherry and Coimbatore. Encouraged by the successful CII Ambattur Industrial Estate Manufactures Association (AIEMA) SME Cluster Model, CII will be launching three new SME Clusters in the southern region states. CII formally launched the SME Leather Cluster in Chennai on March 20, 2006, coinciding with the Tamil Nadu Annual Day. The Leather Cluster will comprise 10-12 industries in the leather sector from Ambur, Ranipet and Chennai. Formed by voluntarily coming together of a group of 10-12 companies to work towards a focused goal, CII clusters represent specific industrial sector, a particular geographical location or a group of companies that are vendors to an original equipment manufacturer (OEM). The SME Cluster members will be hand-held for a specific period of 12 or 18 months and will be offered services by the CII Centres of Excellence to enhance their internal competitiveness in the areas of manufacturing excellence, energy management and total cost management.

Leather Park
Under the leather park package, Chennai is going to have two parks one for footwear and the other for components. An exclusive park for tanneries is also coming up at Nellore, a leather goods park within the upcoming Calcutta Leather Complex in Kolkata and another component park in Agra. The leather goods park project of Indian Leather Products Association (ILPA), coming up on approximately 60 acres of land inside the Calcutta Leather Complex (CLC) at Bantala in east Kolkata, is expected to be completed by 2008-09. The facility will put Kolkata on the international leather goods buyers' map. Ten leather product manufacturing companies, including Liberty Shoes and Irving Leather Company of the US besides a couple of Chinese companies, are keen to set up units in the leather park proposed to be set up in Nellore district.

Scope of tanneries in India

The Indian market has been fragmented with about 2200 tanneries of which 2100 are small scale units and over 8000 leather product manufacturing units. The tanning industry is concentrated in three states viz. Tamil Nadu, West Bengal and Uttar Pradesh. Of the total number of tanneries in India, Tamil Nadu accounts for 52%, West Bengal 23% and U.P 12%. The other important states are Maharashtra, Andhra Pradesh and Punjab. Looking from the angle of scale of operations, the tanning industry largely exists in the small-scale sector with a share of 93% in the total number of tanneries in the organized sector.

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Tamil Nadu Tamil Nadu has a dominant presence in the leather and leather based industries. The tanning industry in India has a total installed capacity of 225 million pieces of hide and skins of which Tamil Nadu alone contributes to an inspiring 70%. Leather industry occupies a pride of place in the industrial map of Tamil Nadu. Tamil Nadu enjoys a leading position with 40% share in Indias export. It currently employs about 2.5 million persons Leather exports by the end of the year 2000-2001 were Rs. 9000 crores. This translates into exports worth nearly Rs. 102.6 billion (1.844 Billion Euros) from Tamil Nadu - given the major share it has traditionally enjoyed. Govt. of Tamil Nadu offers a special capital subsidy to further encourage the leather industry. TALCOa state govt. organization is setting common effluent treatment plants in leather industry clusters. A recent study by the National Council of Applied Economic Research (NCAER) made a comparison of the incentive packages of all Indian States which reveals that Tamil Nadu offers the most attractive package among industrialized States of India. Tamil Nadu ranks II at the all India level in terms of attractiveness of incentives.

West Bengal West Bengal is one of the country's top states for export of finished leather goods. 70% of the country's leather goods are exported from West Bengal. Bata India Limited is India's largest manufacturer and marketer of footwear products. Bata India sells 60 million pairs of footwear products per year throughout India and in overseas markets such as USA, UK, Europe, Middle East and Far East. Its registered office is at S.N.Banerjee Road, Kolkata. It has 5 plants near Kolkata. Main plant is located in Batanagar near Kolkata. Bata India secures its leather supply from two tanneries in Mokamehghat (Bihar) and Batanagar (West Bengal). The number of manufacturing industries engaged in leather products is 538. West Bengal Leather Industrial Development Corporation provides market facilities for the leather products manufactured by small scale industries located in the state. The export market for leather products is very high for good quality leather footwear's and leather crafts and articles. The exports are mainly to European countries as Germany, Italy, UK, France etc. Uttar Pradesh U.P. is one of the most important states in India holding sizeable population of live stock. Claiming a share of 22% U.P. ranks Ist in case of Buffalo and IInd in case of Cattle having a share of 12%. With regards to Goat and Sheep it has IVth and VIIth position respectively. Thus, U.P. has a very strong raw material base and all types of main raw material for leather industry are available. Major production centers and Number of leather and leather products industries in U.P. are to the tune of approx. 11500 of which Kanpur and Agra are the two famous production centres in the world. Kanpur is a prominent centre for leather processing. About 200 tanneries are located in Kanpur. Kanpur tanneries specialize in processing hides into heavy leather (Sole, harness and Industrial leather). This is the only centre in India where saddlery products are manufactured. Agra has been the biggest centre for shoe-manufacturing in the country. Apart from these traditional centers for leather and leather products manufacturing in U.P., NOIDA has recently emerged as another major centre especially for leather footwear and leather garments. NOIDA provides very good infrastructural facilities and establishment of FDDI in NOIDA is expected to promote more footwear. Meerut is another centre for production of sports goods.
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Small & Cottage industries

It is apparent that the small-scale sector accounts for large processing capacity ranging from 70% to 87% for different leathers. In view of widespread modernization and mechanization of the tanning industry, the role of the cottage sector is fast declining. It is unable to complete with the fast-growing organized sector. The Tanning industry in India is well developed. It has back up of a strong R&D base, modern technology as well as trained manpower. The unique aspect is that it turns out best possible quality leathers from relatively low quality hides. India annually produces around 1800 million sq. ft. of leather which accounts for 11% of global production. Goat and buffalo based leathers are Indias major strength. The main products made out of leather are footwear, leather garments, leather goods such as handbags, belts, wallets, gloves, sport goods, harness and saddlery, upholstery, etc. Of all these items, it is footwear that consumes about 60% of the total leather production. The manufacture and export of leather products is systematically promoted, as their value addition is 4 to 5 times that of raw materials. The industry has a large tanning capacity per day but it utilizes only 60-70% of its installed capacity. The turnover of the tanning of the tanning industry is estimated at Rs.8000-9000 crores (182.35-205.15 crores Euros) for the year 1999-2000. The industry produces about 2 billion sq.ft of finished leather of which only 10-15% valued at Rs. 10543.2 Million (240.32 Million Euro) is exported. The problem relating to effective discharges of effluents which is a WTO compulsion is increasingly threatening the small and medium scale tanneries all over the country. The tanning industry is heavily dependent on indigenous raw hides and skins for its supply of raw materials which is very fragmented. Imports are low despite exemption from customs duties due to high import prices (3-4 times higher) and absence of appropriate machinery to process the imported hides and skins. As international pressures to supply good quality leather products mount, the leather manufacturers would have to increase the use of imported hides and skins to improve the image of Indian Leather and Leather products. In the Indian tanning sector, the tiny units primarily engage in producing semi-finished leather, the small units engage in producing both semi-finished leather and finished leather and the large units are usually fully integrated units.

Indian Footwear Industry

There are nearly 4000 units engaged in manufacturing footwear in India. The industry is dominated by small scale units with the total production of 55%. The total turnover of the footwear industry including leather and non-leather footwear is estimated at Rs.8500-9500 crores (Euro 551.3-1723.1 Million) including Rs.1200-1400 crores (Euro 217.6-253.9 Million) in the household segment. India's share in global leather footwear imports is around 1.4% Major Competitors in the export market for leather footwear are China (14%), Spain (6%) and Italy (21%). The footwear industry exist both in the traditional and modern sector. While the traditional sector is spread throughout the country with pockets of concentration catering largely to the domestic market, the modern sector is largely confined to select centres like Chennai,
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Ambur, Ranipet, Agra, Kanpur and Delhi with most of their production for export. Assembly line production is organized, and about 90% of the workforces in the mechanized sector in South India consist of women. In fact, this sector has opened up plenty of employment opportunities for women who have no previous experience. They are trained to perform a particular function in the factory itself. Leather Garments Industry in India The second most important product made out of leather is leather garments. Modern factories have been established in the small-scale during the last decade, mostly in the vicinity of urban areas of Chennai, Bangalore, Delhi and Hyderabad. The leather garment is relatively high leather intensive commodity. Garments and Goods, these segments are essentially dominated by the small scale sector with Large Scale Industries (LSIs) having a very negligible share of less than 3% in garments. Due to increased export demand, the capacity for the leather garment industry has been rising and is presently 18 million pieces per annum. Production is placed at 12 million pieces per annum with capacity utilization at 60-75% with an aggregate turnover of Rs.2200 crores (399.05 million Euros). The share of leather garments in total exports of leather and leather products has been rising and is presently around 24%, having grown at CAGR of 9%, since 1995-96 to reach Rs. 2104 crores (503.8 Million Euros) in 2000-01. India's import in world import garments is around 11%. Our main competitors are China, Italy and Turkey.

