West Bengal's Leather Industry Opportunities

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West Bengal's Leather Industry Opportunities

Market Research [MRU] ID: 81448

Regions: ANESA; Asia; South Asia; ADB

Country: India

Industries: Environmental Technologies; Apparel & Textiles; Construction, Building & Heavy

Equipment; Industrial Equipment & Supplies

Sectors: Pollution Control Equipment; Leather/Fur; Used/Reconditioned Equipment; General

Industrial Equipment/Supplies

by: Ashoke Kanjilal

approver: N/A

Report Date: 09/26/2001

Expires: N/A

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENTOF STATE, 2007. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

Summary:

West Bengal's leather industry employs over 200,000 people. In addition to Bata India Ltd. there areapproximately 600 small tanneries and 20,000 units manufacturing leather products. West Bengalaccounts for 65 percent of India's leather goods exports. Large investments and strenuous efforts arerequired to improve the quality and increase the value of leather exports. To address pollution fromtanneries in Calcutta, the state government decided to set up an integrated world-class leather complexoutside Calcutta. Tanneries and leather industries are unlikely to move there until and unless there isadequate infrastructure and an effluent treatment plant. This is unlikely to happen in the near future.However, as the various segments of the CLC develop, there could be opportunities for US companiesfor sales of equipment, machinery, technology and consultancy services. End summary.Tanneries:

With its large livestock population, West Bengal produces 8 percent of India's cowhides and 11 percent ofits goatskins. Large quantities of skins from Bihar (India's second largest producer of hides) and U.P. arealso tanned here. Bata India Ltd. (BIL) has India's largest tannery (annual capacity 335,000 cow andbuffalo hides) in a Calcutta suburb. Apart from BIL, leather is tanned by 600 smallscale, family-ownedunits concentrated in the Tangra, Tiljala and Topsia areas. The largest of these is the USD 7 million TajLeather Works (TLW).

Numerous tiny units housed in ramshackle sheds use obsolete, traditional methods of tanning. Totalannual tanning capacity excluding BIL is 300,000 tons of hides or 560 million sq. ft. (MSF) leather, butcapacity utilization is about 75 percent and annual production is about 420 MSF leather. Sometanneries, including BIL's and TLW's -- and many tiny ones -- recycle their wastewater. BIL and TLWhave modern tanneries and effluent treatment plants.

The rest of the tanneries dump their untreated effluent in the city's sewers, which drain into the city'scanals and the Wetlands (natural water bodies covering an area of over 400 sq. km. on Calcutta's eastern

fringe). According to the director of the College of Leather Technology, 85-90 percent of the tanneries'effluent pollutants are eliminated through reverse osmosis in the Wetlands.


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India's largest leather goods producer:

Calcutta offers the leather industry several advantages: easy availability of a wide variety of leather (cow,calf, buffalo, sheep, goat, kid); low production costs; a large pool of unskilled, semi-skilled and skilled

workers at competitive rates; and abundant water and power. An airport and two ports facilitate exports.West Bengal is India's largest manufacturer of leather goods. In addition to BIL (annual capacity over 20million pairs of shoes/uppers) there are approximately 20,000 small units making footwear/uppers(12 million pairs per year); industrial gloves (50 million pairs per year); garments (800,000 pieces peryear); and accessories and luggage 35 million pieces per year).

India's largest exporter of leather products:

West Bengal accounts for 65 percent of India's leather goods exports (1999-2000 exports were valued atUSD 226 million). But its share of total Indian leather and leather goods exports is 15 percent. TheEuropean Union and North America are the leading importers of West Bengal's leather and leather goods(79 percent and 12 percent respectively). Unfortunately, West Bengal is generally considered a source oflow-priced, poor qulaity leather goods. Improving the quality of both leather and leather goods is aproblem as most tanneries and manufacturers are small and cannot afford the investments required toupgrade production facilities. Only a few manufacturers have modern equipment. But most of them are

handicapped by low overall production capacity, which prevents them executing large export orders.

Labor issues:

As far as working conditions are concerned, BIL, TLW and a few other units are the exception. In additionto salubrious working conditions, BIL's workers enjoy subsidized housing, medical facilities and numerousother benefits. TLW has modern machines with devices to prevent accidents and injuries to workers.In contrast, working conditions in the tanneries and the leather manufacturing units are generallyappalling and there is scant regard for workers' safety or health.

The Calcutta Leather Complex: A Grandiose Project

In response to the 1996 Supreme Court order banning polluting industries in municipal areas, the

Government of West Bengal (GOWB) decided to set up a modern, integrated leather complex at a siteabout 25 km from where most of the tanneries -- and leather manufacturers -- are currently located. Aprivate company was selected to set up the Calcutta Leather Complex (CLC) on a build-operate-transferbasis. The USD 90 million CLC is a grandiose project: it aims to provide "synergistic" facilities for allaspects of leather production with environmentally friendly technology within a pollution-free environment.It is designed to house the entire gamut of activities associated with the leather industry: abattoirs,facilities for processing rawhides, tanning (with a common effluent treatment plant - CETP), designingand manufacture of all leather products, and recycling of waste products --skin, hair, bones and water.CLC plans include permanent exhibition halls, a design center, R and D centers, schools, shoppingcenters, a training center, a hotel complex, a captive standby power plant, warehousing, a housing estateand state-of-the art telecommunications.

The CETP will have 6 modules, each capable of treating 5 million litres a day (MLD) of wastewater. TheGOI will provide a soft loan to cover 50 percent of the total CETP cost; UNIDO will provide USD 500,000

for the CETP's first module. In June the GOI sanctioned funding for the CETP and a tender for itwould be issued before the end of the year. The CLC will also have a common chrome recovery plant;UNIDO will provide USD 140,000 for purchase of machinery and equipment for it.

Thus far, of the total 1100 acres agreed upon, the GOWB has handed over 950 acres to the CLCauthorities. This land has been leveled, some roads and water storage tanks built, and light postsinstalled. Plots have been demarcated. A two-lane road connects the city with the CLC. Additionally,telecommunication facilities and civic and social infrastructure would also come up in due courseof time. Although no timeframe for the installation of the CETP has been established, the GOWBEnvironment Ministry would not allow any tanneries to be set up at the CLC until the CETP was in place.Therefore, the CLC and GOWB authorities are actively searching for the potential technology providersfor the CETP.

Comments:

The raison d'etre of the CLC was the elimination of pollution caused by tanneries within the Calcuttamunicipal limits. The CLC was scheduled to be operational within 36 months from the date of initial


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handing over of land to the promoters. Although the first tranche of land was handed over in 1997, theproject is way behind schedule. Tanneries cannot be set up until at least the first CETP module isfunctional. The setting up of the various facilities at the CLC, especially the CETP, the chrome recoveryplant and plants for manufacture of various chemicals, could offer opportunities to US companies forsale of machinery, equipment, technology and consultancy services.

For additional details on this project U.S. companies could contact the following addresses:

a) West Bengal Industrial Development Corporation Ltd.Address: 5 Council House Street, Calcutta 700 001, IndiaPh.: (91-33) 248-6583, 248-6695Fax: (91-33) 248-3737, 243-0130Email: [email protected]: Mr. D. P. Patra (IAS), Managing Director

b) Government of West Bengal -- Commerce & Industries DepartmentAddress: Writers' Building, B.B.D. Bagh, Calcutta 700 001, IndiaPh.: (91-33) 214-5487Fax: (91-33) 214-4371Email: [email protected]: Mr. Jawhar Sircar (IAS), Principal Secretary - C&I

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West Bengal's Leather Industry Opportunities

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