By lokesh

Animal skins were man’s first clothing material As long back as two thousand five hundred

years ago, the Greeks had leather tanneries located outside the city to keep the pollution away from human habitation

one of the oldest crafts an art of making useful and decorative articles

from leather for various functional purposes such as drinking water, leather armour worn by soldiers for protection, footwear, jackets, coats, dresses, skirts, hand bags, wallets, and games items

During the days of British, hides and skins from India were sent as semi-processed and less value added products to London & other markets.

sixties this exploitation was severed when exporters sent their raw skins and hides, semi processed leathers directly to various overseas markets

export of value added semi-finished and finished leathers as a result of landmark decision

exporting of highly value added leather products and goods -encouraged by incentive schemes.

In spite of these measures - government of India, some western markets such as Italy, Spain, Hong Kong etc, which do not have raw materials have continued to buy our semi-finished leather for further process

The gradual closing down of a number of shoe manufacturing units in USA, despite increase in the per capita consumption of shoes

The reluctance of modern generation in UK to continue their family business in tannery

The laborers in western countries finding leather industry not sufficiently attractive.

The leather sector is a significant contributor to the Indian economy with a massive potential for employment, growth and exports

provides direct and indirect employment to around 2.5 million people particularly in the semi-urban and rural areas

Employs 2.5 million persons mostly from weaker sections of the society

A large part (nearly 60-65%) of the production is in the small/cottage sector.

Export oriented - amongst top seven export earners for India Endowed with 10% of the world’s raw material.

MANPOWER: STRONG RAW MATERIAL BASE

Exports to Germany alone account for 18.81% followed by UK with 16.92%, US with 15.97% and Italy with 10.33%.

India’s share in world imports of leather is 1.07%, which is far behind Italy (23.70%), Korea ((.42%), Argentina (6.21%), USA (6.43%), Germany (5.90%), Brazil (5.29%) and UK (2.65%).

world imports- Indian leather garments share is 4.69%. The major exporting countries of leather garments and their shares are China (28.70%), Germany (8.95%), Italy (6.58%), Turkey (5.08%), France (3.54%), Romania (2.91%), etc

    Pre tanning operations: Curing - wet salting, drying and dry

salting Trimming Soaking Liming Deliming Bating Degreasing Pickling

   Tanning operations Vegetable tanning Mineral tanning or chrome tanning

 

Post-tanning operations Sammying Splitting Shaving Neutralization Retanning Dyeing Fat liquoring Putting out Drying Conditioning Staking Toggle drying Trimming Buffing/snuffing Brushing Selection/grading  

registering authority for exporters Collecting and disseminating information pertaining to the

leather Promoting Sponsoring teams of member-exporters Organizing, international leather fairs Organizing buyer seller meets abroad. Sponsoring the visit of sales-cum-study teams Holding seminars/workshops Arranging for the training Inviting foreign Organizing joint venture/business collaborations/image

building Assisting exporters Issuing certificate Launching member exporter’s profile

INSPECTION & SELECTION OF RAW MATERIAL I.E. GARMENT LEATHER

ASSORTMENT MATCHING CUTTING FUSING TAILORING, PASTING, LINING, WADDING BUTTONING THREAD CUTTING TRIMMING FINISHING CHECKING& FINAL INSPECTION PACKING & DESPATCH.

Big raw material base producing some of the finest calf skins, goat and sheepskins.

Well developed tanning and finishing facilities capable of producing leathers

Vast network of production facilities for making all kinds of leather goods catering

Vast manpower Comparatively low wage level Government of Indians consistent policy

supports

Unplanned growth & set-up Low average unit value realization Shortage of properly trained technical manpower for

manning various departments and activities connected from sourcing of raw materials to production and marketing

Shortage of properly trained manpower Non-professional attitude of the entrepreneurs Absence of well-developed infrastructural support Financial constraints and non professional financial

management Unprofessional marketing efforts and management Non-availability of adequate quality raw materials.

Country-wise Export Performance: (2009-10)