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2.6 Leather Industry Network

An ideal leather industry network would comprise of the following: Livestock (Cattle, Buffalo, Goat) Slaughter houses Raw Hide/Skin Collection Tanning Industry Leather Industry Other Allied Industries Export Market The other small industries that can co-exist within this network are the glue and manure manufacturing industries that utilize the bones and discarded organs of the slaughtered animals respectively. Besides, operating in close co-operation with the slaughter houses are corporations that have built their services and products around the meat-consuming market - processors of meat into various forms of fast food, processed meat transporters, deep freezer manufacturers, cattle feed 'enhancers', drug manufacturers who sell 'meat growth hormones' and antibiotics for cattle and even agribusiness' banks that will give loans only for cattle 'producing'. Not to forget the fast-growing biotech industry. Other value added product manufacturing industries like Meat-cum-Bone Meal (MBM), Tallow, Bone Chips, Pet Foods and Methane as a source of energy can also exists close to the slaughter houses. Thus the leather industry network appears to offer numerous possibilities for the establishment of other small enterprises.

Status of Livestock in India

India is the leading livestock holding country in the world. It ranks first in the case of cattle (including buffaloes), second in goats and fourth in the case of sheep. India has a predominant share of buffaloes. While buffaloes and goats have recorded annual growth rates of 1.86% and 3.11% respectively, cattle and sheep have recorded a marginal growth rate of 0.52%. Hides and skins are the basic raw materials. Trends in the livestock population and its management; rate of mortality of animals and meat consumption pattern greatly influence the availability of hides and skins. Cattles, buffaloes, goats and sheeps are the major sources of hides and skins. The other sources are pigs, horses, camels and wild animals such as crocodiles, snakes, foxes, etc. However, processing and use of wild animal skins is prohibited due to ecological reasons.

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Hide and Skin Quality

Raw material quality is a prime concern of tanners the world over. The tanning industry and the downstream industries which it supplies - footwear, furniture, automotive, clothing, leather goods, saddlery - are entirely dependent for their raw material on supplies of cattle hides and sheep skins, plus a small number of goat and other skins. While supplies and quality of hides and skins are vital to the tanning industry, they are just by-products for the meat, dairy or wool industries. For the tanner, the raw hides and skins represent 50-60% of the cost of producing a piece of leather. In order for many companies in the leather industry to be competitive, they specialize in producing particular types of leather - for example high quality and high performance leathers. However the potential benefits can only be fully realized when the hides and skins available to the industry reach a consistent quality, allowing tanners to buy with confidence that the material will be suitable for the manufacture of leather to meet their target markets. The quality of leather that the tanner can produce is determined primarily by the quality of the raw hides that he buys. But the quality of the hides cannot be fully assessed until after the hair or wool has been removed, and after the completion of the tanning process when the hide has been turned into leather. The value of the hide depends on the end use to which the leather goes. This eventually has to be reflected in what the tanner pays for his raw material. The quality of the hide or skin is to a large extent related to the amount of damage to the grain (or "outside") surface. The damage may be due to skin parasites that affect the live animal, related scratch, husbandry practices on the farm or in transport of the live animal (scratches, bruising, or dirt contamination); it may be due to damage during slaughter or removal of the hide; or it may be caused by inappropriate handling or inadequate preservation techniques. Most types of damage can be reduced or avoided altogether by better management of the animal or the hide. IHATIS the International Hide and Allied Trades Improvement Society is the international organization that specializes in the improvement of hides and skin quality. As part of a project funded by the European Commission, a network was developed of researchers into improvement in the quality of hides and skins under the FAIR project. Areas identified for further research and development are a need for further investigation into the operating methods of delivering clean animals to the abattoir without damaging the hide or skin, optimum methods of minimizing parasite damage to hides and skins, practical and economic methods of identifying hides and skins through the chain from farmer to tannery here quality can be fully assessed, and development and evaluation of quality improvement systems, in order to provide some incentive to farmers and/or abattoirs to reflect much more directly the quality and value of the hide in the price.

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2.7 Competitive Advantages of Leather Industry

The leather industry can benefit from several characteristics of the Indian Market and the corresponding advantages they offer. Some of these advantages are: 1. Supply side advantages Availability of low cost skilled labor Abundance of raw material Availability of supporting institutions 2. Demand side advantages Large and growing domestic market 3. Regulatory / policy related advantages Government Regulation Government Support Licensing Policy

Supply Side Advantages Availability of low cost skilled labor Indias advantage as a source of low cost, skilled labor is quite relevant to industries such as manufacturing of leather goods and footwear that are manufacturing of leather goods and footwear which are relatively labor intensive. India has among the lowest cost of labor among key footwear producing countries. In India to low costs, India also has the worlds largest technically trained manpower in leather craft. The twin advantages of low cost and technical skills offer India distinct competitive advantages of low cost and technical skills offer India a distinct competitive advantage in this industry. Availability of Raw Materials India is the largest livestock holding country with 21 percent of the large animals and 11 percent of small animals in the world. The large population of cattle, buffaloes, goat and sheep that the country possesses ensures that India has ten percent of the worlds raw material base. IN addition, some of the leather available in India is premium quality and much sought after. Availability of Supporting Institutions India has institutions that support the leather industry in specific areas such as product development, design and R & D. These institutions enable capability building in the industry and help it become globally competitive. a) Product development/ design

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A design development centre for leather and leather accessories is underway under the joint efforts of the council for Leather Exports and the National Institute of Fashion Technology (NIFT). The design development centre functions from the NIFT campus in New Delhi. b) Research and Development Capabilities The Central Leather Research Institute (CLRI) is the worlds largest leather Research Institute. CLRI today, is a central hub in Indian leather sector with direct roles in education, research, training, testing, designing, forecasting, planning, social empowerment and leading in science and technology relating to leather. State-of-art facilities in CLRI support innovation in leather processing, creative designing of leather products and development of novel environmental technologies for leather sector. Demand side advantages Large Domestic Market India has a large and growing consuming class (with an annual income of Rs. 20941.36 [376.50 Euro] or above), that constitutes the largest segment of the population today. This segment is estimated to constitute nearly 90 million households by 2006-07, up from just 32.5 million households in 1997-98 a CAGR of over 12 percent. Coupled with relatively lower penetration levels penetration levels for footwear has been estimated to be about 60 percent this represents a large and growing market for leather goods. Regulatory / policy related advantages Government Regulation & Support The Government of India has announced various initiatives to make the leather more competitive. Key Policy initiatives include: De-licensing of integrated tanneries that convert raw hides and skins into finished leather. Several leather goods have been de-reserved from the small Scale Sector. Free import of raw hides & skins, semi-finished and finished leather. Concessional duty on imported machinery and chemicals. Free export of raw hides & skins, semi-finished and finished leather and leather products.

Policies to facilitate modernization / up gradation: In June 2005 the government initiated a Rs. 2788.45 million (50.82 Million Euros) modernizing scheme called the Integrated Leather Development Programme, whereby all leather tanning and product units will be eligible for modernization assistance. The assistance will be to the extent of 30% of project cost for Small scale industry (SSI) units and 20% for non-SSI units, subject to ceiling of Rs. 4792 thousand per unit (87.36 thousand Euro per unit). _ Setting up of leather parks: An outlay of Rs. 4792.7 million (87.36 Million Euro) for setting up five leather parks two in Chennai and one each in Nellore, Agra and Kolkata. 12 the Council for Leather Exports has estimated that this scheme will generate a total investment of Rs. 11633.1 million (2120.05 Million Euros) in about three years. Establishment of design-centres at individual manufacturing units, to facilitate improvement in design capabilities: Under this scheme, 25 % of the project cost is provided to

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the units under the market access initiative scheme of the Ministry Of Commerce and Industry. Several individual units have come forward to establish their own design centres. Government Support With an eye on the potential of the sector, the Indian Government has placed an emphasis on the Utilization of the available raw materials to maximize returns. It has introduced a number of initiatives, with the special emphasis on integrated development of the tanning sector. These have included raw material augmentation, technology upgrade, and promotion of environmental cleaner processing options, quality standardization and human skills development. To encourage training of unorganized artisan workers, the Government has given support to well equipped training institutions to encourage training programmes to be given jointly with reputed foreign enterprises and experts. Licensing Policy After de-reservation of 11 items in leather sector, which include semi-finished hides and skins, leather shoes, leather washers and laces, molded rubber soles and heels for footwear, flexible polyurethane foam, polyurethane shoes soles, show-tacks & eyelets and leather pickers and other leather accessories for textile industry, vide Notification No SO 603(E) dated 29th June, 2001, no industrial license is required for manufacture of most of the items of the leather industry. However, the location of industrial projects will be subject to Central or State environmental laws and regulations including local zoning and land use laws and regulations. Industrial undertakings desiring to set up industrial undertakings for manufacture of these items have to only file an Industrial Entrepreneurs' Memorandum (IEM), in the prescribed format, with requisite fees to Secretariat for Industrial Assistance in the Department of Industrial Policy & Promotion, Government of India, Udyog Bhawan, New Delhi-110011. Some of the items of the Leather industry viz. leather shoe uppers (closed), leather sandals and chappals, leather garments, industrial leather gloves, leather suitcase and travel goods, leather purses and hand bag, fancy leather goods and novelty items, watch straps and leather straps of all types are still reserved for exclusive manufacture by the small scale sector. Small scale sector units are defined in terms of investment in plant and machinery. Non-small scale units can manufacture these items after obtaining industrial license, which is granted subject to an export obligation of 50 percent production in each year.

