Leather Industry 2012 17 Planning Commission
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Transcript of Leather Industry 2012 17 Planning Commission
-
ReportofWorkingGroup
on
Leather&LeatherProductsTwelfthFiveYearPlanPeriod(201217)
Submittedby:
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BACKGROUNDOFTHEWORKINGGROUP
ThePlanningCommissionconstitutedaWorkingGroupforLeather&LeatherProductsfortheTwelfth Five Year Plan 201217 by Office Memorandum dated 28.04.2011, under theChairmanshipofSecretary,DepartmentofIndustrialPolicy&Promotion,GovernmentofIndia.TheNodalDepartmentforthisWorkingGroupisDIPP.
TheCompositionoftheWorkingGroupwasasfollows:
1. Shri R.P. Singh, Secretary, Department of Industrial Policy & Promotion - Chairman 2. Member- Secretary, National Manufacturing Competitiveness
Commission or Nominee - Member. 3. Secretary, Department of Commerce or Nominee - Member 4. Secretary, Ministry of Micro, Small & Medium Enterprises
or Nominee - Member 5. Secretary, Department of Animal Husbandry or Nominee - Member 6. Secretary, Ministry of Environment & Forests or Nominee - Member 7. Secretary, Ministry of Food Processing Industries or Nominee - Member 8. Adviser (Industries), Planning Commission - Member 9. Director, Central Leather Research Institute, Chennai or Nominee - Member 10. MD, Footwear Design & Development Institute or Nominee - Member 11. Director, IIT Kanpur or Nominee(for Saddlery Development) - Member 12. CEO, National Skill Development Corpn. Or Nominee - Member 13. Chairman, Council for Leather Exports, Chennai or Nominee - Member 14. President, Indian Footwear Components Manufacturers Association,
Mumbai or Nominee. -Member 15. President, Indian Leather Products Association, Kolkata or Nominee - Member 16. President, Indian Leather Garments Association, Delhi or Nominee - Member 17. President, Agra Footwear Manufacturers & Exporters Chamber - Member
(AFMEC),Agra or Nominee. 18. Chairman/MD, Bata India Ltd. - Member 19. CEO, Liberty Shoes Ltd. - Member 20. Chairman/MD, Crew B.O.S. Products Ltd. - Member 21. Chairman/MD, M/s. Tata International Ltd. - Member 22. Chairman/MD, M/s. Bhartiya International Ltd. - Member 23. CEO, Nike India 24. Shri M.C. Singh, Sr. Economic Adviser, DIPP - Member 25. Shri Chaitanya Prasad, Joint Secretary (Leather), DIPP -Member
Secretary
TheTermsofReferencefortheWorkingGroupisgivenbelow:
I. Toarticulate the long termgoals tobeachieved in termsofgrowth, competitivenessandshareinglobaltradeintheleatherandleatherproductssector
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II. Toreviewthestatusof leather, leatherfootwear, leathergarments, leathergoodsandsaddlerindustryalongwithforwardandbackwardlinkagesandindentifytheissuesandgapareasthatneedtobeaddressedtoachievethelongtermgoals
III. Toexamine thestatusandeffectivenessofallongoingschemespertaining to leathersector,and itsforwardandbackward linkagesbeing implemented inthe11thFiveYearPlan
IV. TobenchmarkIndianleatherindustryagainstthebestpracticesofinternationalleatherindustry
V. Toevolveacomprehensivestrategyforthedevelopmentofinternationallycompetitiveleatherindustryincludingforwardandbackwardlinkageskeepinginviewthelongtermgoalstobearticulatedasperitem1above
VI. Toestimatetheyearwisedemandandcapacityforallsegmentsoftheleatherindustryforindigenousconsumptionaswellasforexportupto201617intheperspectiveofthelong term goals and to assess the requirement of raw materials, skilled manpower,technology,infrastructureetcformeetingthesame.
VII. To identifytheenvironmentrelated issues includingproblemsofzero liquiddischarge,removalanddisposaloftotaldissolvedsolidsetcandsuggestmitigationmechanism.
VIII. To indicate themilestonestobeachieved inthe12thPlan inthecontextof long termgoalsasperitem1above,andrecommendprogrammes/schemes/measuresthataretobe initiated, continuedordiscontinued in the12thPlanperiodandestimated fundrequirement.
IX. Tomakeanyotherrecommendationsasmaybeappropriateforsustainedgrowthandcompetitivenessofthesector
In its firstmeetingheldon23rdMay2011, theWorkingGroupconstitutedsixSubGroups toaddressissuesrelatedtodifferentareas/subsectorsoftheleathersector.TheseSubGroupsareasfollows:
A. MacroIssuesofLeatherSector,Convergence&LinkagesB. InfrastructureDevelopmentC. SkillDevelopmentInitiatives;D. LeatherTechnology,Innovation&EnvironmentalIssues;E. BrandBuilding;F. FDIinLeatherSectorinIndia
ThereportoftheWorkingGroupisplacedherewith.
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Contents
BACKGROUNDOFTHEWORKINGGROUP..................................................................................2
SUBGROUPONMACROISSUESOFLEATHERSECTOR,CONVERGENCE&LINKAGES..............11
1. THECURRENTSTATUSANDFUTUREOUTLOOKOFTHELEATHERINDUSTRY.............12
1.1 INTRODUCTION..........................................................................................................12
1.2 StructureoftheIndustry............................................................................................12
1.3Production,ExportandEmploymentinthissector...................................................13
1.4Totalfactorproductivitygrowth................................................................................19
1.5 SWOTAnalysis............................................................................................................21
1.6 Futureoutlookforproductionandexports...............................................................22
2. EVALUATIONOFTHEINDIANLEATHERDEVELOPMENTPROGRAMME(ILDP)INTHE11THPLAN...................................................................................................................26
2.1 INTEGRATEDDEVELOPMENTOFLEATHERSECTOR(IDLS)(OutlayRs.253.43crore): 26
2.2 LEATHERTANNINGCOMPLEXATNELLORE(OutlayRs.29crore):............................27
2.3ESTABLISHMENTOFBRANCHOFFDDIATFURSATGANJ(OutlayRs.7.17crore):.....28
2.4 FOOTWEARCOMPLEX(OutlayRs.3crore):...............................................................29
2.5 SADDLERYDEVELOPMENT(OutlayRs.10crore):......................................................29
2.6 SUPPORTTOARTISANS(OutlayRs40crore):............................................................30
2.7HUMANRESOURCEDEVELOPMENT(OutlayRs.60crore):.......................................32
2.8UPGRADATIONOFFACILITIESOFFDDIANDESTABLISHMENTOFOTHERSUCHINSTITUTESANDCENTRES:(OutlayRs.300.07crore):..............................................34
2.9UPGRADATION/INSTALLATIONOFINFRASTRUCTUREFORENVIRONMENTPROTECTIONINTHELEATHERSECTOR(OutlayRs.200crore):.................................36
2.10MISSIONMODE(OutlayRs.10crore):.....................................................................37
2.11ESTABLISHMENTOFTRAININGCENTREINMADHYAPRADESH(Rs.24.85crore):..37
2.12AdditionalGirlsHostelatFDDIFursatganj(OutlayRs.13.77crore):.......................38
SUBGROUPONINFRASTRUCTUREDEVELOPMENT.................................................................39
3. InfrastructureDevelopment........................................................................................40
3.1 Introduction................................................................................................................40
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3.1.1HistoricalBackground...............................................................................................40
3.2 InfrastructureDevelopmentActivitiesImplementedduringEleventhPlanPeriod..40
3.2.1SchemeforDevelopmentofLeatherParks............................................................40
3.2.2IndustrialInfrastructureUpgradationScheme(IIUS)..............................................42
3.2.3IntegratedDevelopmentofLeatherSector(IDLS)Scheme......................................43
3.2.4Micro&SmallEnterprisesClusterDevelopmentProgramme(MSECDP)............44
3.2.5InterventionMeasuresProposedforthe12thPlaninInfrastructureDevelopment46
3.2.5.1 CommonInfrastructure.....................................................................................46
3.2.5.1.1 EstablishmentofNewGreenfieldClustersviaMegaLeatherClustersScheme 46
3.2.5.2 Establishment&UpgradationofPhysicalTestingLaboratoryofCLRI,FDDI&others.........................................................................................................................49
3.2.6InfrastructureStrengtheningattheEnterpriseLevel...............................................50
3.2.6.1 Modernization,technologyupgradationandexpansionofproductioncapacitiesoftheenterprisesfunctioningintheleathersector.................................50
SUBGROUPONSKILLDEVELOPMENTINITIATIVES..................................................................53
4. SkillDevelopmentInitiatives........................................................................................54
4.1 Introduction................................................................................................................54
4.1.1ToinfuseskillsetsintoartisansproductsandclustersthroughtheSupporttoArtisansscheme........................................................................................................56
4.1.2DevelopmentofemploymentopportunityfortheunemployedyouthtomeetthegrowingdemandofthesectorthroughthePlacementLinkedSkillDevelopmentProgram&TrainingofTrainers..................................................................................56
4.1.3Todevelopadequatetraininginfrastructuretomeetthegrowingdemandintheorganizedsector.........................................................................................................57
4.1.4DevelopmentofNationalDesignStudios.................................................................57
4.2PlacementLinkedSkillDevelopmentProgramme,SecondaryTraining&TrainingofTrainers(National/International).............................................................................57
4.2.1TrainingofWorkers(PLSDPProgramme)Rs.250.00Crore...................................58
4.2.1.1 ImplementationMechanism.............................................................................59
4.2.1.1.1 IdentificationofImplementingAgency..........................................................59
4.2.1.1.2 Identificationoftrades...................................................................................60
4.2.1.1.3 Identification/selectionoftrainees................................................................60
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4.2.1.1.4 Minimumtargetoftrainees...........................................................................60
4.2.1.1.5 TrainingCurriculum........................................................................................60
4.2.1.1.6 Implementation..............................................................................................60
4.2.2SecondaryTraining(Existingorganized&unorganizedworkers)Rs.50.00Crore64
4.2.3TrainingofTrainers(National/International)Rs10CrorenotexceedingRs.1.5LakhforNationalTrainingandRs.3.00LakhforInternationalTraining...................64
4.3ProposedGuidelinesforsubschemeSupporttoArtisan........................................65
4.3.1Background...............................................................................................................65
4.3.2ObjectiveoftheScheme...........................................................................................65
4.3.3ImplementationStrategy..........................................................................................65
4.3.4AreasofInvestmentsforSupporttoArtisanFunds.................................................66
4.3.5CriteriaforSelection.................................................................................................66
4.3.6ImplementationoftheScheme................................................................................67
4.3.7AssessmentandEvaluationoftheProjects..............................................................67
4.3.8ConsolidatedResults................................................................................................67
4.4EstablishmentofnewInstitutions&upgradationofFDDI,Chhindwara...................68
4.4.1Background...............................................................................................................68
4.4.2LeatherProductsIndustryinAndhraPradesh..........................................................70
4.4.3LeatherIndustryofOdisha.......................................................................................70
4.4.4LeatherIndustryofPunjab.......................................................................................71
4.4.5LeatherIndustryinBihar..........................................................................................71
4.4.6LeatherProductsIndustryinHimachalPradesh&Uttaranchal...............................72
4.4.7LeatherIndustryinUttaranchal................................................................................72
4.4.8LeatherIndustryinGujarat.......................................................................................72
4.4.9LeatherIndustryinMaharashtra..............................................................................73
4.4.10 LeatherIndustryinKarnataka............................................................................73