Trend in Major Importing Countries of Leather Products

Country Apr-Mar Apr-Mar % Variation

2006-07 2007-08

Germany 410.08 488.72 19.18%

Italy 413.35 479.04 15.89%

UK 359.84 414.32 15.14%

Spain 185.78 212.07 14.15%

France 174.04 196.17 12.72%

Netherlands 100.82 133.37 32.29%

Australia 39.38 49.74 26.33%

Denmark 42.30 49.08 16.04%

U.A.E. 62.55 74.53 19.14%

Portugal 49.92 56.06 12.31%

China 42.52 51.90 22.05%

Sweden 29.01 38.81 33.79%

Canada 32.17 35.90 11.58%

Hong Kong 279.72 267.93 -4.21%

USA 317.59 306.69 -3.43%

Saudi Arabia 15.77 15.53 -1.56%

Region APR-MAR

2006-07

Share in Total Export

APR-MAR

2007-08

Share in Total Export

% Variation

Southern Western Eastern Northern Central

Others

1250,12 569.58 437.97 377.80

78.86

345.10

40.86% 18.62% 14.32% 12.35%

2.58%

11.28%

1398.49 695.63 517.85 377.21 99.69 388.65

40.22% 20.00% 14.89% 10.85% 2.87% 11.18%

11.87%

22.13%

18.24%

-0.16%

26.41%

12.62% Total 3059.43 100.00% 3477.52 100.00% 13.67%

Product 2006-07 2007-08 2008-09 2009-10 2010-11

Actual Export

Leather 688.05 726.85 785.00 847.80 915.63

Footwear 1212.25 1967.88 2597.60 3428.83 4526.05

Garments 308.98 358.53 372.87 387.78 403.30

Leather Goods 690.66 733.34 798.69 870.06 948.04

Saddlery& Harness

81.85 105.66 127.85 154.70 187.19

Total 2981.79 3892.26 4682.01 5689.17 6980.21

        CATEGORY APR-MAR APR-MAR % VARIATION

  2008-09 2009-10  

FINISHED LEATHER 30970.73 29677.49 -4.18%

LEATHER FOOTWEAR 57237.67 59511.52 3.97%

FOOTWEAR COMPONENTS 11330.34 9921.86 -12.43%

LEATHER GARMENTS 19601.16 20330.45 3.72%

LEATHER GOODS 40172.55 35867.98 -10.72%

SADDLERY AND HARNESS 4238.48 3956.19 -6.66%

NON-LEATHER FOOTWEAR 2000.34 2087.90 4.38%

TOTAL 165551.27 161353.39 -2.54%

Footwear Leather Garments Leather Goods / Accessories

Acme, Ann Taylor, Bally, Charter Club, Clarks, Coach, Colehann, Daniel Hector, Deichmann, DKNY, Double H, Ecco, Elefanten, Etienneaigner, Florsheim, Gabor, Geoffrey Beene, Guess, Harrods, Hasley, Hugo Boss, Hush Puppies, Kenneth Cole, Liz Claiborne, Marks & Spencer, Nautica, Next, Nike, Nunn Bush, Pierre Carding, Reebok, Salamander, Stacy Adams, Tommy Hilfiger, Tony Lama, Versace, Yves St. Laurent

Pierre Cardin, Tommy Hilfiger, Versace, DKNY, Hugo Boss, Liz Claiborne, Ann Taylor, Nautica, Kenneth Cole, Charter Club, Daniel Hector

Coach, Liz Claiborne, Harrods, Yves St, Laurent, Tommy Hilfiger, Etienne Aigner, Geoffrey Beene, Marks & Spencer, Guess, Next, Pierre Cardin

 The Government of India had identified the Leather Sector as a Focus Sector in its Foreign Trade Policy 2004-09 in view of its immense potential for export growth prospects and employment generation.

Accordingly, the Government is also implementing various Special Focus Initiatives under the Foreign Trade Policy for the growth of leather sector.

With the implementation of various industrial developmental programmes as well as export promotional activities, thereby to enhance export to US$ 7.03 billion by 2013-14, and resultantly create additional employment opportunities for overall one million people. 

REGULATORY OPERATIONAL

A Typical International A Typical International TransactionTransaction

French ImporterAmerican Exporter

Bank of New York Bank of Paris

6. Goods Shipped to France7. Exporter

Presents Draft to Bank

10 and 11 Exporter Sells Draft to Bank

14. B of NY Presents Matured Draft and Gets Payment

12. Bank Tells Importer Documents Arrive

13. Importer Pays Bank

2. Exporter Agrees to Fill Order

1. Importer Orders Goods 3. Importer Arranges for LOC

8. B of NY Presents Draft to Bank of Paris9. Bank of Paris Returns Accepted Draft

4. Bank of Paris Sends LOC to B of NY

5. B of NY Informs Exporter of LOC

FIRST STAGE:

1) The exporter should scrutinize the export order with reference to the terms and conditions of the contract.

2) The export order must specify the mode of payment in unmistakable terms such as letter of Credit, Documents on Payment, Documents against Acceptance, etc.

3) The essential terms and conditions of the export order must tally with those of L/C The most important documents which are usually demanded by the

importer are in this stage are:

1) Bill of Exchange2) Commercial Invoice3) On-board Clean Bill of Lading4) Marine Insurance Policy5) Packing List and6) Certificate of Origin

SECOND STAGE:

i) Preparations for the dispatch of goods are started.ii) A ‘delivery note’ is sent to the Works Manager or the Factory Manager

THIRD STAGE:

* As soon as the goods have been manufactured or procured, the following procedures are to be followed:

1) The clearance of the Excise Authorities has to be obtained.