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2.8 Leather Technology

The making of leather is an age-old process. Tanner converts the raw hides and skins of animals into leather. As its simplest, leather is hide or skin which has been treated so that it will not decay, and will last for hundreds of years. Every hide and skin is unique and varies not only from species to species, but even between individual animals. To this natural difference of grain pattern, stretching properties and strength, further features are added which tanners can tailor during processing, such as Color and softness. The complexity of leather manufacturing becomes apparent. Leather is turned into a wide variety of articles footwear, clothing; bookbinding, gloves, saddles, harness, belts, wallets, luggage, bags, gas meter diaphragms, driving belts, gaskets, hydraulic seals used in aircraft, rocket and underwater craft, upholstery including automobiles, sports goods and many others. Tanners keep the end use very much mind, and since many of the uses are subject to fashion, such features as eye appeal, color, texture and drape, while difficult to quality, are essential to success. Using modern techniques of production engineering, tanners must retain the individuality of each skin and, without losing its appeal, produce leather to a degree of uniformity required by customers. Although the leather industry has a long history, the pace of change has been rapid in the twentieth century, and accelerating in the last decade. The time required to process rawhide or skin to finished leather has decreased from over a year to a matter of days. Quality, variety and consistency of products have improved in response to customer demand. While remembering its craft past, the leather industry is now firmly established as a technology based in scientific principles. From the early 1900, the scope and depth of knowledge of protein chemistry and of the other natural and synthetic products used in leather manufacture have advanced at an accelerating pace. The Leather Technologies has become familiar with a wide range of pure and applied science, and with the constitution and properties of many types of material. To produce high quality leather, entrepreneur must understand the nature of the materials used, the way in which they react, the means of controlling the reactivity, and the methods of testing and analyzing the finished product. With this knowledge as a basis, tanners must become familiar with all the practical tanning processes and machinery operation that are necessary to prepare the skins for tanning, the tanning process itself and the many subsequent operations which determine thickness, softness, texture & Color of leather. Biotechnology for Leather: Towards a Cleaner Processing World over leather is made employing technologies which involve processing of skin or hide using large amounts of industrial chemicals and a wide variety of specialty chemical formulations. A large number of the processes involve do-undo operations resulting in severe environmental pollution. The world is compelled to follow this highly polluting Chemical Route in absence of any alternative. This was a great challenge before the scientific community. Under the New Millennium Indian Technology Leadership Initiative (NMITLI) programme, a paradigm shift has been brought about in beam house operations in leather manufacture through bioprocessing as opposed to the currently used chemical processes. World-class leads have been obtained for an environmentally friendly bioprocessing route for ambient preservation of skin/hide, enzyme only dehairing and defleshing. Specific technology packages for the above are being developed with the user industry for commercialization. The development is poised to change globally, the face of a highly polluting industry forever.
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2.9 Export Potential in Leather Industry

India is a major exporter of leather and leather products. It accounts for 2 percent of world trade in leather and leather related products and 10 percent of leather raw material available in the world. Leather exports account for 7 percent of Indias export basket. US and some European countries together account for 80 percent of Indias leather products exports. New market being developed includes South Africa, Australia, New Zealand, Canada, Japan, Spain, Portugal, and Saudi Arabia.

The notable feature of our export performance is the change that has taken place in the export pattern in favor of high value added items, a development in consonance with the export policy. In the 1960s, exports were more in the form of raw materials. In the early 1980s exports were in the form of finished leathers.

And, in the 1990s and beyond the target is in favor of fully fabricated products. Five types of leather products exported from India are Leather Footwear, Footwear Components (Shoe Upper, Soles, etc.), Leather Garments, Leather Goods (including Harness & Saddlery, Leather Gloves, etc.) & Finished Leather. The major customers for Indias export are Germany, USA, Italy, UK, Spain and France.

In recent year, Hong Kong has emerged as a large importer of leather. Around 70% of the global imports of leather products are accounted for by Western Europe and North America. USA is the largest importer of all kinds of leather products, accounting for about 25% of the global trade. Germany is the second largest importer of leather products in the world. Italy, Portugal, Spain, Czechoslovakia and Romania are potential competitors from the European region.

Though these countries enjoy the advantages of easy access to the West European market, rising labor costs is the limiting factor. However, the former East European countries are trying to consolidate their position slowly. Their unfamiliarity with the market mechanism is their major drawback. In the Asian region, countries like South Korea and Taiwan are still continuing their activity, but in a different style.

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In view of the high labor costs, they are relocating their production bases and Consolidating their hold on the market. The real competitors for India are China, Indonesia, Turkey and Thailand. These countries enjoy favorable labor costs and congenial industrial and Investment climate, though they may not have significant raw material base of their own.

However, current global trade favors import of hide and skins, and their processing in any part of the world. Countries like Bangladesh, Sri Lanka, Nepal and a few African countries may be future competitors for India. They have consolidated their gain in the tanning sector, and are slowly penetrating the products market. The global market for leather products is estimated at Rs. 2781.4 bn (50.45 Billion Euro).

Of the various items, the market for upholstery is growing fast, while the market for leather goods is likely to remain stable. According to the statistics available from the Council for Leather Exports (CLE), export of footwear, both leather and non-leather, has made a significant growth in recent times but the export of leather garment has declined.

Exports of leather and leather products have increased by 13.02 percent in rupee terms and 7.42 percent in dollar terms during the first half of 2006-2007.

Exports jumped to Rs 6,844.63 crores (1190.78 million Euros) during April-September 2006, from Rs 6,056.25 crores (1053.62 million euro) in the previous fiscal year. Leather footwear exports were up to Rs 2,075.85 crores (361.14 million Euros) from Rs 1656.72 crores (288.22 million Euros). CLE expects exports to cross Rs. 137.76 billion (2.39 Billion Euros) mark in 2006-07. The target for 2010-11 is Rs. 321.44 billion (5.592 Billion Euros).

