Indian leather. How furniture leather is made in India

Over the past few years, we have witnessed multi-level changes taking place in the Chinese economy. Just a decade ago, few imagined that this producer of cheap counterfeits would grow into one of the world's strongest economies and become the second largest market.

The change in economic roles occurs so quickly that the consciousness of many does not have time to “keep up with the times.” Could Indian leather and leather goods manufacturers have imagined even five years ago that their biggest competitor would turn into a profitable buyer? Even a year ago, the situation in the leather production market was different, but now rising wages have forced Chinese companies to reconsider their strategic plans and take a fresh look at their competitors.

Indian participants at the Shanghai Leather Fair 2012 exhibition held in September told CHaINA magazine about this trend. As noted by the Chairman of the Leather Export Council of India, the famous entrepreneur Rafeeque Ahmed, this year Chinese companies have shown great interest in Indian suppliers, who have been participating for several years in this exhibition.

And while Indian leather and leather goods manufacturers are looking for buyers in other new markets, including Australia, New Zealand and Latin America, they realize the enormous potential the Chinese market represents for them. Moreover, European countries, which constitute the main market for Indian leather, are reducing import volumes into recent years influenced by economic instability.

It is too early to say how competitive Indian products (especially those with high added value) will be in the Chinese market, since statistics that could document these changes have not yet been published. But we can take a look at what the leather industry in India and China has been like in recent years.

India is the sixth largest producer of leather and leather goods in the world. According to the Leather Export Council of India website, the industry was worth $7.5 billion in 2011. Indian manufacturers accounted for 6% of all leather products produced in the world and 2.78% of global imports of leather and leather goods.

From 2004 to 2009, the Indian leather industry's exports grew from €1.62 billion to €2.63 billion. This makes India the 5th largest exporter of leather and leather products in the world (according to the Leather Export Council).

Looking at the export structure of the Indian leather industry, 42% comes from leather footwear, 24% from leather products, 19% from processed leather, 12% from leather clothing, and 3% from saddles and harnesses.

The main importer of Indian leather and leather products is the EU - up to 65%. Moreover, the largest consumers among countries are Germany (14.1%), Italy (12.8%), Great Britain (11.5%), followed by the USA with 10%, Hong Kong (6.6%), Spain (6.1 %), France (6.1%) and Holland (4.1%).

Many global brands also produce leather shoes in India, including Clarks, Ecco, Nike and even Versace. Indian-made leather clothing is supplied to Pierre Cardin, Tommy Hilfiger, Versace, Nautica, Kenneth Cole, DKNY, Hugo Boss, Ann Taylor, Liz Claiborne, Charter Club and Daniel Hector. And various products and accessories - for Coach, Liz Claiborne, Tommy Hilfiger, Etienne Aigner, Harrods, Yves St, Laurent, Pierre Cardin, Geoffrey Beene, Marks & Spencer, Guess, Next.

What is the situation on the global leather market? If we study the statistics for 2010 Eurostat, we find out that the largest supplier of hides, raw and processed leather is Brazil, accounting for 17.2% of product supplies in the world, while India - 6.9%, and China - 4.5%. The largest consumer of raw and processed leather is China: local producers process 21% of all products produced in the world. India ranks 6th in this ranking with 3.6%.

We observe the opposite situation in the market of finished leather products. China supplies up to 66% of all leather goods in the world. India, although it ranks second in this ranking, produces only 11.2% of production. The main consumers of leather products are the following countries: Hong Kong (18% of the market), Switzerland (16.8%), Japan (14.8%) and the USA (14.1%). By the way, Russia consumes only 4.5% of leather products, and China with a population of 1.3 billion only 3%. Therefore, it is not surprising that the growing welfare of Chinese citizens opens up enormous opportunities for foreign manufacturers of leather handbags, belts and shoes.

You don't need to have special prophetic abilities to imagine the direction of development of the global leather industry in the near future. In general, the trend is obvious: China will increasingly focus on production with higher added value, and will supply cheap products for its own consumption from other countries with low level wages. And not least on the list of main contenders are Indian manufacturers. But I cannot predict with accuracy how quickly changes in the market will occur, since too many factors influencing the processes are unknown.