4.4.11 LeatherIndustryinGoa......................................................................................73
4.5ProposedEstablishmentPlanofFDDIBranch(perCenter).......................................73
4.5.1ProposedAcademicProgrammes.............................................................................74
4.5.2CreationofPhysicalInfrastructure...........................................................................74
4.5.2.1 ClassRooms,Workshops,Offices,etc...............................................................74
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4.5.2.2 HostelsandStaffQuarters.................................................................................75
4.5.2.3 EstablishmentofTrainingInfrastructure...........................................................75
4.5.2.4 CentreforFootwearDesign&Technology.......................................................75
4.5.2.4.1 ProductDevelopment&DesignCentre.........................................................75
4.5.2.4.2 PILOTPLANT(ConsistingOfCutting,Closing,Components,NonLeather&SportsShoeTechnology,Lasting&FinishingWorkshops).........................................76
4.5.2.5 CentreforLeatherGoods&AccessoryDesign..................................................76
4.5.2.6 CentreforRetailManagement&FashionMerchandising................................76
4.5.2.7 EstablishmentofInformationTechnologyandServiceCentre.........................76
4.5.2.7.1 EstablishmentofComputerCentre................................................................77
4.5.2.7.2 EstablishmentofInternetEnabledWirelessNetwork...................................77
4.5.2.7.3 Library.............................................................................................................77
4.6CostofProject(perCentre).......................................................................................77
4.7 SustainabilityoftheProject.......................................................................................79
4.8EstablishmentoftwoNationalDesignStudios,inNorthIndiaandinSouthIndia....80
4.8.1Need&Justification..................................................................................................80
4.8.2OutputsofNationalDesignStudios..........................................................................80
4.8.3UpgradationofFootwearDesign&DevelopmentInstitute(FDDI)(NOIDA,RAEBARELI,CHENNAI,KOLKATA&CHINDWARA)......................................................82
SUBGROUPONLEATHERTECHNOLOGY,INNOVATION&ENVIRONMENTALISSUES.............85
5. LeatherTechnology,Innovation&EnvironmentalIssues...........................................86
PerspectivesfortheLeatherSectorandIssuesIdentified...............................................86
5.1 InterventionMeasuressuggestedfortheTwelfthPlan.............................................86
5.1.1AnimalHusbandryMeasures....................................................................................86
5.1.2AnimalSlaughterandSkinCollectionImprovementMeasures...............................87
5.1.3RuralTanningImprovementMeasures....................................................................88
5.1.4EnvironmentalManagementMeasuresinTanneries/CETPs................................88
5.1.5TechnologyUpgradationandModernizationofTanneries.....................................88
5.1.6SociallyInclusiveSolidWasteUtilizationScheme....................................................89
5.2DetailsofMeasures....................................................................................................89
5.2.1AnimalHusbandryMeasures....................................................................................89
5.2.2Structure...................................................................................................................89
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5.2.3DetailedPlan.............................................................................................................89
5.3 SlaughterandSkinCollectionsImprovementMeasures...........................................90
5.3.1Aim............................................................................................................................90
5.3.2Structure...................................................................................................................90
5.3.3DetailedPlan.............................................................................................................90
5.4RuralTanningImprovementMeasures......................................................................91
5.4.1Aim............................................................................................................................91
5.4.2Structure...................................................................................................................91
5.4.3DetailedPlan.............................................................................................................91
5.5EnvironmentalManagementMeasuresinTanningSector........................................92
5.5.1Aim............................................................................................................................92
5.5.2Structure...................................................................................................................92
5.5.3DetailedPlan.............................................................................................................92
5.5.4ContinuationofthesubschemeofILDPUpgradation/installationofinfrastructureforenvironmentalprotectionintheLeatherSector.........................93
5.6TechnologyUpgradationandModernizationofTanneries.......................................94
5.6.1Aim............................................................................................................................94
5.6.2Structure...................................................................................................................94
5.6.3DetailedPlan.............................................................................................................94
5.6.4ContinuationofthesubschemeofILDP:IntegratedDevelopmentofLeatherSector(IDLS)Scheme..................................................................................................95
5.7 SociallyInclusiveSolidWasteUtilizationProgram.....................................................95
5.7.1Aim............................................................................................................................95
5.7.2Structure...................................................................................................................95
5.7.3DetailedPlan.............................................................................................................95
5.8TechnologyBenchmarkingofTanneries,Footwear&ComponentsandLeatherGoods.........................................................................................................................96
5.8.1Preamble...................................................................................................................96
5.8.2Neededtechnologyinterventionsforsustainabledevelopment.............................97
5.8.2.1 Processinnovationsforecofriendlyleather.....................................................97
5.8.2.2 Waterandenergysaving...................................................................................97
5.8.2.3 Highercustomerorientations............................................................................97
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5.8.2.4 Highthroughputtechnologysystems................................................................97
5.8.2.5 Leatherasaproductofqualitycircle................................................................97
5.8.2.6 Betterutilizationofrawmaterialresources......................................................97
5.8.3Methodologyproposed............................................................................................98
5.8.4ImplementationMechanism....................................................................................98
5.8.5Majoroutcomesenvisaged......................................................................................98
5.8.6CentreofExcellencefordevelopingLeatherlikeMaterials.....................................99
5.8.6.1 Aim.....................................................................................................................99
5.8.6.2 Structure............................................................................................................99
5.8.6.3 DetailedPlan......................................................................................................99
SUBGROUPONBRANDBUILDING.........................................................................................103
6. BrandBuilding............................................................................................................104
6.1 Introduction..............................................................................................................104
6.1.1ImportanceofaBrand............................................................................................104
6.1.2CurrentScenario.....................................................................................................104
6.2 ILDPC:AGoverningBody.........................................................................................105
6.2.1ScopetheIDLPCshouldbecommittedto..............................................................105
6.2.2Quantum&NatureofAssistance...........................................................................106
6.3 IndianLeatherMark.................................................................................................106
6.3.1ReferenceofOtherQualityMarks..........................................................................107
6.3.2Scope......................................................................................................................108
6.3.3QuantumofAssistance...........................................................................................110
6.4 SchemeforResearch&DevelopmentandDesign&Development........................110
6.5 SchemeforOutsourcedConsultancyProgram........................................................110
SUBGROUPONATTRACTINGFDIINLEATHERSECTORININDIA...........................................115
7. FDIinLeatherSectorinIndia.....................................................................................116
7.1NeedoftheLeatherSectortoAttractInvestments.................................................116
7.2RoleofForeignInvestment......................................................................................117
7.3CurrentGlobalScenariofortheLeather&LeatherProductsIndustryOpportunitytoAttractFDI................................................................................................................118
7.4 Inferences.................................................................................................................119
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7.5CurrentFDIRegulationsandIndiasPositioning......................................................119
7.6 InterventionscarriedoutDuringTenthandEleventhFiveYearPlanPeriods.........120
7.7 InterventionssuggestedfortheTwelfthPlan..........................................................121
7.8Promotionalactivitiesinforeigncountriestobecarriedoutinvariousformats....122
7.8.1OrganizationofRoadShowsinforeigncountries:.................................................123
7.8.2InvestmentpromotionDelegationstoforeigncountries:......................................123
7.8.3VisitofSourcingMissionstooverseascountries...................................................124
7.9PrintcampaigninInternationalmagazinestoreachouttotheprospectiveinvestors 125
7.10InvestmentMeetsinIndia......................................................................................125
CONSOLIDATEDSUMMARYOFPROPOSEDINTERVENTIONSANDITSPLANOUTLAY............130
ANNEXURES.............................................................................................................................133
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SUBGROUPONMACROISSUESOFLEATHERSECTOR,CONVERGENCE&LINKAGES
The following is the composition of the SubGroup on Macro Issues of Leather Sector,Convergence&Linkages:
1) SrEconomicAdviser,DIPP Chairman2) ManagingDirector,M/sBharatiyaInternational Member3) ManagingDirector,M/sCrewB.O.S. Member4) CEO,M/sLibertyShoes Member5) IndianShoeFederation(Representative) Member6) Chairman,CLEorrepresentative Convenor
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1. THECURRENTSTATUSANDFUTUREOUTLOOKOFTHELEATHERINDUSTRY
1.1 INTRODUCTION
The leather industry occupies a place of prominence in the Indian economy in view of itsmassivepotentialforemployment,growthandexports.Therehasbeenanincreasingemphasison its planned development, aimed at optimum utilization of available raw materials formaximizingthereturns,particularlyfromexports.