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2.10 Economic Issues

In the overall food chain, the positive economic importance of the industry taking care of one of its major waste products should not be underestimated or marginalized. As the tanning industry is sometimes criticized on environmental grounds, ponder the alternative hazard of millions of dumped, putrefying hides and skins. Whoever it was who first thought of preserving hides and skins did mankind a tremendous service. The leather industry in total produces about 18 billion square feet of leather a year, and the total value of this is estimated at about Rs. 176 billion (32.03 Billion Euros). If the by-product of the meat industry, hides and skins, was not used to produce this quantity of leather, then, for example, shoes and upholstery would be manufactured from alternative, non-renewable raw materials such as plastics and other petrochemical based products. Developing countries now produce over 60% of the world's leather, and this proportion is growing. About 65% of the world production of leather is estimated to go into leather footwear and the global production of footwear is estimated at around 11 billion pairs (worth estimated Rs. 6622.5 billion [120.12 Billion Euro] at wholesale prices). The value of leather products at retail level would be commensurately higher - and the value of products containing leather, if one counts automobiles and aircraft, would be substantially greater than a straight proportion of the footwear value. The value of leather produced for the automotive industry has been calculated at Rs. 59602.5 Million (1081.12 million Euros) internationally.
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Social issues
Employment to the people: Indias leather industry employs 1.7 million people and helps the socially-disadvantaged, known as Scheduled Castes in officials, earn a livelihood. And even though India has a cattle population of 195 million the worlds largest cows provide only 10.8 percent of hides. The rest are derived from goat and sheep. The fear is that the campaign against Indian leather will embrace these animals too. The exclusion of disadvantaged social groups from full participation in the opportunities of society lies central to the existence of child labor in slaughter House and allied activities, as there is a substantial concentration of certain religious and caste groups Child Labor: The Leather Industry is Labor intensive and is concentrated in the small and cottage industry sectors. While leather shoes and uppers are concentrated in large scale units, the sandals and chappals are produced in the household and cottage sector. The processes in the footwear making include last making, pattern cutting, clicking, sewing Assembling and finishing. There is no gender selectivity in child labor. Adults earn wages that are only marginally higher than what the children earn. Irrespective of the experience, skill and family size and requirements the wage payment system remains insensitive and relatively inelastic. While market forces predominantly govern all other aspects of the industry, the labor is drawn exclusively from the most downtrodden section. As heads of 60 per cent of the households are engaged in leather work, the leather sector study establishes the incidence of child labor in leather flaying as an intergenerational phenomenon. Women Employees: Women are employed in large numbers in Indian leather industry and are making important contribution to the national economy as well as to exports. Women are involved in footwear production in Athani (Karnataka), Rajasthan, Agra (UP) and Chennai, Ambur, Ranipet and Vaniambadi (Tamil Nadu). Their entry into productive work has helped considerably in improving their household situation. With the `take off' of the footwear industry, especially in the last 20 years and the rapid rise of exports, women's employment has increased. The present study and other studies -indicate that, prolonged contact with chemicals used in the leather industry leads to problems such as dermatitis, loss of hair on the head, conjunctivitis ,nervous disorder, itching of skin and throat mucous membrane, chest pain, ulcer, breathing problems, asthma, bronchitis, fissure in fingers, toes, mouth and nose, frequent fever, headache and stomach upsets. Specific gynecological problems faced by women workers are: menstrual disorders; premature death, still births and prolapsed of the uterus.

Environmental issues

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The leather industry has been traditionally considered as a heavy polluting industry in the tanning and finishing stages of the chain. Pesticides, chemicals and organic materials are the main sources of pollution. Chrome is the most dangerous and long-lasting chemical pollutant. Others are sulphides and solvents. Additionally the industry emits protein residues in the form of putrescible organic materials and its disposal is one of the tanners main problems since about 50% of the original hides and skins is not converted to leather and is left as solid waste. Odour: The tropical climate of our country enhances the process of degeneration of any tissue material remaining as waste in the premises of the slaughter houses. Therefore, the slaughter house premises always give a particular stink. In order to avoid this stinking odour proper ventilation of slaughtering halls, washing of the floors with non-poisonous disinfectants and if need be use of aerobic deodorants must be provided at each slaughter house. Tanneries: Tanneries harbor the greatest risk potential for the environment. This is due on the one hand to the considerable odour nuisance and on the other to the dyes and other chemicals (particularly chromium compounds) used in the tanning process which complicate the wastewater treatment operation. And there is also biological pollution. Besides a substantial impairment of the quality of the nearby surface waters, an enrichment of the hazardous substances in the soil, and possibly also in the groundwater must also be expected. Odours in tanneries have various origins. They mainly originate from the putrefaction of hides, skins, trimmings and fleshings, from the release of hydrogen sulphide from sulphides used in processing, and from the use of volatile organic compounds (VOCs). They can also occur in the wastewater treatment both in effluent processing and in sludge de-watering. Effect on Groundwater: Most parts of India are facing anthropogenic groundwater pollution. Such types of pollution are mainly enrichments of various chemical parameters such as nitrate, hardness, metallic trace elements and microbiological organisms. The overexploitation of groundwater in some parts of the country induces water quality degradation. Untreated industrial effluents discharged on the surface cause severe groundwater pollution in the industrial belt of the country. This poses a problem of supply of hazard-free drinking water in the rural parts of the country. Pollution of water resources, both surface and underground, by indiscriminate discharge of spent wastes of chromium-based industries has become a serious global concern, for it has created an acute scarcity of safe drinking water in many countries. Wastes and chemicals released to water system are the main pollution concerns for the leather industry. They are produced during washing, dehairing and tanning of the leather. The washing of skins removes dirt, salt and some organic matter from the raw material. Lime and sulfides are used to dehair the skins. The water discharge from turnover is called Raw Effluent.
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Bio-accumulation of Chrome: The presence of chromium in the effluent is a major concern for the tanning industry. Currently, chemical precipitation methods are practiced for the removal of chromium from the effluent, butt hat leads to the formation of chrome-bearing solid wastes. The other membrane separation and ion exchange methods available are unfeasible due to their cost.

The Environment Measures for Improvement Leather Age July 2010 Edition
Significant steps have been made by the global leather industry with regard to environmental matters. In the manufacturing stages, a high level of quality control ensures that the best use is made of hides and skins and the chemicals required in their conversion into leather. Overall chemical and water use has thus been reduced, reducing the level of waste for treatment. Many new techniques have evolved specifically to reduce pollution before any form of treatment. Specifically JIT techniques and alternative methods of preservation are used to reduce the use of salt for preservation. Biotechnology is employed in process to reduce the levels of chemicals and energy used. There has been a significant move away from non-biodegradable products, and the phasing out of products suspected of causing environmental damage. Pollution is also being reduced by making use of previous wastes as a source of new raw materials. Hair, off-cuts, and other manufacturing wastes are being converted in fertilizers, added value products and energy. Products that were not taken up in processing, such as residual chromium from tanning, are being reprocessed to create new tanning materials. Even waste waters from some sections of manufacture are being recycled and used again within manufacture. The industry is strongly regulated regarding emissions such as waste water, solid wastes and air emissions. Comprehensive effluent treatment systems ensure that waste water discharge limits set by relevant authorities are met. Treated effluents are scrutinized by regulatory authorities, and every tannery needs to meet stringent discharge parameters to both surface waters and sewers. Any solid wastes for landfill from direct manufacture, or from treatment of effluents, are also regulated. Disposal is carefully controlled, with emphasis on alternative uses with gasification techniques and energy generation moving to the fore. Air emissions have also been closely addressed. The use of solvents has plummeted over the last ten years, being replaced by newly developed water based auxiliaries. For degreasing operations, solvents have been replaced by aqueous degreasing technology. Odour, overspray and air borne particles can all be treated by specialized extraction, chemical and biological treatment systems. In Tamil Nadu, all operational tanneries have either their own effluent treatment facility or connection to a common treatment plant. Today, the tanneries of Tamil Nadu are fast moving towards a zero liquid discharge (ZLD) system to meet a regulation of the pollution control Board of the state. Many tanneries and clusters have implemented this and others are expected to do so in the near future. Developments have been taken place in Kolkata, Kanpur and Jalandhar too in dealing with pollution so as to meet the legal requirements of respective PCBs. Uninformed criticism on this score can hurt the industry very badly. We should not forget the fact that over 2.5 million drive their livelihood from this industry and easily another half a million can find employment in this sector, if the targets of 11th plan are reached. Ensuring increased availability of leather will be critical for achieving the envisaged targets of the 11th plan.
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Effect of Global meltdown

The impact of economic slowdown on Indian leather and leather products industry has been severe as the demand contraction in the developed world has had its crippling effect on leather and leather products manufacture and exports. Lower sales volumes, global credit crunch, problems of liquidity, ever increasing barriers, environmental issues and finally bargaining for lower and lower prices are hitting the industry hard. The industry is to adopt lean manufacturing and cost efficient procedures at this critical period. The industry expects by maintaining global standards in quality and reliability and following sound business ethics, the export target of USD 7 billion can be achieved by 2013-14. Though the industry is passing through tough times, it is looking at positive issues such as the resiliency of Indias economy by maintaining a growth rate of more than 6.5% even in the phase of global meltdown. As far as the shoe sector is concerned, there is good demand for shoes and shoe uppers from some of the regular customers, but the business atmosphere is not what it was before. The industry is yet to come out of the recession. Some shoe manufacturers are planning to open their own showrooms for marketing their products under their own brands. Already some big export oriented shoe units have already estimated and are running their showrooms successfully in some places in the country.

2.11 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

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Weaknesses 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

Threats Major part of the industry is unorganized 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 and other Asian countries Lack of communication facilities and skill.