India has been a supplier of leather products to Russia since ancient times Soviet Union. In the late 1980s, about twenty percent of Indian leather and leather goods exports went to the USSR. However, in the time that has passed since the Soviet-Indian partnership, this market has changed a lot. The main exporter of footwear and leather goods to Russia today is China. Chinese exports exist both legally and in the form of smuggling. Moreover, this country is increasing the volume of products imported to Russia, despite the crisis. Thus, in January-June this year, the number of shoe exports from China to Russia through the Manzhouli checkpoint reached a record level, amounting to 1.23 million pairs. This is a 46.6% increase compared to the same period last year.

Today, the main markets for Indian leather products are Germany, Great Britain and Italy. Exports of leather and leather products to Russia amount to only about 20 million dollars in monetary terms - less than 1% of all leather goods that the Russian Federation imports. And this despite the fact that Russia is in 11th place in the world among importers of leather and leather products. In 2008, this country imported leather goods worth $3 billion 296 million. The growth rate of imports of these products is also impressive. Before the crisis, they were 68% per year.

However, India today still has 3 interesting directions that will be in demand on the Russian market, explains the Russian Union of Leatherworkers and Shoemakers. “Russian trading companies supply finished leather to our country from India,” says Nelly Myakunova, president of RSKO. “This is yuft leather, used for the production of special and work shoes. Leather supplied from India is much cheaper than Russian, and 8 times cheaper than leather imported from other countries to Russia." According to RSKO, in the 1st half of 2010, imports of leather from India amounted to 893 tons worth only 900 thousand dollars. Not much, but there is potential for growth here.

Another direction is the supply of blanks for shoe production. Unlike finished products, supplies of blanks have already been partially established and can gradually increase in volume. According to customs statistics, in the first half of 2010, 387 thousand pairs of finished shoes worth $900 thousand were imported from India to Russia. This represents only 0.2% of footwear imports. During the same period, imports of blanks for shoe production amounted to 137.7 tons worth $1.6 million, or 7.8% of the total Russian volume of imports of blanks.

Finally, Russia could cooperate with India in the same format as European manufacturers. The Union of Tanners and Shoemakers notes that low production costs in India are increasingly attracting Russian shoe manufacturers to this country.

Nidamarthi Mallikarjuna Rao, consultant at the Leather Export Council in Moscow, about the meeting of Indian and Russian representatives of the leather business, which will be held on November 22.

- Meeting of sellers and buyers in Moscow. What is this, the beginning of the global expansion of Indian leather goods manufacturers into the Russian market?

In Russia, such an exhibition is our first experience. Previously, we brought leather manufacturing companies only as part of general exhibitions and fairs of Indian goods. Along with beads and spices. This time we are doing an industry exhibition. We sent out invitations to four and a half thousand Russian companies - these are companies that are directly involved in the trade of leather goods and footwear. We hope they come. At least just to look. Now any attempt will be positive. Because now our volumes are nowhere lower. It will be possible to talk about some specific plans after the exhibition - who will come, what level of buyers, whether there will be any agreements. For our country, this is a very serious attempt to simply say that we exist. Dispel doubts. Declare the quality of our products.

- Do you have any idea what products of Indian companies will be in demand on the Russian market?

Companies ask what type of samples to bring. I don't have an answer to this question. On the one hand, people here don't have much money. On the other hand, few places dress so stylishly. And a person would rather buy one thing that is more expensive, but stylish, than a lot of cheap things. Since Indian companies manufacture products for almost all global brands, I am sure that there is experience. If we take shoes, for example, Russians will be closer to Italy in terms of demand. What they do for the UK, for example, will not work here. British shoes can be passed on to your children, but in Italy fashion changes every six months. Russians also love style and fashion.

- What prospects do Indian manufacturers have in Russia? Will there be competition, or is entry into the market still fairly free?

