CHENNAI: Tanneries in Tamil Nadu are seeing a dip of over 50% in domestic demand and export owing to rise in cost of materials, including leather processing chemicals and inflation in key markets, in the past two years, business owners told TNIE.
Traditional tanneries are mostly around Ranipet-Tirupattur, Dindigul and Erode. They supply finished leather to goods makers in New Delhi, Agra, Kanpur, and Kolkata, and also export to US, UK, Germany, Italy, UAE, China and Hong Kong.
T Mohamed Mubeen, a tannery owner in Vaniyambadi and industry representative, said, “Demand for soft sheep leather used in leather goods and garments has dropped as consumers are unable to afford for those in an inflationary market. Customers also stopped buying luxurious leather goods and are opting for affordable alternatives. Almost half of the tanneries in the Ambur- Vaniyambadi region have shut down in the last two years.”
Data from Directorate General of Commercial Intelligence and Statistics (DGCIS) and Council for Leather Exports (CLE) says leather, leather products and footwear exports from India to Hong Kong and Poland declined by 15% and 1.02% respectively from 2021-22 to 2022-23. Export to top 15 destinations shows very little growth with Somalia and Belgium being exception. CLE southern regional chairman Israr Ahamed said the demand for leather products is expected to pick up by end of the July quarter (Q3 2023).
K Thiyagarjan, owner of Induja Leather based in Ranipet, said, “Our exports and domestic supply fell significantly. Due to the slowdown, cash crunch is prevalent in the industry. The cost of chemicals used in semi-finished leather and for converting chrome-tanned leather into finished leather has increased by almost 100% in the last two years. Labour cost has also shot up. However, our selling price has remained the same due to surplus in the market.”
He also urged the Union and state governments to set up a dedicated board for the industry. Industry representatives also want GST to be reduced from 12% to 5%, proposed by Department for Promotion of Industry and Internal Trade. They also urged the Union government to increase duty drawbacks.
Meanwhile, small-scale tannery businesses are also facing challenges. Independent groups like the leather working group (LWG) have gained prominence over the years, especially in European Union, UK, US and other developed markets and pose a threat, job workers claimed.
Job workers execute orders through small industrial units. As more leather goods makers demand LWG certification, it is difficult for these unorganised, small and cottage industries. “We export finished leather to China, Hong Kong, Bangladesh and other countries that don’t expect these certifications,” AMA Yousuff, partner in a small industrial unit, told TNIE. “These audits take around Rs 20 lakh, and Rs 5 lakh to Rs 7 lakh a year for renewal. It is pushing people out of business,” he added.
According to industry insiders, more than 50,000 people are directly employed by tanneries in Ranipet district. Tanneries were accused of flouting pollution control norms for years. However, over the years it has come down significantly with enforcement of zero liquid discharge and regulatory requirements.
While promoting sustainable practices, livelihood of small-scale tanneries and their workers should not be ignored, AMA Yousuff said.