2.12 Strategies for Indian Leather Sector

The Indian leather industry is targeting over US$ 5 billion exports by 2010 and is expected to add about additional 1 million direct and indirect jobs during this period. At present, the industry employs 2.5 million people directly and indirectly. Shifting of Manufacturing Base:Major world tanning firms are in the process of shifting their manufacturing base to developing countries due to high wage levels and strict environmental norms in developed countries. Factors such as availability of leather, production know-how processing of shoes work in Indias favor. India could effectively use these advantages to augment its share in global production and exports. Strong Production Base:The industry should lay emphasis on design and technology, quality and innovation and economies of scale. Skill development for the manpower engaged in the sector is vital for enhancing the export potential of this sector. Investment By Large Corporate:-

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Indian leather industry is dominated by household and small scale sectors. Corporate presence would enhance the capability of producing quality leather products. The large capacity would also bring down the unit cost and increase the competitiveness in international markets. New Markets:Diversification of export markets is another important strategy for Indian leather industry. Consolidation in new markets such as Croatia, Slovakia and Serbia would sustain the export growth momentum for the Indian leather industry. Imports of leather articles by these countries have increased in the range of 20- 30% in a period of five years New Trends:The industry needs to keep itself abreast with latest fashion trends in the sector. It is observed that Italian buyers pay attention not only to the quality of the leather products but also to the accessories used in the garments. It is imperative that adequate care is taken about the packing material.

Diverse Marketing Techniques:India needs to adopt aggressive marketing techniques in order to endure global competition. The industry could undertake business delegation to secure overseas investments and technology partnerships, besides building brand image. Developing countries like India should have two pronged marketing strategy of simultaneously targeting low price and high quality markets, rather than the traditional strategy of being a low price-low quality supplier. Enabling Infrastructure:The development of the Calcutta Leather Complex is a positive sign as all amenities are available at one place. Such exclusive leather complexes could be developed in other major production centers. Improvements in efficiency of ports, internal transport, customs procedures and supply chain management are necessary for augmenting the productivity and exports in this sector. Fairs and Exhibitions:It is imperative that Indian exporters participate in fairs and exhibitions organized in the international market. It could serve as a good platform to showcase our products. Lack of information about Indian manufacturers also act as a hurdle for international buyers

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Training and Facilities:Training programmes should enable the industry to foresee and adapt to changing trends and technology. It is imperative that the staff is skilled and well qualified to train the students. Further, programmes need to be conducted to make Indian exporters aware of different standards and requirements in the global market to ensure that Indian exports do not get rejected due to environmental norms.

2.13 Institutions, Organizations & Associations for leather industry development

There are certain renowned institutions, associations & organizations of leather chemists who have played a key role in the development of products and technologies for the overall growth and development of the leather sector. The IULTCS (International Union of Leather Technologists and Chemists Societies) traces its history back to 113 years, when the first conference was held at the Herolds Institute in London in 1987. The IULTCS is representing twenty two countries as member associations or affiliate societies, and about 3000 leather technologies and chemists. The major objectives of IULTCS include developing standard test methods specific for leather; Studying the problems relating to environmentally sound leather manufacture; Facilitating communication training needs for the industrys future and facilitating international communication on research needs. The role of organizations like IULTCS is more relevant today due to various regulations on use of chemicals which include prohibitions and restrictions on use of certain chemicals. The LCMA formed during the year 1985 is an association of leather chemical manufactures in India. Its Charters are: represent the interest of leather chemical manufacturers to Government & other Institutions partners to tanneries in technology up gradation collect & share statistical information on Indian leather Industry to leather chemical manufacturers in India
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nurture young minds in pursuing careers in Indian Leather Industry Dissemination of information new emerging standards pertaining environment & ecological aspects in chemicals.

Leather Chemical Distributors Association (LCDA) is an association of distributors of leather chemicals operating in Southern States of India and are largely covering the distribution network of most of the large & medium leather chemical manufactures & M.N.Cs. The association is formed with the following objectives: To promote and protect the trade, commerce and distribution of leather dyes and chemicals in India. To maintain cordial relations and co-operate whole heartedly with the tanners in every respect which would benefit both the tanners and the members of the association. To collect and circulate all information relating to trade, commerce and technology of leather dyes and chemicals in India and abroad as well as update the members on management skills and business analysis. To share information among members as to the standing and responsibility of the parties with whom they wish to do business. To protect the members from unscrupulous customers and to facilitate the prompt and economic realization of their dues. To represent the interest of the trade for the purpose of securing relief from the State and Union governments affecting the manufacture, import, distribution and sale of leather dyes and chemicals. To settle the disputes, if any, arising between members with regard to business transactions. To take steps to bring about uniformity in the practice of the trade without detriment to individual business interest and convention.

ICT (International Council of Tanners) is the membership organization of the worlds leather trade associations. It meets regularly to discuss relevant topics affecting or influencing the global leather industry. Not all trade associations are members but most of the major ones are. The main aims and objectives of ICT therefore can be summarized as: 1. To provide a forum for members to meet and exchange views and information. Including the exchange statistics and market information. 2. To provide an interface with international bodies such as: ICHSLTA International Council of Hide, Skin & Leather Traders Associations UNIDO United Nations Industrial Development Organization FAO Food and Agriculture of the United Nations UNEP United Nations Environmental Programme ISO the International Standards Organization IULTCS International Union of Leather Technologists and Chemists Societies

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COTANCE Confederation of National Associations of Tanners and Dressers of the European Community 3. To collaborate with ICHSLTA to maintain and develop the International Leather Contracts to promote a fair and ethical basis for trade in the sector. 4. Protect and promote leather as a product by providing information, developing the website and producing position papers to counter threats to the industry. 5. Support improvements in the supply, treatment and preservation of hides and skins. 6. Promote free trade in hides, skins and leather as far as practically possible. 7. To undertake, or commission, reviews and research on matters pertaining to the industry and to disseminate the results to members and, where appropriate, more widely. 8. To assist members in negotiations with Regulatory Agencies on a national, regional, or global basis as called for, using any appropriate means. 9. To engage in any other activity that is to the advantage of members.

2.14 Leather Industry in the 11th Five Year Plan by Mr. A. Sahasranaman from Leather Age July 2010 Edition
Recent developments In the 1980s and 1990s the importance of leather industry stemmed from the fact that it was the sixth or seventh largest foreign exchange earner for the country. However, this situation has drastically changed with many service and other industries overtaking leather sector as important sources of foreign exchange. Nevertheless, a great deal of prominence has been deservedly given to the leather industry in the 11th five year plan primarily in view of its employment potential. The focus of the government clearly is on generating inclusive growth and the nature of employment provided by the leather sector indeed meets this objective, as it reaches out to the left out segments of the society. The plan targets the total turnover of the industry to grow from its current level of about US $ 6 billion to US $ 13.2 billion by 2011-2012, with exports climbing up from its current level of about US $ 3.5 billion to US $ 7 billion per annum in this period. Till a few months back, the rising global trade in leather and leather products coupled with the big spurt in demand for leather products already witnessed in the domestic market, thanks to the burgeoning middle class, were the reasons for the optimism. But with the global meltdown and consequent slowing down of economic activity in developed countries, the industry has to grapple with the immediate problems of contraction in demand 2009 and possibly most part of 2010.
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Indias Strategy At present, India produces annually about 2.0 billion square feet of leather, about 2.1 billion pairs of footwear, about 8 million pieces of leather garments and over 100 million pieces of assorted leather goods. Taking the 11th plan targets as these are, the additional capacities required to meet the envisaged targets are indeed large about 3 billion square feet of leather, 2 billion pairs of footwear and large volumes of assorted leather goods, per annum. It would make sense for India to go ahead with its plans for creating additional capacities in various segments of the industry. This will take time to materialize. And, in all probability, when the capacities are created, the world demand would be peaking again. However, in light of the rather tepid performance of the industry in creation of new capacity in the last plan, it would appear that we have to actively promote foreign direct investments and joint ventures in different segments. Incremental investments by existing domestic players along may not be adequate to meet the ambitious targets. One option could be for the large corporate of India to take a serious relook at this sector.

Leather Parks A major problem faced by the industry is regard to availability of developed industrial plots at affordable prices. There has been talk about developing exclusive leather industrial parks but unfortunately during the last five year plan, not much visible progress could be made. The 11th plan has also provided for establishment of many leather parks. Tamil Nadu is planning two footwear parks, one at Irungattukottai and another at Ranipet. All these industrial estates have to be taken up on war footing. Some gentle nudging from Indian industry bodies such as FICCI, CII and leather sector organizations such as CLE and FDDI and commercial attaches of Indian embassies abroad may accelerate this process. Dealing with Recession It is reasonable to estimate that demand has fallen from developed countries at least to the extent of 20%. The effect on Indias export performance has been significant with a reduction in export of over 20% over the last years export. At the same time, it must be noted that with Indias growth rate projection having been scaled down to 7%, the domestic demand also has shown a little decline.