The Soviet Union was India's largest partner in the leather industry. After this partnership broke up, we lost our main consumer and began to look for other markets. As a result, our companies inevitably had to improve quality. Today we can consider that India is quite a powerful country in leather exports. We supply goods to the USA, today this is our main partner. It turns out that the severance of relations with the USSR benefited our light industry. Previously, we supplied goods and were paid money without question, but now we need to improve the quality. Russia has always worn and will wear leather. We don't have many competitors. Leather processing is a fairly dirty industry; there are not many countries in the world that do it. For example, Europe doesn’t make leather here, they just give orders and then put on their brands. India produces leather clothing for such brands as Pierre Cardin, Tommy Hilfiger, Versace, DKNY, Hugo Boss. It is more difficult to fight China. There is government support, enterprises are exempt from taxes. There is no such thing in India. But it seems to me that Indian products have a slight psychological advantage over Chinese ones. Our products are more trusted in Russia compared to what our neighbors produce; Indian manufacturers are believed to make higher quality goods.

The Indian leather industry occupies a prominent position in the Indian economy in terms of significant export earnings, employment and growth trend.

The role of planned industrial development is increasing in order to optimally use available raw materials in order to obtain maximum income, especially from exports.

Exports of leather and leather products have increased manifold over the past decades. In monetary terms, exports increased from Rs 28 crore in 1956-57 to Rs 9000 crore in 2000-01 i.e. almost 320 times in five decades (1 crore equals 10 million).

Today the industry ranks eighth in the country's export trade.

The composition of leather and leather goods exports from India has undergone significant structural changes over the last three decades, from exporting almost exclusively raw materials in the sixties to exporting finished goods in the nineties. Finished products now account for 81% of the industry's total exports, up from just 7% in 1956-57.

Many expert committees have been formed, from time to time, by the Government of India with the aim of formulating measures to increase the exports of the leather sector. The initiation of the course pursued by the Government on the basis of the recommendations of these committees was decisive for these changes.

Organizational structure of the leather industry

• Tanning and Dressing
• Shoes and shoe components
• Leather clothing
• Leather goods (bags, cases, gloves, accessories)
• Saddlery products.

Main production centers

The major manufacturing centers for leather and leather products are: Chennai, Ambur, Ranipet, Vaniyambadi, Trichy, Dindigul in Tamil Nadu, Kolkata in West Bengal, Kanpur and Agra in Uttar Pradesh, Bangalore in Karnataka, Hyderabad in Atdira Pradesh and Delhi.

Estimation of production capacity for leather and leather goods, including non-leather footwear (1999)

Source: CLRI

Characteristics of the Indian Leather Sector

• Employs the labor of 2.5 million people, mainly from the weaker sector and female labor.
• Almost 60-65% of production is from the handicraft sector.
• Annual exports reach almost 2 billion US dollars.
• Provides 10% of the world's raw hides.
• Has high value added by domestic processing.
• High return on capital investment, i.e. high capital turnover ratio.
• Has huge potential for future growth (both for domestic use and for export).
• Production complies state requirements countries to protect environment.
• At production sites, the main priority is given to safety and quality of work to protect the environment.
• Careful care for consumer safety.
• Some world famous leather products are sourced from India.

Industry potential

Raw material base

The country has a huge leather industry raw material base of 212 million cattle, 96 million buffaloes, 144 million goats and 53 million sheep. According to the latest statistics, India ranks first in the world in terms of livestock population. These four varieties of livestock provide raw materials for the leather industry in India.

The annual processing of 65 million whole hides and 170 million hides is a powerful backbone of the industry. A certain variety of breeds of goats, cows and sheep allows us to maintain a leading position in the world market in terms of the quality of leather products.

Labor force

The abundance of skilled labor involved in tanning, dressing and production of finished products is another strength in the industrial development strategy. The competitive salary level in the country is an additional advantage.

Technology

Improvement in technology in the tanning sector in accordance with international environmental standards, the ability to develop modern designs for modern leather products, especially footwear, upgradation of equipment and readiness to meet changing fashion and consumer demands are the strengths of the Indian leather sector. A number of institutions like CLRI, FDDI, NID, NIFT and others have been established to provide support to the Indian Leather Industry in the field of scientific research and development, testing and quality control of products, in the design and further improvement of products.

Environmental protection

In recent years, India has paid serious attention to environmental protection in the tanning sector of the leather industry. 17 public and more than 180 private liquid waste treatment plants operate in the country, treating 70% of the approximately 80,000 cubic meters of liquid discharge received daily. In addition, a lot of solid waste, such as pieces of meat, trimmings and various protein-containing waste, wool, are processed into useful by-products. India's achievements in this field over the past less than 10 years have been praised by experts and businessmen in Europe and the United States, as well as international agencies such as the United Nations Industrial Development Organization (UNIDO).