The post liberalization era has generated significant opportunities for the Indian leatherindustry.With globalplayers looking fornew sourcingoptions, India stands to gain abiggershareoftheglobalmarket.Theleatherindustryhasundergoneadramatictransformationfrombeing a mere exporter of raw materials in the sixties to being a producer of value addedfinishedproducts in thenineties.Policy initiatives takenby theGovernmentsince1973havebeen,toalargeextent,instrumentalforsuchatransformation.Indiahasa2.6percentshareinthegloballeathertradeandthissectorrankseighthintermsofthecountrysforeignexchangeearningsfromtheindustry.Thecompositionofexportshasalsobeenchanging,withmoreandmorevalueaddedproductsbeingexported.
Indiasshareinglobalvalueaddedfromthissectoratconstant2000priceswas2.1percentin2000anddeclinedto1.8percentin20091.ThoughIndiahasdistinctadvantagesintheleatherindustry in termsof availabilityof rawmaterialswith the largest livestockpopulation in theworld,thetappedpotentialintheleathersector,particularlyinthehighendvaluechainisstilllimited.Thisuntappedpotentialprovidesthesectorsignificantopportunitiesforexpansionanddiversification.
1.2 StructureoftheIndustry
The leather industry in India is geographically well diversified, though Tamil Nadu, UttarPradesh andWestBengal account forbulkof theoutput. Themajorproduction centres forleather and leather products are located at Chennai, Ambur, Ranipet, Vaniyambadi, Trichi,Dindigul in TamilNadu, Calcutta inWest Bengal, Kanpur, Agra andNoida inUttar Pradesh,Jalandhar inPunjab,BahadurgarhandManesar inHaryana,Bangalore inKarnataka,DelhiandHyderabad inAndhraPradesh.The sector isdominatedbymicroand smallunitswithbiggerunitsaccountingforjustaround5percentofthetotalmanufacturingunits.Thedistributionoftheunits in this sector in termsof thebroad classificationofMSME andothers is indicatedbelow:1UNIDOInternationalIndustrialStatisticsYearbook2011
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Table1:StructureofIndustry(Numbers)2
LargeUnits
MediumUnits
SmallUnits
MicroUnits
MerchantUnits Total
Finishedleather 30 49 309 68 151 607LeatherFootwear 38 46 228 49 81 442NonLeatherFootwear 4 2 34 13 17 70FootwearComponent 29 32 182 28 22 293LeatherGoods 14 13 242 259 210 738LeatherGarments 8 8 132 49 72 269LeatherGloves 4 3 38 36 24 105HarnessandSaddlery 3 9 74 69 26 181Total 130 162 1239 571 603 2705
NOTE: Multiple units of a single company are counted as one. But if they producedifferentproducts,theyfigureineachoftheproductioncategories.
The leather industry isspread indifferentsegments,namely, tanningand finishing, footwearand footwear components, leather garments, leather goods including saddlery and harness,etc.Theestimatedproductioncapacityindifferentsegmentsisasunder:
Product CapacityLeatherHides 65millionpiecesSkins 170millionpiecesFootwear&FootwearComponents 909millionpairsLeathershoeuppers 100millionpairsNonleatherfootwear 1056millionpairsLeatherGarments 16millionpiecesLeatherGoods 63millionpiecesIndustrialGloves 52millionpairsSaddlery&Harness 12.50millionpieces
1.3 Production,ExportandEmploymentinthissector
Production data for leather sector, as for the other industries, are available in theNationalAccountsstatistics (NAS).NASprovidesdata forboththeorganized factorysector (defined interms of employment and covering all units employing 10 or more workers) and the
2CentralLeatherExportCouncil
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unorganized sector (definedasunitsemploying less than10workers).Asper theNAS, totaloutputof the leathersector increased fromRs27,233crore in200405 toRs47,940crore in200910atanaverageannualrateof11.8percent.Thegrowthintheorganizedsectorat16.9percentwassignificantlyhigherthantheunorganizedsector,whichrecordedagrowthof6.9per centduring thisperiod.The shareof theorganized sector, therefore,witnesseda sharpimprovement. Exports had a slower growth compared to total output resulting in somemoderationintheshareofexports.
Table2:ProductionandExportofLeatherandLeatherProducts
Organized Unorganized TotalShareoftheOrganizedSector
ExportsExportsas%to
production20042005 12401 14972 27373 45.3 10881 39.720052006 15406 15530 30936 49.8 11943 38.620062007 17482 17263 34745 50.3 13650 39.320072008 24392 19861 44253 55.1 14101 31.920082009 24828 19228 44056 56.4 16355 37.120092010 27017 20923 47940 56.4 15946 33.3
Source:NationalAccountStatistics,2011
ThedatafromNAS(outputapproach),however,appearstobeunderestimated3.Analternativewayofbuildingthedatacouldbe fromtheprivate finalconsumptionexpenditure.TheGrossDomesticProduct, intermsofexpenditure,providesthedatafortheexpenditure incurredbyhouseholdsonpurchaseofavarietyofproducts.Footwear isoneof itemscoveredundertheNASconsumptionbasket.TheexpenditureonfootwearincreasedfromRs4,270crorein198990toRs42,509crorein200910atanaverageannualtrendrateof10.6percent.Theelasticityof demand for footwear is less than 1 indicating that growth in consumption has remainedlowerthanGDPgrowth4.Theshareoffootwearintotalprivatefinalconsumptionexpenditure(PFCE),however,continuedtofluctuateandaveraged1.18percent(thesharehadpeakedto1.7percentin199091).SincethePFCEdoesnotincludetheconsumptionexpenditureofthepublicsector(andthismaynotbe insignificantgiventhepurchasesbythedefence)andsincetheexpenditurepertainsonlyto footwear,thePFCE in itself isanunderestimationof leathergoods production for domestic use. The PFCE data with some mark up to cover the nonfootwear sector and public procurement could be used to build up the market size of theleatherindustry.(Table3)
3Underestimationcouldbeintheunorganizedsector.Industryestimatedunorganizedtobebiggerinsizethantheorganizedsectorandshouldbeaccountingfornearly60percentofoutput.4Thegrowthoftotalprivatefinalconsumptionexpenditureduring19902010was11.8percent.Theelasticityoffootwearconsumptionwithrespecttototalprivatefinalconsumptionwas0.90.
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Table3:Domesticproductionandexportsofleatherproducts
Marchending
PFCEFW Production ExportsShareofFWinPFCE
ExportsSharein
production
GlobalImports
ExportsFromIndia
Shareinexports
(Rsincrore) Percent US$ Percent2000 15977 26257 6891 1.21 26.2 54512 1590 2.922001 17459 30046 8883 1.24 29.6 59170 1944 3.292002 17465 30279 9110 1.14 30.1 62470 1910 3.062003 15471 27697 8945 0.95 32.3 63545 1848 2.912004 16801 30305 9939 0.95 32.8 68570 2163 3.152005 19352 34338 10881 1.00 31.7 97461 2495 2.562006 24045 41089 11943 1.11 29.1 109127 2752 2.522007 27250 46681 13650 1.10 29.2 118824 3059 2.572008 37840 59968 14101 1.33 23.5 131513 3549 2.702009 39105 63755 16355 1.20 25.7 139158 3599 2.592010 42509 67472 15946 1.12 23.6 115589 3401 2.94
2011$ 50501 79551 18338 1.12 23.1 127841 3877 3.03$Estimates
Fig1:Domesticfootwearconsumption,productionandexportofleathergoods
ProductionestimatesbuiltontheNASconsumptiondatahaveassumedthat leatherfootwearwould account for nearly 80 per cent of total footwear consumption and share of leather
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footwearinconsumptionoftotalleathergoodswouldbearound66percent.Exportsareaddedtothedomesticconsumptionofleathersoarrivedtogettheoverallleathergoodsproduction5.
While itwasexpectedthatwiththebanonexportsofsemifinished leather in199091,andastructural shift in favourof theorganized sector, the leather industrywouldmoveup in thevalue addition ladder. The organized factory sector data, however, reveal that resourceintensity in the organized leathermanufacturing has actually increased. The ratio of valueaddedtooutputdeclinedfrom22.8percentin199394to13.6percentin2007086.Thevalueofinputsconsumedintheproductionprocessincreasedtocloseto84percentin200708.Theshareofvalueadded inoutput in leathersectorwasalso lower thantheshare in theoverallorganized manufacturing. Four factors, lack indigenous development and acquisition oftechnology, adoption of the acquired technology through research, brand building andinadequate emphasis on human resource (skill) development may have contributed to thisstable (increased)material resource intensity in leathermanufacturing.Resource intensityofleatherindustrywasalsoobservedbytheICRAstudywhichbasedonCapitalinedataobservedthat infootwearsectorrawmaterialaccountedfor65percentofthecostfollowedbysellingandadministrativeexpenses(14percent)andexpenditureonemployees(7percent)7.
Fig 2: Gross value added, persons engaged and emoluments in organized leather sector
5LeatherindustryestimatestheleathersectortobearoundUS$175200billion.ProductionasperNASislessthanhalfoftheindustryestimates.ThealternateapproachputsleathersectoroutputatUS$140billion.6BasedontheAnnualSurveyofIndustriesvariousissues7ICRAStudyonManufacturingCompetitivenessIndices,page81
100
120
140
160
180
200
220
240
113579
1113151719212325
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
GVAas%tooutput Emolumentsas%tooutput Personsengaged
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Adecline intheshareofvalueaddedtooutputbecomesapparentfrom19992000onwards8.Thedeclineinshareofvalueaddedwaslargelyonaccountofadeclineintheshareofprofits.
Fig3:ShareofvariouscomponentsofvalueaddedinOutput(%tooutput)
Contrarytothegeneralperception,theoverallemploymentintheleathersectorseemstohavedeclinedinthelastfiveyears.TheNSSO61stand66thRounds9indicatethatoverallemploymentinmanufacturingandleathersector(coveringboththeorganizedandunorganizedsector)hasdeclined not only in absolute terms but also relative to total employment. In 200910, theleathersector(manufacturingsegment)employed2.2percentoftotalpersons(usualprincipaland subsidiary statusbasis)engaged inmanufacturing.Theemployment inorganized leathersector,however,witnessedanincrease.Buttheorganizedsectoremployedonlyabout20percentofthepersonsengagedintheentiresector.