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Urgent Steps by Industry Some steps that will help the industry retain its current export market share are: Price competitiveness will be an important factor. The exporters have to be ready to meet this situation by more efficient organization of their production and cost cutting. Diversification of markets for Indian products, to areas not seemingly affected by the global meltdown badly, is desirable. Latin American and African countries, recently explored by Indian exporters could be ventured into with the right type of products at the right prices. Sharing the worries of the buyers in developed markets and working jointly with them in meeting the situation would go a long way in bonding firm relationships. Quality, delivery, packaging etc. must be maintained at assured levels without giving an opportunity to any unscrupulous buyers to renege on their contracts. The industry should not give a chance to social NGOs within and outside the country to rake up issues like environmental lapses, poor worker facilities and benefits, poor workplace environment, etc. It is believed that the domestic market has not been so badly affected by global meltdown. Without efforts by the public and private sector players the Indian market is expected to bounce back soon. For some time, the leather sector has been looking at the domestic with interest. The current situation may give the right impetus for at least some of the players to enter the domestic market with greater gusto and commitment. The industry must explore the domestic market option with an open mind and bring in many new products as well.

Estimated Production Capacities Footwear industry currently exists in traditional and modern sectors at varying degrees of importance. while the traditional sector spread throughout the country with pockets of concentration catering largely to domestic market, modern sector is largely confined to selected centers like Chennai, Ambur, Ranipet, Agra, Kanpur, and Delhi and most of its production goes for export. Production is organized in the form of assembly line and women represent about 90% of the workforce in the mechanized sector in south India. Agra with the century old tradition of footwear making, mainly handmade, has transformed today with several modern factories. Kanpur, originally known for heavy footwear for industrial and military purposed, most now modern shoe factories manufacturing classical dress and casual shoes mainly for export. Thus, Indias production capacity (all categories of shoes) is 2065pairs (according to 20062007 figures) compared to Chinas production of 14.52 billion pairs, accounting for 14% of global footwear production (source: FDDI). In India, the domestic market is becoming more important and more valuable all the time. It is interesting to know that, even if non of Indias total estimated production capacity for finished leather shoes and leather uppers went for export it would still not be enough to supply everyone who lives in India with one pair each. Indias per capita consumption is two pairs according to 2007 estimation. Consumption out of the production in China was 23%, whereas in India it is 95%.
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Strengths and Weaknesses of the product segment and the steps to be taken to enhance them. The leather industry can benefit from several characteristics of the Indian market. The specific supply side advantages are: 1. Availability of low cost skilled labor 2. Abundance of raw material 3. Availability of supporting institutes The major demand side advantage is that it caters to a large and growing market. The key challenges faced by the Indian industry in this specific product segment are Lack of financial assistance from banks and development finance institutions Low level of foreign direct investment (FDI) Absence of technical research and training centers, resulting in overall technology constraints Lack of familiarity with global design/fashion trends and insufficient number of design/art centers Low cost effectiveness of operations Inadequate exposure in spheres of manufacturing and marketing Under-utilization of capacity, on account of influx of goods from China Wide disparity in market prices of end products

Major Challenges faced by the product segment The major challenges faced by the Indian leather goods industry are:1. Low level of modernization and up gradation of technology and slow integration of development technology 2. Low level of labour productivity due to inadequate formal training / unskilled labour 3. Horizontal growth of tanneries 4. Less number of organized product manufacturers 5. Lack of modern finishing facilities of leather
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6. Unawareness of international standards as maximum number of leather industries are SMEs 7. Difficulties n accessing testing, designing and technical services 8. Environmental issues To meet the above challenges, it would be important to give greater focus to the following objectives:1. Making the leather goods industry more visible and attractive to investors 2. Adoption of a detailed policy package for this sector 3. Developing schemes for modernization and expansion of the industry 4. Drawing up of an aggressive marketing plan at the national and state levels 5. Adoption of global benchmarks of best practices 6. Tanning activities to be undertaken in compliance with environmental norms 7. Strengthening of design development and prototyping 8. Shift to higher return generating production systems

2.15 Governments Role

The government is already doing what it can but it will have to play a more pro-active role in helping the industry overcome the current situation. Some steps that the government has taken or can take include: Removing unnecessary harassment to importers of raw materials. Facilitate FDIs and JVs in footwear sector keeping in view the reported interest of some global players to enter India as an alternative to China. The scheme of developing leather parks in the country should be expedited so that interested producers will have well developed industrial sites to choose from. Irritants in domestic sales of footwear and leather goods, especially in terms of excise duty, etc. should be examined and remedied so that the business becomes smoother. Packing and post shipment credit, at affordable rate of interest, must be made available to the exporters in required quantum. Banks must treat established exporters as partners during these difficult times.
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ECGC should become more active and ensure that the exports of particularly SMEs are well protected, especially to new destinations and even to existing destinations. The focus should be to create infrastructure for new capacities in footwear, leather goods and perhaps leather too; private sector should have access to adequate bank loans for realizing this objective.

The major policy intervention required from the Government for the development of the industry
The Central Government has identified that the challenges before the Indian Leather Industry are capacity inadequacy, raw material base, environmental issues, availability of human resources and inadequate investment. In order to address these issues, the Central Government has approved eleven sub-schemes under Indian Leather Development Programme (ILDP) for implementation during the Eleventh Five Year Plan period with emphasis on infrastructure development, capacity building, human resource development, investment promotion and addressing environmental issues for the leather industry. For the Eastern region, interventions considered necessary are announcement of an increase 5%, at the minimum, in drawback rates for the leather goods exports to offset the impact of rupee appreciation. Since the date for the introduction of the Proposed Goods and Service Tax (GST) has not yet been decided, introduction of a scheme to rebate State taxes / local levies on an average basis is required as these taxes account for as high as 5-6% of the FOB value of exports. Service tax exemption to organizations / associations is exclusively working for promotion for exports and the introduction of a turnover tax for exporters, to replace income tax. This would reduce administrative burden on exporters and create a more conducive climate for trade. The industry would also favor introduction of investment linked tax incentives for the MSME sectors. The rate of depreciation for plant and machinery and equipment should be enhanced from 15% to 25%. Enhancement of the duty free limit under duty free import scheme is from 35%.

While the above steps need to be taken by the Central Government, the State Governments need to aggressively pursue a multipronged policy aimed at encouraging: Setting up of design, engineering and development centers Access to timely and adequate credit Tackling technological obsolescence Strengthening R&D linkages, and Greater competitiveness of the small scale sector by removing marketing constraints
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3.1RESEARCH METHODOLOGY

Definition of Research Research is an endeavor to discover answers to intellectual and practical problems through the application of scientific method. Research is the systematic process of collecting and analyzing to increase our understanding of the phenomenon about which we are concerned or interested. Objectives of a Research To gain familiarity with a phenomenon or to achieve new insights into it. To portray accurately the characteristics of a particular individual, situation or a group. To determine the frequency with which something occurs or with which it is associated with something else. To test a hypothesis of a causal relationship between variables. Types of Research 1. Descriptive Survey: Descriptive survey uses facts or information already available and analyzes to make a survey & fact finding enquiries of different kinds. The basic purpose of descriptive research is description of the state of affairs as it exists at present. The main characteristic of this research is that the researcher has no control over the variables; he can only report what has happened or what is happening. 2. Applied Survey: Applied research aims at finding a solution for an immediate problem faced by a society or an industrial organization. Research aimed at certain conclusions facing a concrete social or business problem is an example of applied research. Thus, the central aim of applied research is to discover a solution for some pressing practical problem. 3. Quantitative Research: Quantitative Research is employed for measuring the quantity or amount of a particular phenomenon by the use of statistical analysis. Quantitative research is based on the measurement of quantity or amount. It is applicable to phenomenon that can be expressed in terms of quantity. The objective of quantitative research is to develop and employ mathematical models, theories and/or hypotheses pertaining to phenomena. Quantitative research is used widely in social sciences such as psychology, sociology, anthropology, and political science. Research in mathematical sciences such as physics is also 'quantitative' by definition, though this use of the term differs in context. In the social sciences, the term relates to empirical methods, originating in both philosophical positivism and the history of statistics, which contrast qualitative research methods.

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4. Qualitative Research: Qualitative Research is a non-quantitative type of analysis which is aimed at finding out the quality of a particular phenomenon. Qualitative approach to research is concerned with subjective assessment of attitudes, opinions and behavior. Research in such a situation is a function of researchers insights and impressions .such an approach to research generates results either in non-quantitative form or in the form which are not subjected to rigorous quantitative analysis. Generally, the techniques of focus group interviews, projective techniques and depth interviews are used. For instance, when we are interested in investigating the reasons for human behavior (i.e. why people think or do certain things) we often talk of Motivation Research, an important type of qualitative research.