2) AR-4 form is to be prepared in sixtuplicate.

3) The other authority which is to be approached immediately at this stage is the Export Inspection Agency for conducting quality control and pre-shipment inspection.

4) If the goods are despatched to the port of shipment by railway, Railway Receipt is obtained.

FOURTH STAGE:

1) After the goods have been despatched to the port town, the Works Manager sends a ‘dispatch advice’ to the Export Department.

2) Soon after, an application is sent to the insurance company for marine insurance cover. The insurance policy is obtained in duplicate.

FIFTH STAGE:

The clearing and forwarding agent takes delivery of the consignment from the railways and arranges its storage in the warehouse. Thereafter he prepares the requisite copies of the shipping bill.

SIXTH STAGE:

i)After the shipping is passed by the customs a Dock Challan is prepared

ii) Dock Challan consists of the following details: - Consignees name and address - Vessels name - Port of destination - Exporters name - Marks and Number of packages - Gross weight - Measurement in cubic metres & weight in metric tons - Port charges payable

iii) Dock Challan is processed in the following manner: - Place in Receiving box - The clerk calculates & checks the port commissioners shipping charges. - Deposit with cash clerk - Sheet writer - Distributing clerk releases the Dock Challan to the clearing and forwarding agent after debiting the exporters account with the port commissioners.

SEVENTH STAGE:

- The passed Shipping Bill including the Dock Challan,where submitted,Cart Ticket or Boat Note,- In case of overside cargo, are carried by the Authorised Licensed Sircar accompanying the goods for making the cargo ready for shipment.

-The processing in this stage is as follows: i) Gate warder checks the documents,registers and permits entry of cargo into Dock. ii) Export Shed Writer accepts Dock Challan and Cart Ticket iii) Receiving Clerk issues unloading slip for cargo from lorry afetr checking its condition. iv) The Supercargo arranges unloading cargo from lorry. v) The writer registers Dock challan in manifest and sends it to the Customs Prevention Officer for endorsement. vi) The prevention officer examines & checks the contents,weight etc of goods and Dock challan is finally signed by the Customs Divisional Officer vii) The port Commissioner writes in Shed register the details and releases the Dock Challan.viii) The Supercargo takes over control of the cargo for shipment

EIGHT STAGE:

i) The ships export clerk calls for cargo from shed or boat and after loading prepares the Mates Receipt.

ii) The mates receipt is signed by the ships Captain or his agent.It is the delivered to Ports Commissioners Shed.

iii) The clearing and forwarding Agent pays the port charges and takes delivery of the Mates receipt.

iv) This Mates receipt is presented to the shipping company and requisite copies of the Bill of Lading are obtained by the clearing and forwarding agent.

NINTH SATGE:

* The clearing and forwarding agent forwards the following documents to the exporter:

i) Full set of Bill of Lading,Clean,on Board,together with the required number of non-negotiable copies

ii) Export Promotion copy of the Shipping Bill

iii) Copies of Customs-attested Invoice

iv) AR-4 form(Duplicate copy)

v) Original Export order

vi) Original Letter of Credit and

vii) Railway Concession form, duly attested by the customs.

TENTH STAGE:

* As soon as the exporter receives the documents he files a claim with the Maritime Commissioner of Central Excise or Assistant Commissioner in the Port town for rebate of central excise duty.

* Side by side shipment advice is sent to the importer which contains the following documents: i) A non-negotiable copy of the Bill of Lading ii) Customs Invoice iii) Commercial Invoice iv) Packing list.

ELEVENTH STAGE:

* The following documents are presented to the negotiating bank:

1) GR form(duplicate copy)

2) Bill of Exchange

3) Full set of Clean-on-board Bill of Lading

4) Original Letter of Credit

5) Commercial Invoice

6) Customs invoices

7) Certificate of Origin

8) Packing list(four copies)

9) Marine Insurance Policy(two copies)

10) Bank Certificate

11) Commercial Invoice copy

12) Consular Invoice if necessary

TWELTH STAGE:

* The processing is done at the negotiating bank. All the documents are scrutinized with reference to the terms and conditions of the original Letter of credit.

* Thereafter a set of the following documents are transmitted to the banker of the importer: 1) Bill of Exchange 2) Negotiable Bill of Lading 3) Commercial Invoice 4) Customs Invoice 5) Insurance Policy 6) Certificate of Origin 7) Consular Invoice 8) Packing List

* The negotiating bank transmits the duplicate copy of the GR form to the Exchange Control Department of the Reserve Bank of India.

* The original copy of the Bank Certificate along with attested copies of Commercial Invoice, is returned to the exporter.

* The duplicate copy of the Bank certificate is forwarded to the office of DGFT.