Table4:EmploymentinManufacturingandleathersector(personsinmillions)
Employment LeatherTotal
ManufacturingTotal
Employment
ShareoftheLeathersector
200405 1.4 53.6 457.9 2.6200910 1.1 50.5 459.0 2.2
8OverallshareofvalueaddedinoutputfortheASIsectoralsowitnessedadecline,from24.9percentin199697to18.7percentin200809.9ReportoftheNSSO61stand66thRoundSurveys,MinistryofStatisticsandProgrammeImplementation
0
2
4
6
8
10
12
14
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
EmolumentsDepreciationProfitsOthers
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Leather industry,however, isoftheviewthatboththeproductionandemploymentnumbersare grossly underestimated. Direct employment in leather sector is expected to be over 2million persons 10 . The share of total persons engaged in leather sector in organizedmanufacturing,however, increased from1.3percent in199091 to2.1percent in200708,thoughitsshareinoutputdeclinedfromover1percentto0.86percentduringthisperiod.
Fig4:Shareinoutputandemploymentoftheleathersector
Leather industry is amongst the top ten foreign exchange earners for the country. IndianLeather Sector has registered consistent growth in exports during the six year period from200304to200809withexportsincreasingfromUS$2.22billionin200304toUS$3.60billionin200809.The Leather sectorhas shownpositiveexportperformanceevenduring200708whentheIndianRupeeappreciatedsignificantly.Thesectorsurpassedthesetexporttargetsinthe five year period from 200304 to 200708. However, during 200910 the exports fromLeatherSectorhasdeclinedby5.51percentinDollarTermsduetocontinuedimpactofglobalfinancialcrisis.Growthinexportsegmentisreturningin201011and201112.
10Theindustryestimatesoftotalemploymentinleathersectoris2.7million,butcomparisonwithNSSOneedstobemadewithemploymentinmanufacturingsector.
0.0
0.5
1.0
1.5
2.0
2.5
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
ShareinOutput
Shareinemployment
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Table5:Commoditycompositionofexports (US$Million)
Product 200506
200607
200708
200809
AprJan200910
AprJan201011
200910
%Share
FinishedLeather 636.3 724.0 807.2 673.4 625.5 18.4 506.5 669.5
Footwear 1045.2 1236.9 1489.4 1534.3 1507.5 44.3 1018.5 1159.1LeatherGarments 333.3 309.9 345.3 426.2 428.5 12.6 372.2 330.5
LeatherGoods 660.2 706.3 800.5 873.4 756.0 22.2 616.7 657.0Saddlery&Harness 77.5 82.3 106.2 92.2 83.4 2.5 67.5 69.1
Total 2752.5 3059.4 3548.5 3599.5 3401.0 100.0 2581.3 2885.2
%Growth10.30
% 11.15% 15.99% 1.44% 5.51% 11.77%
1.4 Totalfactorproductivitygrowth
Notwithstandingadecliningshare ingrossvalueadded(or increasedmaterial intensityofthesector)andnearstagnant(orevenamoderatelydeclining)employment,thesectorachievedabettergrowth intotalfactorproductivity.Thetrendgrowthoftotalfactorproductivity intheorganized leathersector increased from0.78percentperannumduring198081 to199091(prereformperiod)to1.18percentduring199292to200304(postreformperiod).Ahighergrowth in TFP in post reform period relative to the overall manufacturing indicates theresponsivenessofthissectortofactormarketreformsundertakenduringthe1990s.Thetrendtotal factorproductivitygrowth in the leather sectorduring198081 to200304at1.17percentperannumwassignificantlyhigher than the total factorproductivitygrowthof0.92percentperannuminthetotalmanufacturingsector11.
11Reserve Bank of India, Development Research Group Study No 37- Productivity, Efficiency and Competitiveness of the Indian Manufacturing Sector- Pushpa Trivedi, L Lakshmanan, Rajeev Jain and Yogesh Gupta- page 106
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Table6:Totalfactorproductivitygrowth(percentperannum)
PeriodLeatherSector
OverallManufacturing
19811985 5.85 4.3219851990 0.83 1.1919901995 1.57 0.2719952000 0.48 0.2420002004 2.94 2.21AverageannualTFPG 1.79 1.5TrendTFPG 1.17 0.92
The labourproductivity comparison for theorganized andunorganized sector in the leathersector relative tooverallmanufacturing indicates that,while in theorganizedmanufacturingsector the leather sector recorded a lowproductivity growth, in theunorganized sector theincrease in productivity was substantially higher than over the unorganized manufacturing.Whiletheorganizedleathersectorbecamemoreresourceandcapitalintensiveandgeneratedhigher total factor productivity growth, the unorganized sector successfully improved theproductivity of labour. Increase in labour productivity in the unorganized sector, with asignificantproportion of selfemployedpersons, indicate that thepolicy interventions raisedtheincomeinleathersectorataratehigherthaninothersectors.
Table7:Labourproductivityinleatherandoverallmanufacturing(Rsat198182prices)12
198990
199495
20002001
198990
199495
20002001
Organizedsector UnorganizedsectorLeatherManufacturing 117840 162685 208403 9953 19850 27800OverallManufacturing 168007 208557 336726 12452 14949 22794Ratioofleathersectorslabourproductivity 70.1 78.0 61.9 79.9 132.8 122.0ROGLeather 6.7 4.2 14.8 5.8ROGManufacturing 4.4 8.3 3.7 7.3
Successofpolicyinterventionsarecorroboratedbyotherresultsaswell.UsingtheCobDouglasProduction Function approach for measurement of the total factor productivity growth, a12Reserve Bank of India, Development Research Group Study No 37- Productivity, Efficiency and Competitiveness of the Indian Manufacturing Sector- Pushpa Trivedi, L Lakshmanan, Rajeev Jain and Yogesh Gupta- page 125
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DevelopmentResearchGroupStudycommissionedbytheReserveBankofIndiaobservedthatwhilepolicyenvironmentper sedidnotemergeasanenabling factor leading toa shift toahighergrowthpathfortheorganizedmanufacturingsector,the leathersectorwasoneoftheexceptions. Thecoefficientofpolicydummyforthe leathersectorwasnotonlypositivebutstatisticallysignificant13.An ICRAstudydone for theNationalManufacturingCompetitivenessCouncil(NMCC)hasalsoobservedanimprovementinmanufacturingcompetitivenessindexfortheleathersectorbyaround27percentin2007comparedtothebaseyearof2004.14
1.5 SWOTAnalysis
ICRA study conducted on behalf of NMCC has very exhaustively outlined the strengths,weaknesses, opportunities and threats of the Indian leather industry.A summary version ispresentedbelow:
13Reserve Bank of India, Development Research Group Study No 37- Productivity, Efficiency and Competitiveness of the Indian Manufacturing Sector- Pushpa Trivedi, L Lakshmanan, Rajeev Jain and Yogesh Gupta- page 111
14DerivingManufacturingCompetitivenessICRAstudypage83
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Opportunities Rising potential in the domestic
market Growing fashion consciousness
globally Use of information technology
and decision support software tohelp eliminate the length of theproduction cycle for differentproducts
Use of ecommerce in directmarketing
Strengths HighGrowth Ready availability of highly
skilledandcheapmanpower Largerawmaterialbase Policy initiatives taken by the
Government Capability to assimilate new
technologies and handle largeprojects
Continuous emphasis onproduct development anddesignupgradation
Weaknesses Lack of warehousing support
fromthegovernment Internationalpricefluctuation Huge labour force resulting in
highlabourcharges Lack of strong presence in the
globalfashionmarket Unawareness of international
standardsbymanyplayers
Threats Major part of the industry
isunorganised Limited scope for
mobilising funds throughprivate placements andpublic issues (manybusinesses are familyowned)
Difficulty inobtainingbankloans resulting inhigh costofprivateborrowing
Stricter internationalstandards
HighcompetitionfromEastEuropean countries andotherAsiancountries
Lack of communicationfacilitiesandskills
1.6 Futureoutlookforproductionandexports
The sectorsperceptionof the leather industrybasedon the surveyof100 firmsandby theICRA Study has observed that themajor factors limiting the growth of firms in the leatherindustrywereaccess to capital,highpercapita cost, shortageof skilled labour, taxationand
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regulations, appreciating rupee, competition from imports and high employee cost. At themacro level,thekeyconstraintsof the leather industryparticularly in its shift toahighvaluechain segment isqualityof rawmaterials,absenceofan institutionalmechanism fordesign,inability of Indian producers to build the brand despite a huge domestic markets andtechnologygaps. However,giventheresponsivenessofthissectortothepolicy initiativesasillustratedbythestudy,itispossibletobeoptimisticaboutthefutureprospectsofthissector.
A risingdisposable income and a low shareof the footwear and leather components in theoverall consumptionexpenditureof thehouseholds,abundanceof leatherasa rawmaterialandlowcostmanufacturingbasearethestrongpointsonwhichtheleathersectorcouldbuildup itsfuturegrowthstory. Thedereservationanddelicensingofseveral leathergoodsfromthesmallscalesectorin2001,100%FDIallowedintheleatherandfootwearsectorsince2002andfocusedmarketschemeintroducedbyDepartmentofCommercehavecreatedthegroundwork fortheexpansionofthissector. Comprehensiveschemeofthe ILDP formodernizationandtechnologicalupgradationoftheleathersectorcoveringtanneries,footwear,leathergoodsandgarmentshavecreatedthebasicconditionsforbuildinggrowthinfuture.
Table8:DomesticproductionandexportsofleatherproductsOutlook
Marchending
PFCEFW Exports ProductionShareofFWinPFCE
ExportsSharein
production
GlobalImports15
ExportsFromIndia
Shareinexports
Rscrore Inpercent US$Million Percent
2012 59086 22006 93625 1.12 23.5 141393 4725 3.34
2013 66176 25307 105520 1.16 24.0 156380 5434 3.47
2014 74117 29103 118942 1.19 24.5 172957 6249 3.61
2015 83011 33468 134088 1.23 25.0 191290 7186 3.76
2016 92973 38489 151183 1.27 25.5 211567 8264 3.91
2017 104129 44262 170479 1.31 26.0 233993 9504 4.06
2018 116625 50901 192265 1.34 26.5 258796 10929 4.22
2019 130620 58536 216864 1.39 27.0 286228 12569 4.39
2020 146294 67317 244643 1.43 27.5 316569 14454 4.57
2021 163850 77414 276020 1.47 28.0 350125 16622 4.75
2022 183512 89027 311465 1.52 28.6 387238 19115 4.94
2027 323410 179064 571076 1.76 31.4 640846 38448 6.00
15Globalimportsareprojectedtoincreaseat10.6%,attheobservedrateofgrowthofimportsduring20002010.