Data collection 1. Primary data: Primary research involves collecting data that does not already exist. The advantages of primary research are control over the information that is collected. The researchers can then customize how they want the research to go and how long it should take. There are also some disadvantages such as cost. In order to find primary data, the research can get pretty expensive. The process can also take a long time since the data must be researched instead of just having secondary data already available. Since it takes some time to do the research, the findings may already be outdated by the time they are derived. There are many methods of collecting primary data and the main methods include: questionnaires interviews focus group interviews observation case-studies diaries critical incidents Portfolios. 2. Secondary Data: Published data and the data collected in the past or other parties are called secondary data. Secondary data is data that has already been collected by someone else for a different purpose to yours. The sources of secondary date include: paper-based sources books, journals, periodicals, abstracts, indexes, directories, research reports, conference papers, market reports, annual reports, internal records of organizations, newspapers and magazines Electronic sources CD-ROMs, on-line databases, Internet, videos and broadcasts. trade associations trade and other journals private research publishers large company market reports professional bodies Academic institutions.

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Tools for data analysis Correlation Regression Trend analysis Forecasting Standard deviation Microsoft Excel Correlation: The correlation is one of the most common and most useful statistics. A correlation is a single number that describes the degree of relationship between two variables. A positive relationship means that, in general, higher scores on one variable tend to be paired with higher scores on the other and that lower scores on one variable tend to be paired with lower scores on the other. Regression: Linear regression analyzes the relationship between two variables, X and Y. The goal of regression analysis is to determine the values of parameters for a function that cause the function to best fit a set of data observations that you provide. In linear regression, the function is a linear (straight-line) equation. It is a statistical measure that attempts to determine the strength of the relationship between one dependent variable (usually denoted by Y) and a series of other changing variables (known as independent variables). The two basic types of regression are linear regression and multiple regressions. Linear regression uses one independent variable to explain and/or predict the outcome of Y, while multiple regressions use two or more independent variables to predict the outcome. The general form of each type of regression is: Linear Regression: Y = a + bX + u Where: Y= the variable that we are trying to predict (dependant variable) X= the variable that we are using to predict Y (independent variable) a= the intercept b= the slope u= the regression residual. Dependent Variable: A dependent variable is a variable dependent on another variable: the independent variable. In simple terms, the independent variable is said to cause an apparent change in, or simply affect, the dependent variable. For example, in a call centre, the number of customers serviced per hour, depends on the number of agents, and average service time per customer. In this case number of customers is a dependent variable, entirely dependent on the other two independent variables namely agents, and average service time. Independent Variable: An independent variable is a factor that can be varied or manipulated in an experiment (e.g. time, temperature, concentration, etc). It is usually what will affect the dependent variable. There are two types of independent variables, which are often treated differently in statistical analyses: (1) quantitative variables that differ in amounts or scale and can be ordered (e.g. weight, temperature, time). (2) Qualitative variables which differ in "types" and cannot be
42

ordered (e.g. gender, species, method). By convention when graphing data, the independent variable is plotted along the horizontal X-axis with the dependent variable on the vertical Y-axis.

P-VALUE: The P value is a probability, with a value ranging from zero to one. It is the answer to this question: If the populations really have the same mean overall, what is the probability that random sampling would lead to a difference between sample means as large (or larger) than you observed? HYPOTHESES: Hypotheses may be defined as a set of proposition set forth as an explanation for the occurrence of some specified group of phenomenon either asserted merely as a provisional conjecture to guide some investigation or accepted as highly probable in the light of established facts. A hypothesis should be clear and precise and also be capable of being tested. It should state relationship between variables and must be consistent with a substantial body of established facts. A researcher must remember those narrower hypotheses are generally more testable and acceptable. Null hypotheses: typically proposes a general or default position, such as that there is no relationship between two measured phenomena or that a potential treatment has no effect . Hypothesis testing works by collecting data and measuring how probable the data are, assuming the null hypothesis is true. If the data are very improbable (usually defined as observed less than 5% of the time), then the experimenter concludes that the null hypothesis is false. If the data do not contradict the null hypothesis, then no conclusion is made. In this case, the null hypothesis could be true or false; the data give insufficient evidence to make any conclusion. For instance, a certain drug may reduce the chance of having a heart attack. Possible null hypotheses are "this drug does not reduce the chances of having a heart attack" and "this drug has no effect on the chances of having a heart attack".

Alternative hypothesis: the hypothesis to be accepted if the null hypothesis is rejected. It is compared with the null hypothesis in a statistical test. It is usually the one which one wishes to prove whereas null hypothesis is usually the one which one wishes to disapprove.

In this research the dependent variable is exports of finished leather. Correlation method is used to assess the influence of other factors affecting exports, and thus to see which factors are significant. Thereafter, multiple regression analysis is also done using Microsoft Excel 2007 and SPSS.

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3.2 HYPOTHESIS
1. H0: b = 0 (no influence of Currency Fluctuations on Exports of Finished Leather) Ha: b 0(influence of Currency Fluctuations on Exports of Finished Leather)

2. H0: b = 0 (no influence of Market Size on Exports of Finished Leather) Ha: b 0(influence of Market Size on Exports of Finished Leather)

3. H0: b = 0 (no influence of Imports of Finished Leather on Exports of Finished Leather) Ha: b 0(influence of Imports of Finished Leather on Exports of Finished Leather)

4. H0: b = 0 (no influence of Availability of Bovine Hides on Exports of Finished Leather) Ha: b 0(influence of Availability of Bovine Hides on Exports of Finished Leather)

5. H0: b = 0 (no influence of Production of Bovine Hides on Exports of Finished Leather) Ha: b 0(influence of Production of Bovine Hides on Exports of Finished Leather)

6. H0: b = 0 (no influence of Chinas Production of Bovine Hides on Exports of Finished Leather) Ha: b 0(influence of ChinasProduction of Bovine Hides on Exports of Finished Leather)

The hypothesis is therefore analyzed not using a single regression but as a multiple regression format. The data analysis and findings are discussed here after.

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3.3 DATA ANALYSIS

My area of analysis entails how Exports of finished Leather (Dependent Variable) is affected by changes in currency fluctuations, market size, imports, availability of bovine hides, production of bovine hides, and a rivals production of bovine hides (China) (Independent Variables). Dependent Variable: Exports of Finished Leather (Y)

Independent Variable: Currency Fluctuations, Market Size, Imports, Availability of Bovine Heads, Production of Bovine Hides, Chinas production of Bovine Hides.

So firstly the analysis will focus on the correlation of each independent variable on the dependent variable, after finding the significance of each independent variable. A multiple regression analysis is then done to find out the results. So the SPSS application was used to find out the correlation and their significance on the Exports. Table 1 (refer to Annexure): Table 1.3 shows the correlation between Exports of Finished Leather and Currency Fluctuations of US Dollars, the findings show us that there is a negative non-significant correlation between the two variables; hence this variable will not be taken in for final multiple regression analysis. The correlation value between the two variables (exports and currency) is -0.137 Table 2 (refer to Annexure): Table 2.3 shows the correlation between Exports of Finished Leather and Market Size of Domestic Market, the findings show us that there is a positive significant correlation between the two variables; hence this variable will be taken in for final multiple regression analysis. The correlation value between the two variables (exports and market size) is .915 Table 3 (refer to Annexure): Table 3.3 shows the correlation between Exports of Finished Leather and Imports of Finished Leather, the findings show us that there is a positive significant correlation between the two variables; hence this variable will be taken in for final multiple regression analysis. The correlation value between the two variables (exports and imports) is .994
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Table 4 (refer to Annexure): Table 4.3 shows the correlation between Exports of Finished Leather and Availability of Bovine Hides, the findings show us that there is a negative significant correlation between the two variables; hence this variable will be taken in for final multiple regression analysis. The correlation value between the two variables (exports and currency) is -0. 888

Table 5 (refer to Annexure): Table 5.3 shows the correlation between Exports of Finished Leather and Production of Bovine Hides, the findings show us that there is a negative significant correlation between the two variables; hence this variable will be taken in for final multiple regression analysis. The correlation value between the two variables (exports and currency) is -0. 846

Table 6 (refer to Annexure): Table 6 shows the correlation between Exports of Finished Leather and Production of Chinas Bovine Hides, the findings show us that there is a non significant positive correlation between the two variables; hence this variable will not be taken in for final multiple regression analysis. The correlation value between the two variables (exports and currency) is 0.0975

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Multiple Regression Analysis

From the above data and correlation findings we saw that four variables were to be analyzed to see their significance and their influence over Exports of Finished Leather. Therefore the independent variables were: Market Size, Imports, Availability of Leather Hides, and Production of Leather Hides. From Table 7.2, we analyzed that out of the 4 variables only three were below the value of 0.05, the P-values of 3 variables were lesser and thus those three had a significant influence on exports. The three independent variables which are Imports, Availability of Bovine Hides and Production of Bovine Hides have a significant impact on the Exports of Finished Leather in India. The values of the three variables are, for imports the p-value is 0.001, availability of bovine hides it is 0.013 and production is 0.019.