Support for related industries

Related industries such as leather chemicals, finishing auxiliaries, components, consumer products and accessories are very helpful in solving the challenges facing the leather industry.

Export of leather industry

Export of leather and leather products in 1999-2000 and 2000-2001

In millions of rupees

Source: DGCI& S. Calcutta
In millions of US dollars

Global India Export Scenario

The volume of sales of leather and leather products on the world market is growing every year and in 1999 reached a level of 68 billion US dollars.

Exports of Indian leather and leather products have increased manifold over the last three decades and currently contribute 2.35% to global trade.

India's share in global leather imports is 1.97%. The main countries exporting leather and their share in world exports: Italy - 23.39%; Korea - 9.60%; USA - 6.80%; Argentina - 6.11%; Germany-5.72%; Brazil - 4.88%; Great Britain - 2.94%; China - 2.88%, etc.

In global imports of leather and leather products, the share of leather shoes is 38.65%. India's share in global leather footwear imports is 1.43%.

The main countries exporting leather shoes and their share in world exports are: Italy - 18.62%; China -15%; Portugal - 5.63%; Spain - 5.60%; Brazil - 4.28%; Indonesia - 3.61%; Germany - 3.56%; Belgium - Luxembourg - 2.69%; Great Britain - 2.56% and others.

India's share in global imports of footwear components is 4.96%. The main countries exporting footwear components and their share in world exports are: Italy - 29.12%; Korea - 7.89%; China - 7.45%; USA - 6.98%; Romania - 5.63%; Tunisia - 3.15% and others.

India's share in global imports of leather clothing is 11.17%. The main countries exporting leather clothing and their share in world exports are: China - 39.22%; Pakistan - 9.24%; Türkiye - 7.10%; Italy - 7.02%; Germany - 5.02%; Korea - 4.98%; USA - 2.54% and others.

India's share in global imports of leather goods is 7.08%. The main countries exporting leather goods and their share in world exports are: Italy - 21.65%; China - 16.52%; France - 11.51%; USA - 5.22%; Greece - 83%; Thailand - 4.62%; Germany - 3.69% and others.

India's share in global imports of leather gloves is 9.62%. The main countries exporting leather gloves and their share in world exports are: China - 35.77%; Pakistan - 2.62%; Germany - 2.02%; Italy - 1.92%; Hungary - 1.57%; Mexico - 1.20% and others.

India's share in global imports of saddlery is 8.27%. The main countries exporting saddlery products and their share in world exports are: China - 14.27%; Denmark - 3.98%; Mexico - 3.68%; Italy - 3.68% and others.

India's share in global imports of non-leather footwear is 0.08%. The main countries exporting non-leather footwear and their share in world exports are: China - 26.03%; Italy - 6.73%; Belgium-Luxembourg - 4.35%; Indonesia - 3.49%; Spain - 2.61%; France - 2.06%; Thailand - 1.70% and others.

India is fiercely competing in the global market with China, Vietnam, Thailand, Indonesia and other countries, which are emerging as leading producers of leather products.

Eastern European countries such as Poland, Romania, the Czech Republic and Slovakia have once again established themselves as leading production centers for leather products, especially in the footwear sector. These countries are also serious competitors to India's exports as they have the geographical advantage of being close to the global market.

Development prospects

The global leather market is witnessing growth due to rising demand for leather products.

Domestic demand is also expected to further increase due to the growth of the overall gross product and the characteristics of consumption in general, especially for footwear and, in particular, for leather goods.

Developed countries have lost their position in the competition in the leather market and depend on developing countries, such as India.

The Indian leather industry is fully prepared to meet the increased demand of the market consumers by upgrading its technology and equipment.

The Indian government is playing big role in ensuring the growth of leather goods exports, taking into account the existing strengths and prospects.

Taking into account the recent experience gained and current trends development, an expert assessment of development prospects for the next five years was carried out. Accordingly, India's exports are expected to reach US$3.6 billion by 2005-06, projecting a 5% share of global trade.