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Fig5:ProductionandExportsofleatherproducts
Weexpectthefutureoutlookoftheleatherproductionandexportstobereallypromising.Thefutureproductionandexportoutlookhavebeenprojectedontheassumptionthattheshareofthefootwearconsumption inprivatefinalconsumptionexpenditurewouldreach1.5% innexttenyears.Indiasshareinthegloballeathermarketisalsoexpectedtoincreasebyaround5%in2027.Withinthesetwoconsiderationswehaveassumedagrowthof12%intheprivatefinalconsumptionexpenditureof footwear,giving theelasticityofexpenditure toGDPat1.3.Theexport sector isexpected to growth at15%per annum in rupee terms. Theprojection is at201112prices. Basedon these, the futureoutlook forproductionandexport is indicated intable8above.
Theexportprojectionattheproductlevelhasalsobeenworkedoutassumingdifferentialratesofgrowthforfinishedleather,footwearandotherleatherproducts.Theresultsarepresentedintable9.
Table9:CommodityCompositionofExports(US$Millions)
Product 201112 201213 201314 201415 201516 201617 202122 202627
FinishedLeather
950 1093 1256 1445 1662 1911 3843 7730
Footwear 2200 2530 2910 3346 3848 4425 8900 17902LeatherGarments
500 575 661 760 875 1006 2023 4069
LeatherGoods 950 1093 1256 1445 1662 1911 3843 7730Saddlery&Harness
125 144 165 190 219 251 506 1017
Total 4725 5434 6249 7186 8264 9504 19115 38448
0
100000
200000
300000
400000
500000
600000
DomesticConsumption
Exports
TotalProduction
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The Working Group on Boosting Indias Manufacturing Export in 12th Five Year Plan hasprojected a growth at 24% during 201217. The Report indicates that while the leatherexporters favour a much more conservative scenario of about 24%, the goal is achievableprovided no economic major disruptions occur in the main markets, and the proposedstrategies are implemented16. As per the scenario indicated by the Working Group, totalexports of leather by 201617 are expected to reach at US $ 14 billion. The sub groupconsideredtheReportandwasoftheviewthat itmaybea littlemoreoptimistic.Evenat15per cent growth, the exports from India would be growing at 1.5 times the global importgrowth.
Leathersector indeedprovidesa lotofoptimism.The localresourcebase, lowwagecostandpolicysupportcouldaccelerategrowthto1415percentrangeintwelfthplanandbeyond.
16ReportoftheWorkingGrouponBoostingManufacturingExports
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2. EVALUATIONOFTHEINDIANLEATHERDEVELOPMENTPROGRAMME(ILDP)INTHE11THPLAN
LeatherSectoristhe10thlargestmanufacturingsectorinIndiaanditplaysanimportantroleintheIndianeconomy inviewof itssubstantialoveralloutput,exportearningsandemploymentpotential. TheLeather Sector employs 2.5 million people with a majority from the weakersectionsofthesocietyandcomprisingabout30%women.TheSectorisdominatedbysmallandmedium enterprises. In order to augment raw material base, enhance capacity, addressenvironmental concerns, human resource development, attract investment and globalmarketingIndianLeather,theCentralSchemeIndianLeatherDevelopmentProgramme(ILDP)was approved for implementation for the 11th Five Year Plan Period with thirteen subschemes.
ThePlanningCommission allocatedRs1300 crore for implementationof the ILDPduring the11th Plan. 13 subschemes with total outlay of Rs1251.29 crore were approved forimplementationunderILDP.Outofthisapprovedoutlay,Rs738crorewasmadeavailableunderILDPinfiveyearsof11thPlan.
Thecomponentwiseevaluationofperformanceofthe13ongoingsubschemesofILDP(ason30.09.2011)isasunder:
2.1 INTEGRATEDDEVELOPMENTOFLEATHERSECTOR(IDLS)(OutlayRs.253.43crore):
Thisisa10thplanschemewhichwascontinuedinthe11thplan.Thescopeoftheschemewasenhancedtoincludenewunits.Theschemeprovidesassistanceintheformofinvestmentgrant@30% toSSIand20% toNonSSIuptograntofRs50 lakh for infrastructure strengthening,modernizationandtechnologyupgradationoftheleatherunits.Assistanceisprovided@20%ifthegrantamountisaboveRs.50lakhwithintheceilingofRs.2crore.DisbursementsaboveRs.25lakharemadeinfourequalannualinstallments.Thisisademanddrivenscheme.
Thetotaloutlayforthissubschemeforthe11thFiveYearPlanwasRs.253.43crore.Atotalof1254 cases involvingGOIassistanceofRs.182.93 crorewasapprovedbyDIPP tillSeptember2011during the11thFiveYearPlanPeriod. DIPPhad releasedRs.138.97crore to theNodalBank SIDBI ason30.09.2011 forproviding subsidy to the approvedeligible leatherunits fortheirmodernizationandtechnologyupgradation.
In view of larger scope of the scheme, two organizations were nominated as ProjectImplementationUnits (PIUs),oneatCLRI,Chennai forTanneriesandotheratFDDI,Noida forfootwearcomponents,leathergoodsandgarmentsandsaddlery.
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In order to provide the benefit of the IDLS Scheme to the industry & for the timelyimplementation of the IDLS Scheme, maximum publicity by releasing advertisement of thisscheme&byorganizingRoadShowsatvariouspartsofthecountrysuchasKolkata,Jalandhar,Agra,Mumbai,Dewas,Saharanpur,Jaipur,Noida,Indore,Kanpuretc.,wascarriedout.
Theschemewasverypopularamongthe leather industriesduringthe10thplanaswell11thplan period. It is felt that the scheme should be continued during the next plan period formodernization and technology upgradation of the leather units to compete with the latesttechnology.
2.2 LEATHERTANNINGCOMPLEXATNELLORE(OutlayRs.29crore):
Thisprojectaims to increase the capacityof the tanning sectorandwas tobe implementedduringthe10thFiveYearPlan.However,theprojectcouldnottakeoffforwantofdecisionbytheStateGovernmentandisbeingimplementedduringthe11thPlan.
AprovisionofRs29crorewasapprovedduring11thPlanasassistanceforsettingupofastateofarttanningcomplexatNellore.Itwasproposedthattheareaoftheparkwouldbe412acresandwouldhouseabout25tanningunitsand21leatherprocessingunits.Theparkwouldhavemodernfacilitieslike,CentralCommonFacility;CommonEffluentTreatmentPlantswithMarineOutfall;StormWaterDrainage;SecuredLandfill;Research&TestingFacility;Warehousing;etc.
TheKrishnapatanamInternationalLeatherComplex(KPILC)wastobedevelopedbyanSPV,theLeather IndustriesDevelopmentCorporationofAndhraPradesh(LIDCAP)andAndhraPradeshIndustrial InvestmentCorporation (APIIC) is the implementingagency.DIPP released the firstinstallmentamounting toRs.15crore toLIDCAPduring the20082009 in the11thFiveYearPlanperiod.TheSpecialPurposeVehiclehasbeen formedandChiefExecutiveOfficerof theSPVappointedbuttheprojecthasnottakenoffasyet.Someofthereasonsareasfollows:
EnvironmentClearanceoftheprojectisawaited. Outofthetotalareaof412acresprojectedinDPR,SPVwasinpossessionof142.85
acresonlyandplannedtodevelopitasphaseIofthepark. TheStateGovernmentofAndhraPradeshhasnowidentifiedanareaof538.65acres
ofGovernment land in KothapatnamVillage, KotaMandal for this project but thetransferoflandisstillpending.
Outof the total releaseofRs.15crore twoyearsago,expenditureofRs.9.56croreonlyhasbeen reported tohavebeen incurredby theSPV.ThebalanceamountofoverRs.5 crore is lyingunspentwith the implementingagency.Now that the landitself has been changed by the StateGovernment, even the expenditure incurred
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uptilnowwillhavetobetreatedtohavebeenbornebytheStateGovernmentandalmosttheentireRs15crorewouldbetreatedasunspent.
TheStateGovernmentofAndhraPradeshhasonlycontributedRs.10 crore for theproject as against its commitment of Rs.50 crore for the provision of externalinfrastructurefortheproject.
Itisclearthatevenafterexpiryofthreeyears,theprojecthasstillnottakenoffontheground.AprovisionofRs.29crorewaskeptforprovidingassistancefor infrastructuredevelopmentoftanningpark.TheSPVhasnotbeenabletoutilizethefundsduringthe11thPlanduetoseveralreasons interalia including noncompletion of environment clearance. The Scheme aims toprovidetheinfrastructuresupportfortheLeatherIndustrywithallmodernizedfacilities..TheProject can take off only if the land is transferred finally by the State Government andenvironmentclearanceisobtained.
2.3 ESTABLISHMENTOFBRANCHOFFDDIATFURSATGANJ(OutlayRs.7.17crore):
The Institute is a branch of the Footwear Design and Development Institute, Noida andequippedwith facilities of latest technologies to provide training of international standardswithlatesttechnology.
TheInstitutehasbeendevelopedwithtotalCentralAssistanceofRs.96.69crorewithsupportfromDIPP to theextentofRs.13.53croreand from theDepartmentofCommerceRs.83.16crore. An amount of Rs. 6.36 crorewas released byDIPP during the 10th Plan Period. ThebalanceofRs.7.17crorehasalsobeenreleased inDecember2007 i.e.,during the11thPlanPeriod.TheassistancefromtheDepartmentofCommercehasalsobeenreleased.
FDDINoidawastheimplementingagencyfortheproject.Theinstitutehasbecomeoperationalwithin12monthstoensureinternationalstandardsoftrainingandhighendsupportservicestothe Industry in the domain of Footwear & Leather Products Design Technology, RetailManagementandFashionMerchandising.