The regression equation thus became:

Y (Exports) = a + b1x1 (imports) - b2x2 (availability of hides) + b3x3 (production of hides) Substituting the coefficients (from table 7.2):-

Y (Exports) = a+0.678x1 (imports)-1.628x2 (availability of hides) +1.282x3 (production of hides)

From the table 7.1 (refer to annexure) We found that R2 values to be 0.998 which means that 99% of exports are influenced by the three variables of imports, availability and production.

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ANNEXURE Table 1.1 Exports Currency Year Value(Crores) Fluctuation(Rs.) 2000 1674 44.957 2001 1795.5 47.227 2002 1930.8 48.679 2003 2096.2 46.66 2004 2607.3 45.34 2005 3145 44.115 2006 3658.4 45.319 2007 4491.1 41.357 2008 4791.9 43.814 2009 5811.2 48.85 2010 6093.2 46.108 (Source: Council of Leather Exports) Table 1.2 (Authors Calculation)
7000 E x p o r t s 6000 5000 4000 3000 2000 1000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 50 48 C u 46 r 44 r 42 e 40 n 38 c 36 y

Exports Value Currency Fluctuation

Table 1.3 (Authors Calculation) Correlations Exports Exports Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N 1 Currency -.137 .689 11 1

Currency

11 -.137 .689 11

11

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Table 2.1(Source: Economic Intelligence Service) Exports Market Year Value(Crs) Size(Crs) 2000 1674 2100.8 2001 1795.5 2402 2002 1930.8 2501.5 2003 2096.2 2601 2004 2607.3 2652 2005 3145 2701.5 2006 3658.4 2753.9 2007 4491.1 2804.7 2008 4791.9 2905 2009 5811.2 3009.7 2010 6093.2 3102.4 Table 2.2(Authors Calculation)
7000 3500 M 3000 a 2500 r k 2000 e 1500 t 1000 S i 500 z 0 e

6000
E x p o r t s 5000 4000 3000 2000 1000 0

Exports Value Market Size

Table 2.3(Authors Calculation) Correlations Exports Exports Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N 1 Market Size .915** .000 11 1

Market Size

11 .915** .000 11

11

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Table 3.1(Source: Economic Intelligence Service) Exports Import Year Value(Crs) Value(Crs) 2000 1674 19 2001 1795.5 38.2 2002 1930.8 38.6 2003 2096.2 41.4 2004 2607.3 65.4 2005 3145 143.9 2006 3658.4 205.3 2007 4491.1 314.6 2008 4791.9 364 2009 5811.2 427.5 2010 6093.2 481.3

Table 3.2(Authors Calculation)

7000 E x p o r t s 6000 5000 4000 3000 2000 1000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 600 500 I m 400 p 300 o r 200 t 100 s 0

Exports Value Import Value

Table 3.3(Authors Calculation) Correlations Exports Exports Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N 1 Imports .994** .000 11 1

Imports

11 .994** .000 11

11

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Table 4.1 (Source: FAO) Availability of Bovine Exports Hides Value(Crs) (Tonnes-Wet Salted) 1674 413.6 1795.5 414.2 1930.8 416.2 2096.2 372.3 2607.3 328 3145 288.6 3658.4 254.7 4491.1 248.9 4791.9 255.3 5811.2 253.2 6093.2 249.5

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Table 4.2(Authors Calculation)

7000 E x p o r t s 6000 5000 4000 3000 2000 1000 0 450 400 A 350 v 300 a i 250 l 200 a 150 b 100 l 50 e 0

Exports Value Availability of Bovine Hides

Table 4.3(Authors Calculation) Correlations Exports Exports Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N 1 Availability -.888** .000 11 1

Availability

11 -.888** .000 11

11

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Table 5.1(Source: FAO) Exports Production of Bovine Year Value(Crs) Hides(million pieces) 2000 1674 40.1 2001 1795.5 40.5 2002 1930.8 40.8 2003 2096.2 36.5 2004 2607.3 32.1 2005 3145 27.7 2006 3658.4 23.4 2007 4491.1 23.3 2008 4791.9 24.4 2009 5811.2 25.7 2010 6093.2 25.3 Table 5.2(Authors Calculation)
7000 E x p o r t s 6000 5000 4000 3000 2000 1000 0 45 40 P 35 r o 30 d 25 u 20 c 15 t 10 i 5 o 0 n

Exports Value Production of Bovine Hides

Table 5.3(Authors Calculation) Correlations Exports Exports Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N 1 Production -.846** .001 11 1

Production

11 -.846** .001 11

11

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Table 6.1(Source : FAO) Exports China Production Year Value(Crs) BH(million pieces) 2000 1674 39.7 2001 1795.5 41.3 2002 1930.8 44.1 2003 2096.2 47.1 2004 2607.3 50.7 2005 3145 53.9 2006 3658.4 44.5 2007 4491.1 47.1 2008 4791.9 47.2 2009 5811.2 44.2 2010 6093.2 43.8 Table 6.2(Authors Calculation)
7000 6000 E x p o r t s 5000 4000 3000 2000 1000 0 60 50 40 C h 30 i n 20 a 10 0 P r o d u c t i o n

Exports Value China Production BH

Table 6.3(Authors Calculation) Correlations Exports Exports Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N 1 Chinas Prodn. .098 .775 11 1

Chinas Prodn.

11 .098 .775 11

11

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Table 7.1(Authors Calculation) Model Summary Model 1 R 1.000a R Square .999 Adjusted R Square .998 Std. Error of the Estimate 73.27920

Table 7.2 (Authors Calculation)

Coefficients a Unstandardized Coefficients Model 1 (Constant) Market Size Imports Availability Production B 4997.580 -.189 6.332 -36.087 284.936 Std. Error 1604.884 .353 .776 8.544 74.937 -.033 .678 -1.628 1.282 Standardized Coefficients Beta t 3.114 -.535 8.164 -4.224 3.802 Sig. .036 .621 .001 .013 .019

Table 7.3 (Authors Calculation)

ANOVA df Regression Residual Total 4 6 10 SS 26284376.97 38966.87817 26323343.85 MS 6571094.242 6494.479695 F 1011.796872 Significance F 1.29611E-08

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BIBLIOGRAPHY
1. http://leather.indiabizclub.com/info/indian_leather_industry_overview (refer to Page No. 7, 11) 2. http://www.indianleatherportal.com/leather-industry-overview/ (refer to Page No. 8) 3. Luthra, Y. K. Leather Age August 2010 Edition Page Nos. 5 (refer to Page No. 10) 4. Luthra, Y. K. Leather Age July 2010 Edition Page Nos. 5, 19, 20, 21, 22, 29 (refer to Page No. 12, 13, 14, 15, 16, 18, 28, 29) 5. Luthra, Y. K. Leather Age June 2010 Edition Page Nos. 68, 69, 70, 75, 79 (refer to Page No. 8, 11, 16, ) 6. Khan, Ali Ahmed Leather News India August 2010 Edition Page Nos. 4, 14, 16 (refer to Page No. 17, 18, 19, 20, 28, 29) 7. http://www.tannerscouncilict.org/perspective.htm (refer to Page No. 8) 8. http://kanpurbds.fibre2fashion.com/indian-leather-ind.asp (refer to Page No. 7) 9. http://ezinearticles.com/?The-History-of-Leather&id=2186656 (refer to Page No. 9) 10. http://www.scribd.com/doc/43877708/Indian-Leather-Industry 11. Khan, Ali Ahmed Leather News India June 2010 Edition Page No. 22 (refer to Page No. 10) 12. http://b2binformation.blogspot.com/2010/09/glimpse-of-indian-leather-industries.html 13. http://www.fibre2fashion.com/industry-article/26/2555/beauty-behind-the-beast-indianleather-industry1.asp 14. http://ec.europa.eu/enterprise/sectors/leather/index_en.htm 15. Khan, Ali Ahmed Leather News India July 2010 Edition Page No. 6, 15, 20 (refer to Page No. 12) 16. www.mapsofindia.com/maps/india/leather-industry.htm 17. http://www.petaindia.com/dreport6.html 18. http://www.scribd.com/doc/35613042/Indian-Leather-Industry 19. Khan, Ali Ahmed Leather News India April 2010 Edition Page Nos. 42, 43 20. http://planningcommission.nic.in/reports/sereport/ser/stdy_ict/9_leather.pdf 21. http://labourbureau.nic.in/Leather%20Report%20Final.pdf
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