The campus has the capacity to train 800 to 1000 students through its PG and UG levelProgrammes. The campus is functional since2008with a totalenrolmentofmore than800studentsasondate.
Theworldclass infrastructureand facilitiescreated in thecampus suchas smartclassrooms,workshops in each operational area of manufacturing equipped with modern stateofartmachineries&equipment,auditorium,openairtheatre,hightechITlab,comprehensivelibraryetc.,alongwithfullyfurnishedseparateGirls&BoysHostelportraysFDDIFursatganj,campusas an attractive destination formany of the aspirant youths of the region seeking lucrativecareeropportunityinthesector.
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2.4 FOOTWEARCOMPLEX(OutlayRs.3crore):
Thiswasanongoing schemeof the10thPlanandaimed tobuilda FootwearComplexnearChennai on 153.65 acres and provide infrastructure facilities for housing large footwearmanufacturingunits. Infrastructuredevelopment towardsdesign and testing centres,displaycentre,warehousing,commonpowerplantetc.wastobeprovided.StateIndustriesPromotionCorporation of Tamil Nadu Limited (SIPCOT), a State Government undertaking is theimplementingagency.TheCentralGovernmenthasreleasedRs11croreduringthe10thPlanandthebalanceofRs3crorewastobereleasedduringthe11thFiveYearPlanperiod.
ThefundingpatternoftheGoIgrantwassuchthatitcouldbeusedtodefray40%ofthecostofdevelopmentofcommoninfrastructureexcludinglandsubjecttoaceilingofRs2crorewherethetotalsaleablelandwaslessthan100acresandRs4crorewhereitwas100acresormore.Itcouldalsobeutilized to theextentof100%of thecostof special infrastructure subject toaceilingofRs8 crorewhere the total saleable landwas less than100 acres andRs10 crorewhereitwas100acresormore.
SIPCOThasonlybeenabletoconstructcommoninfrastructureandDIPPhasdecidedtorecoverthebalanceGOIgrantamount lyingwith the implementingagencywithpenal interest.Also,sincetheleatherindustryhasshownnointerestinestablishingunitsinthislocatioin,itmaynotbefeasibletocontinuetheschemeduringthenextplanperiod.
2.5 SADDLERYDEVELOPMENT(OutlayRs.10crore):
Harness and Saddlery comprise awide range of products. The industry had identified theupgradation and development of skilled manpower, standardization & development ofcomponents accessories and tools, development of low cost indigenous machinery, andimprovementinproductiontechniquesandprocessesasmajorareasofconcern.InternationalInstituteofSaddleryTechnologyandExportManagement (IISTEM)Kanpur,aSpecialPurposeVehicle constituted under the overall guidance and superintendence of IIT (Kanpur) wouldcontinuetoprovideskilledhumanresourcestomeettheneedofthesectorandfunctionasanR&Dbasefortheindustry.InordertoachievetheabovestatedobjectivesanallocationofRs.10crorehasbeenapprovedfortheXIPlanperiod.
During the 11th Plan Period, the scope of the subscheme subscheme was to provideassistance for skill upgradation training to the skilled manpower of saddle industry,standardization&developmentofcomponentsaccessoriesandtools,developmentoflowcostindigenousmachineryandimprovementinproductiontechniquesandprocesses.
Duringthe11thPlan,themainutilizationofassistancebytheIAi.e.IITKanpurisintheareaofR&Dofsaddletreesforlocalsaddleindustry.IITKanpurhasdeveloped6kindsofsaddlesofar.
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Theworksoffourtypesofsaddlesareinprogress.Prototypedesigningof4machineshasbeencompleted.Theprototypedesigningworkforfourmachinesisunderprogress.
SkillupgradationtrainingprogrammewastobeconductedbyIISTEMbutcouldnottakeoff.
This is theonlysubschemewhichprovidesR&D for theLeatherSector throughaprominenttechnical institute i.e. IIT Kanpur. The subscheme requires continuation in 12th Plan withemphasisonR&Dworkswithabroadenambit.ThesubschememayincludetheR&Dstudyoflatest technologies for Leather Sector alongwith the Saddle Industry. The skill upgradationtrainingmayalsobeapartofthesubscheme.
2.6 SUPPORTTOARTISANS(OutlayRs40crore):
TherearevariousclustersintheIndiamakingtraditionalfootwearandotherleathergoods.Theaimofthiscomponentistopromotetheclustersatvariousforumsastheyareanintegralpartofrural Indianeconomyandhavepotential forgenerating localemploymentandexport.Theartisanclusters(bothurbanandrural)wouldbesupportedforenhancingtheirdesignsasperthe changing trends and fashion, corpus of revolving funds for obtaining bulk rawmaterial,grantbased livelihoodsupport,marketingsupport/linkagesandalsobank linkages.Thebroadobjectiveofthiscomponentwouldbetoensurebetterandhigherreturnstotheartisans.
Tilldate,about14,400leatherartisanshavebeencoveredunderthissubschemeforprovidinglivelihoodsupportandmarketingsupportalongwithpromotionofthetraditionalruralclusters.The subscheme isbeing implemented inArunachalPradesh,Bihar,Orissa,MadhyaPradesh,Andhra Pradesh, Maharashtra, Tamil Nadu, Karnataka (traditional Kolhapuri), Punjab(traditionalPunjabiJooti)andRajasthan(traditionalMojari).
For supporting the artisanal sector,360 interventions are being done in the areas of TrustBuilding and SHG Formation,EstablishmentofCentralizedResourceCenters (CRCs),ProcessProduct and Design Development, Advertisement & Brand promotion and Development ofMarketLinkages.
Themajorfocusoftheinterventionistosynergiseandbuildawarenessamongtheartisansfortheir socioeconomic upliftment, introduction of new low cost technology, development oftools,rawmaterialupgradation,designingupgradationforbuildingupadiverseproductrangebasedonmarketfeedback,developmentofmarketlinkagesetc.
Interventionsaredone throughvarious skilldevelopment& skilldiversificationworkshopsatregularintervals.
Thestatusofongoingprojectsisasunder:
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S.No.
NameofOrganization ApprovedProject cost11thFYP
Amountreleased(inRs.)
Interventionareas
1. Footwear Design &Development Institute(FDDI)Noida
Rs.518.00lakh
Rs.259.00lakh
Jaipur&Alwar(Rajasthan)
2. Footwear Design &Development Institute(FDDI)Noida
Rs.494.40lakh
Rs.247.20lakh
Jodhpur(Rajasthan)
3. Footwear Design &Development Institute(FDDI)Noida
Rs.555.17lakh
Rs.278lakh
Patiala(Punjab)
4. Asian Centre forEntrepreneurial Initiatives(ASCENT)Banglore
Rs.275.27lakh
Rs.68lakh Athani(Karnataka)
5. Gramin Jan KalyanParishad, Muzzffarpur(Bihar)
415.24lakh 207.62lakh
Sahebganj, Matipur,Mushahari, Dumari, Kasti,Tariyani and Sheohar clusters(Bihar)
6. Yallang MultipurposeCooperative Society,ArunachalPradesh
43.75lakh
21.874lakh
Papum Pare Dist, Itanagar andLower Subansiri (ArunachalPradesh)
7. Janjagaran Kendra,Dhenakanal(Orissa)
149.19lakh 37.2975lakh
Athamalik, Angul, Khamar,Talcher,Dhenkanaland Jujmara(Orissa)
8. Tata International, DewasMP
458.76lakh 114.69lakh
Dewas District (MadhyaPradesh)
9. RuralEducationandActionforChange,Tirupati(AP)
75.22lakh 18.805lakh
Anantpur, Prakashan, Nellore,Chittor(AndhraPradesh)
10. Center Footwear TrainingInstitute,Chennai
700lakh 175lakh Salem&Erode(TamilNadu)
11. Harshal Gramin VikasSanstha, Chandrapur,(Maharashtra)
262.50lakh 65.625lakh
Nagpur,Chandapur, Bhandara,Wardha(Maharashtra)
SupporttoArtisans isoneofthecrucialsubschemesunder ILDPproviding livelihoodsupportandmarketing support to theartisansalongwithpromotionof the traditional rural clusters.Implementation of this scheme requires more and more coverage for the rural artisansscattered invariousvillagesallover India.Thesubschemerequirescontinuation in12thPlanwithemphasisontheleftoutareas.
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2.7 HUMANRESOURCEDEVELOPMENT(OutlayRs.60crore):
HRD mission targets nontraditional potential work force in the rural areas. This project isintendedtotrainandprepareindividualsintheruralareastobefittoworkinmediumtolargeindustrialunitsthatarelikelytobesetup.Upgradationofskillsofpersonsalreadyemployedinthe sector besides training for trainers/supervisors is also be undertaken. The scheme laysstressonskilldevelopmentandtechnicaldevelopmentespeciallyincuttingandstitching.Thetrainingproposedundertheschemeistobeoutputlinkedwhereatleast75%ofthosetrainedwouldbeplacedintheindustry.
Tilldateabout22,000unemployedpersonshavebeenprovidedskilldevelopmenttrainingandplaced in the leather sector. Besides it, 1200 employed workers have been provided skillupgradation training. The subscheme is being implemented inUttar Pradesh,West Bengal,Madhya Pradesh, Haryana, Uttarakhand, Rajasthan, Maharashtra, Andhra Pradesh, Orissa,Karnataka,HimachalPradeshandTamilNadu.
Thedetailsofthestatusofongoingprojectsareasunder:
PlacementLinkedSkillDevelopmentProgramme(PLSDP):
PLSDPisimplementedthroughestablishmentoftrainingcentersatvariousplaceslikeKanpur,Agra and at the subcenters at Mumbai, Bangalore, Chennai in addition to various onsitelocationsacrossthecountry.
Attheselocationstheunemployedyouthsbelongingfromtheeconomicallyweakersectionofthesocietywereselected,trainedandprovidedassistancetogetemploymentinthefootwearindustryattheshopfloorleveloperations.
TheGovernmentsefforts increating freshwork forcethroughashort,but, intensivetrainingprogrammehasbeenagreatsuccessandapplaudedatvariousforumsasthemostinnovativeand effective approach of implementation of any of the scheme carried out so far. It isprovidingmuchneededskilledworkforcetotheIndustryonehandandpermanentlivelihoodtotheunemployedyouthsatotherandisverymuchindemandatbothlevels.
ReputedcompaniessuchasM/s.Tata International,Dewas,M/s.N.M.Zackriah&Company,Ambur,M/s.ZetaShoes,Rewari,Haryana,M/s.SSIPL,Sonepat,M/s.DawarShoesAgra,M/s.Oscar LeathersMohali,M/s. SuperHouse,Unnao,M/s. Florence ShoeCo. Pvt. Ltd.,Ambur,M/s.LeeyanOverseasKanpur,M/s.PrimeShoesChennai.,M/s.ZermattShoesAmbur,M/s.TejShoesAgrahavebenefitedasondateunderOnSitetrainingPrograme.
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S.No.
Name ofOrganization
Approvedprojectcostandnumberofbeneficiaries
Maximumassistancetobereleased(75%orRs10,000whicheverisless)
AmountReleased(inRs.)
Interventionareas
1. Footwear Design& DevelopmentInstitute (FDDI)Noida
Rs1013.41lakh6480Persons
Rs648lakh Rs1110.68lakh(forbothprojects)
Agra and Kanpur(UP)
2. Footwear Design& DevelopmentInstitute (FDDI)Noida
Rs1013.41lakh6480Persons
Rs648lakh
3. Footwear Design& DevelopmentInstitute (FDDI)Noida
Rs943.26lakh6000persons
Rs600.00lakh
Rs150.00lakh
FursatganjRaiBareilly(UP)
4. Central FootwearTraining Institute(CFTI)Chennai
Rs904.25112lakh7365persons
Rs678.24lakh
Rs479.05lakh
Chennai, Ambur,Vellore, Ranipet(TamilNadu)
5. West BengalConsultancyOrganisation Ltd,Kolkata
Rs579.28lakh,5670persons
Rs434.46lakh
Rs108.61lakh
Kolkata Region(WestBengal)
6. Crew B.O.SAcademy,Gurgaon(Haryana)
Rs798.00lakh6480persons
Rs598.50lakh
Rs278.83lakh
Manesar(Haryana),Dehradun(Uttarakhand)and Neemrana(Rajasthan)
7. CEDMAP, Bhopal(MP)
Rs615.00lakh6000persons
Rs461.25lakh
Rs115.31lakh
Dewas, Indore,Gwalior, Dhar(State ofMadhyaPradesh)
8. ILFS Rs500.00lakh5000persons
Rs375lakh
Rs93.75lakh
Mumbai(Maharashtra),Andhra Pradesh,Orissa, Karnatakaand HimachalPradesh
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SkillUpgradationTrainingProgrammes:
TheHRD subscheme isoneof the successful initiativesof the ILDPprogrammeand there istremendousdemandintheindustryforthisscheme.Itneedstobecontinuedinthe12thPlanperiod.
2.8 UPGRADATIONOFFACILITIESOFFDDIANDESTABLISHMENTOFOTHERSUCHINSTITUTESANDCENTRES:(OutlayRs.300.07crore):
Inorder to increase theuptakeof students ineach categoryand to train them in the latesttechnology,thesubschemewasintroducedtoestablishthreenewcampusofFDDIatChennai,KolkataandRohtak.
Footwear Design and Development Institute (FDDI), Noida, a premier Institute providingtraining, consultancy services in the footwear and leather industry was the implementingagency.
ItwasproposedthatatleastthreenewFDDIcampuses,oneeachatTamilNadu,WestBengalandHaryanawouldbeestablishedatacostofRs96.69croreeachduringthe11thPlanperiodtomeetthegrowingdemandofthe leather Industry.Besides,Rs10crorewouldbeprovidedforupgradationofexistingFDDIcampusatNoida.Assistancewouldbeintheformofonetimegrantforcreationofcapitalassetsandpermanent infrastructureandnorecurringcostwouldbeprovided.
These campuses areestablished to facilitate an allinclusive growthof the leather& leatherproducts sector in the country that includes theproductdevelopment,marketdevelopmentandproductivityimprovementwhicharecrucialtoincreasethetradevolume.
Sl.No.
Name ofOrganization
Approvedproject costandnumberofbeneficiaries
Maximumassistance tobereleased
(Rs.2500maximum)
Firstpartof1stinstallmentto bereleased(@25%)
InterventionAreas
1. CFTI, Chennai,TamilNadu
Rs.153lakh
4800persons
114.75lakh
28.6875lakh
Chennai, Ambur,Vellore, Ranipet,Gudiyattam,Vaniyambadi andPernambut(TamilNadu)
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All the campuseshave commencedacademicprogrammeswithin12monthsandhavebeenmadeoperationalfromtheacademicsession201011.
These campuseswill relieve pressure of shortage of specializedmanpower of the footwearindustrysuchasproductiontechnologists,designers,managers,retailersandmerchandisers.
ThestateoftheartcampuseshavingexcellentinfrastructureandmodernfacilitiessuchasWiFiconnectivity, workshops in each operational area of manufacturing equipped with modernstateofartmachineries&equipmentassistsinconductingthevariousacademicprogrammes.
Allthecampusesarehavingworldclassinfrastructuresuchascomprehensivelibrary,computerlab,wellfurnishedandcentrallyairconditionedbuilding,classroomsand lecturehalls, latestmultimediaaudiovideo,educationalsupportforteachingandafullyequippedauditorium.
Thesecampusesarealsohavingadequate facilities likestaffquarterandhostels fortheboysandgirlsfortheiroverallgroomingandcontinual involvement intheacademicprocessofthestudents
EstablishmentandUpgradationofWorkshops,Labs&ClassroomsatFDDI,Noida:
TheUpgradationofWorkshops,LabsandclassroomsatFDDI,Noidacampustoaccommodatetheincreasedstrengthofstudents(asthetrainingcapacityenhancedto1900intheyear200809frommere184in201011)andtoensureinternationalstandardsofdeliveryandservicestothestudentsandtheindustryhasbeencarriedout.
Keeping in view the enhanced capacity of the campus in various discipline and ensurestandardized training & services in each areaof specialization various activateshavebeencarriedoutsuchasConstruction/renovationandaugmentationofClassrooms& lecturehallswith modern facilities and aids, construction & renovation of Manufacturing Workshops &VisualMerchandizinglab,establishmentofPDCandProductivitylab,establishmentofElectricalSubStationetc.
Theexpansion/modernizationplanhasbeensuccessfullycompletedandthe facultiescreatedare being used by the Industry, faculty and the students for training, research anddevelopment.
AllthethreenewcampusesofFDDIhavebecomeoperationalduringthe11thPlan.Thesubscheme provides infrastructure support and also provides establishment of an instituteproviding professional and technical education for Indian Leather Sector. It requirescontinuationduringthe12thPlanforestablishmentofnewFDDIbranchesintheleftoutstates.
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2.9 UPGRADATION/INSTALLATIONOFINFRASTRUCTUREFORENVIRONMENTPROTECTIONINTHELEATHERSECTOR(OutlayRs.200crore):
The leather industry and the tanning activity in particular, all over the world is linked toenvironmental concerns. In view of the fact that environmental issues are slowly gaininggroundandmeasuresareneededtobeput inplace for industriestocopewiththestringentnorms.AnallocationofRs.200 crorewasmade in the11thFiveYearPlan toaddress theseconcerns. Projects formeeting environmental concernswere to be fundedwith 50% grantsfromCentralGovernment,withtheremainingfundcomingfromStateGovernment(15%)andfromtheIndustry(35%).TheentireOperationandMaintenancecostswouldbebornebytheindustry.
Total sixprojectsofestablishmentofCommonEffluentTreatmentPlants inTamilNaduwithtotalGOIassistanceofRs.92.50crorewereapprovedunderthesubscheme.Fiveprojectsareonthevergeofcompletion.
Chennai Environmental Management Company of Tanners (CEMCOT), Chennai is theimplementingagency.Thedetailsoftheprojectsareasunder.
NameofCETP ApprovedProjectCost
CentralAssistance(50%)
StateGovtofTamilNaduContribution(15%)
ContributionBeneficiary(35%)
CentralAssistancereleasedtilldate
CETPRanitec,Ranipet
44,10,00,000 22,05,00,000 6,61,50,000 15,43,50,000 15,84,98,482
CETPSIDCOI,Ranipet
29,19,00,000 14,59,50,000 4,37,85,000 10,21,65,000 10,49,61,149
CETPPTIETC,Pallavaram,Chennai
37,80,03,262 18,90,01,631 5,67,00,489 13,23,01,142 13,48,45,377
CETPSIDCOII,Ranipet
17,32,93,089 8,66,46,545 2,59,93,963 6,06,52,581 5,99,05,273
CETPPertec,Vellore
20,88,35,466 10,44,17,733 3,13,25,320 7,30,92,413 7,56,63,212
CETPDintec,Dindigul
35,70,00,000 17,85,00,000 5,35,50,000 12,49,50,000 0
Total 1,85,00,31,817
92,50,15,909 27,75,04,773 64,75,11,136 53,38,73,492
The subscheme isbeing implemented to address theenvironmental concernsof the IndianLeather Industry. This subscheme is very important to protect the pollution caused by the
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development of Leather Industry in India. The Department related Parliamentary StandingCommitteehasobservedthatsuchCETPsshouldbeestablishedinallthemajorleatherclustersinIndia.
Thesubschemerequirescontinuationduringthe12thPlan forestablishmentofCETPs inthestates other than TamilNadu to address the environmental concerns of the Indian LeatherIndustry.
2.10 MISSIONMODE(OutlayRs.10crore):
This programme envisages attracting investment into the sector and includes provision forresearch,programme support, survey,and concurrentevaluationetc. in the fieldof leather.Besides,provisionhasalsobeenmadeforcostonaccountofadvisoryandconsultancyservicesinrespectofvariousprojectsunderILDPbeingimplementedinthe11thFiveYearPlan.
Five Roadshows were conducted respectively at Madrid (Spain), Birmingham (UK), Milan(Italy),HongkongandTokyobyCouncilforLeatherExports(CLE)duringthecurrentPlanPeriodwiththeGOIassistanceofRs.1.376crore.Afreshguidelinewasnotifiedduringtheyear201011forimplementationofthesubscheme.Theschemecouldnotbeusedfurtherduetodelayinfinalisationofguidelinesandlackofbudgetaftertheguidelineswerefinalised.
The subschemewillplayavital role toattract the investmentandevaluationof theoverallscheme.Theschemeisrequiredtobecontinuationduringthe12thPlan.
2.11 ESTABLISHMENTOFTRAININGCENTREINMADHYAPRADESH(Rs.24.85crore):
ThissubschemeaimedatestablishmentofatrainingcentreatChhindwarainMadhyaPradeshtocatertheneedsofshortageofmanpowerforthe leather industrysituated inCentralIndia.The institutewouldalsohelp ingenerationofemployment in the regionandwouldactasacatalystfortriggeringdevelopmentactivitiesintheregionbysettingupofleatherunitsintheregion.
Underthesubscheme,atrainingcentre inMadhyaPradeshwastobeestablishedtoprovidetrainedmanpower for the Leather Industry. FDDI,Noidawas the implementing agency. Thetrainingcentrehasbecomeoperationalduringthe11thPlan.
TheFDDIChhindwaraCampushasbeenestablishedwithstateofartinfrastructureandfacilitiesinlinewithothercampusesofFDDItoconducttrainingandconsultancyintheareaofFootwearTechnologyandRetailManagement.
The admission process has been successfully completed for UG & UG Programme in theacademicsession201112andtheclassesarebeingconductedundertheguidanceofqualified
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Facultiesandstaffs.TheresponseoftheregionalaspirantyouthhadbeenquiteoverwhelmingfordifferentacademicprogrammesbeingconductedatFDDI,Chhindwaracampus.
2.12 AdditionalGirlsHostelatFDDIFursatganj(OutlayRs.13.77crore):
ThisisanewprojectforprovidingasafeaccommodationandenvironmenttothegirlsstudentsofFDDIFursatganjbranch.Theprojectwasapprovedduringtheyear201011.Thesubschemewas approved for establishment of an additional girls hostel at FDDI Fursatganj campus toprovidea secureenvironment to thegirls studentsofFDDIFursatganj.Theproject ison thevergeofcompletion.FDDI,Noidaistheimplementingagency.
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SUBGROUPONINFRASTRUCTUREDEVELOPMENT
ThefollowingisthecompositionofthemembersofInfrastructureDevelopmentconstitutedofthefollowingmembers:
7) ShriM.RafeequeAhmed,Chairman,CLE(Chairmanofthissubgroup)8) ShriS.K.Basu,Director,MinistryofMicro,SmallandMediumEnterprises9) ShriD.Banerjee,JointAdviser(Industry),PlanningCommission10) Shri Raajeev J Lakhara, Managing Director, Footwear Design & Development
Institute(Convenerofthissubgroup)11) ShriDarshanSinghSabharwal,President,IndianLeatherProductsAssociation12) ShriShirishS.Patel,CEO,MasLineaLeatherAccessoriesPvt.Ltd13) ShriPuranDawar,President,AgraFootwearManufacturers&ExportersChamber14) ShriP.V.GopalakrishnaBachi,President,IndianShoeFederation15) ShriSnehdeepAgarwal,BhartiyaInternationalLimited
The subgroup suggested the following interventions with the focus of the infrastructuredevelopmentactivitiesintheleathersector:
CommonInfrastructure Infrastructurestrengtheningattheenterpriselevel
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3. InfrastructureDevelopment
3.1 Introduction
Theinfrastructurefacilitiesfortheleathersector,whichencompassesvariousspectrumsofthefacilitiesrequiredbythe industry,needstrengthening.Common infrastructurefacilitieshavetobecreated intheclusters. The infrastructurebywayofupgradingtheproductiontechnologyby way of installing stateoftheart machinery at the shop floor, and modernization ofproductionfacilitiesistheneedofthehour.
3.1.1 HistoricalBackground
Indiahastraditionallylaggedbehindininfrastructurecreationfortheindustry.MuchofgrowthintheleathersectorinprominenttraditionalhubsofAgra,Kanpur,Jalandhar,AmburRanipetVaniyambadi and Kolkata was unplanned and was almost entirely due to private sectorinitiative.Thesmallandmediumenterprisenatureofmuchof Indian leather industrymeansthatmany firms cannot invest in large scale by themselves,without enabling infrastructuresupportinitiativesatpanindustry/Governmentlevel.Muchmoreneedstobedoneinexistinginfrastructure initiatives such as Tannery / IndustrialParks at Jalandhar,Kolkata,Unnaoetc.Development of social infrastructure is unfortunately ignored in our cluster developmentefforts. The need for planned cluster development efforts i.e. creation of geographicallyintegratedsupplychain infrastructure (materialmarkets,tanneries),production infrastructure(factories forproductssupportedbycomponentancillaries)andgrowthenablers (designandproduct development studios, testing laboratory, training institutes, buyerinteractionshowroomsetc,socialinfrastructure)iswaybehindwhatisrequired.
3.2 InfrastructureDevelopmentActivitiesImplementedduringEleventhPlanPeriod
3.2.1 SchemeforDevelopmentofLeatherParks
As one of the subschemes of the Indian Leather Development Programme (ILDP), videNotificationdated5thNov2009,theDepartmentofIndustrialPolicy&Promotion,MinistryofCommerce&Industry,Govt.ofIndiahadnotifiedaschemeforDevelopmentofLeatherParkswithanoutlayofRs.300crore.Theobjectiveoftheschemewastocreateadditionalcapacitiesintheleathersectorandassisttheindustryinaddressingtheinfrastructureneedsoftheentireleathersector inaholisticmanner. Asperschemeguidelines,agroupofminimum7 legallyindependentcompanieswhichisinterestedtosetupproductionunitsinthePark,couldformaSpecialPurposeVehicle(SPV).
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Total Project cost for a Parkwas to be funded throughGOI assistance@ 50% of the cost,subject to amaximumofRs.40 croreperpark,equity from Industry and Loan fromBanks /FinancialInstitutions.SPVwouldmobilizefundsotherthanGovt.Grantstoexecutetheproject.TheProjectcostforeachParkwastohavethefollowingcomponents:
A. Land&LandDevelopmentCostB. Common Infrastructure in the form of physical and environmental infrastructure,
technologyinfrastructureandmarketinginfrastructureC. Capacity Building such as common marketing efforts, branding, technology sourcing,
skill development, quality certifications, environmental certifications, standards andothercommoninitiativesundertakenbytheSPV.
D. Engineeringandconstructionsupervision,Projectdevelopment&executionconsultancyE. AnyotherexpenditureincludingPreoperativeExpenses,ExpensesforIncorporationetc
SubsequenttonotificationoftheschemeduringDec2009,theCouncilforLeatherExports(CLE)highlightedthedifficultiesfacedby industry inmootingproposalstosetuptheLeatherParkscitingimpracticalityandnonviabilityofafewprovisionsofthescheme.SomeoftheclausesintheguidelinesoftheschemewereconsideredimpracticalandnotfoundviableforthesectortopromotetheParks.Accordingly,theCLEsubmittedrepresentationtotheDIPPpertainingtothefollowingtworequests:a. To exempt the condition of registering the SPV under Sec 25 ofCompaniesAct, and
insteadallowSPVtoregisterunderanysectionsoftheCompaniesAct.Thiswasbasicallyto tide over the difficulty in getting finance for the project as investors would bereluctanttoinvestinaSPVwhichismandatedtoworkonnoprofitbasis.
b. ToamendtheoverallschemeguidelinesaspertheSchemeforIntegratedTextileParks(SITP) since the scheme is already under operation and several ITP has alreadyestablishedinthetextilesectoralloverthecountry,andassuchtheschemehasprovenitself.
Further,theindustryalsoinformedthathighlandcostisadeterrent,andindustryisfindingitdifficulttoprocuretheland,andmoveforwardparticularlyduetothisreason.Thehighcostoflandmakes the project unviable, and hence somemechanism has to be found out on landissue.
DIPP is in the process of merging this scheme with that of a new scheme Mega LeatherCluster.Inconclusion,nonewLeatherParkcouldbeestablishedinthecountryunderSchemeforDevelopmentofLeatherParksduringEleventhFiveYearPlanperiod20072012.
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3.2.2 IndustrialInfrastructureUpgradationScheme(IIUS)
IIUSwasnotifiedvideOMdated10thDec2003in2003asaCentralSectorSchemewithaviewto enhancing competitiveness of industry by providing quality infrastructure through publicprivatepartnership inselected functionalclusters.Centralassistanceupto75%oftheprojectcostsubjecttoaceilingofRs.50croreisgivenforeachproject.Basedontheoutcomeoftheevaluationandexperiencesgainedduringthe implementation,theschemehasbeenmodifiedsoastomakeitmoreeffective,focusontechnologicalupgradationandavoidinitialproblemsfacedintheprojects.
Theschemetargetsexisting industrialclusterswithhighgrowthpotentialrequiringassistanceforupgradationof infrastructuretoworldclassstandards.An illustrative listof infrastructureeligibleforassistance: Physical Infrastructure Transport, Road, Water Supply, Common captive power
generatingunits,Transmissionanddistributioninfrastructure,Commonfuel/gassupplysystem,CommonEffluentTreatmentPlant(CETP),Solidwastemanagementfacilities
Information and Communications Technology (ICT) Infrastructure, ICT induction andManagementConsultancyServiceCentre
R&DInfrastructure Quality Certification & Benchmarking Centre: Improvement of soft skills in quality
control/Total Quality Management(TQM technologies and handholding of firms toachievecertificate,benchmarkingthemvisvisinternationalstandards
CommonFacilitiesCentre Informationdispersal/InternationalMarketingInfrastructure Any other physical infrastructure identified by cluster and approved by the Apex
Committee.
One time grantinaid is provided to the SPV, restricted to 75% of project cost subject to aceiling of Rs. 60 crore, and remaining 25%will be financed