PAKISTAN INSTITUTE OF TRADE & DEVELOPMENTpitad.org.pk/Publications/28-Pakistan Trade Liberalization...

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PAKISTAN INSTITUTE OF TRADE & DEVELOPMENT

Leather Sector Analysis

By

Osman Bin Saif

Senior Research Associate

September, 2012

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List of Contents

1. INTRODUCTION....................................................................................................................................................................... 8

OBJECTIVE OF THE REPORT ................................................................................................................................................... 9

SCOPE ................................................................................................................................................................................................ 9

2. LEATHER INDUSTRY PROFILE ....................................................................................................................................... 10

2.1 HISTORY .......................................................................................................................................................................... 10

2.2 PRODUCTION CAPACITY .......................................................................................................................................... 10

2.3 LOCATIONS of tanneries and manufacturing units IN PAKISTAN........................................................... 11

2.4 CATAGORIES OF LEATHER ...................................................................................................................................... 11

2.5 SOURCES OF RAW MATERIAL ................................................................................................................................ 11

2.6 TRAINING INSTITUTES: ............................................................................................................................................ 12

2.7 CAPITAL AND MACHINERY ..................................................................................................................................... 13

2.8 RESEARCH & DEVELOPMENT: ............................................................................................................................... 13

2.9 INFRASTRUCTURE: ..................................................................................................................................................... 13

3. PRODUCTION PROCESS ..................................................................................................................................................... 13

3.1 TYPES OF PROCESSES ................................................................................................................................................ 13

3.2 STAGES OF LEATHER FORMATION: .................................................................................................................... 15

3.3 TECHNOLOGICAL LEVEL .......................................................................................................................................... 17

3.4 DYES AND CHEMICALS .............................................................................................................................................. 17

3.5 LABOUR SITUATION ................................................................................................................................................... 18

4. OVERVIEW OF GOVERMENT POLICIES AND INCENTIVES ................................................................................. 18

4.1 TRADE POLICY (STPF 2009-2012) ....................................................................................................................... 19

4.2 demand of leather industry from the government ........................................................................................ 19

4.3 performance of the government ............................................................................................................................ 20

4.4 AFTER WTO & FUTURE PERSPECTIVES ............................................................................................................ 21

5. TRADE DATA ANALYSIS .................................................................................................................................................... 22

5.1 EXPORT ANALYSIS ...................................................................................................................................................... 22

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5.2 LEATHER GARMENTS AND GLOVES.................................................................................................................... 24

5.2.1 EXPORT COMPOSITION OF LEATHER GARMENTS AND GLOVES ...................................................... 24

5.2.2 COMPETITOR ANALYSIS FOR GARMENTS AND GLOVES ...................................................................... 25

5.2.3 POTENTIAL TRADE FOR GARMENTS AND GLOVES................................................................................. 26

5.3 LEATHER FOOTWEAR ............................................................................................................................................... 27

5.3.1 EXPORT COMPOSITION OF LEATHER FOOTWEAR .................................................................................. 27

5.3.2 COMPETITOR ANALYSIS FOR FOOTWEAR .................................................................................................. 29

5.3.3 POTENTIAL TRADE FOR LEATHER FOOTWEAR ....................................................................................... 30

5.4 LEATHER INDUSTRIAL GOODS .............................................................................................................................. 30

5.4.1 EXPORT COMPOSITION OF LEATHER INDUSTRIAL GOODS ................................................................ 30

5.4.2 COMPETITOR ANALYSIS OF LEATHER INDUSTRIAL GOODS .............................................................. 31

5.4.3 POTENTIAL TRADE FOR LEATHER GOODS INDUSTRIAL ..................................................................... 32

5.5 LEATHER GOODS CONSUMER ARTICLES .......................................................................................................... 33

5.5.1 EXPORT COMPOSITION FOR LEATHER GOODS CONSUMER ARTICLES ......................................... 33

5.5.2 COMPETITOR ANALYSIS FOR LEATHER GOODS CONSUMER ARTICLES ....................................... 35

5.5.3 POTENTIAL TRADE FOR LEATHER GOODS CONSUMER ARTICLES ................................................. 37

5.6 finished leather (hides) ............................................................................................................................................. 37

5.6.1 export composition of finished leather (hides) .......................................................................................... 37

5.6.2 competitor analysis finished leather (hides) ............................................................................................... 38

5.6.3 potential trade finished leather (hides) ......................................................................................................... 40

5.7 finished leather (skins) .............................................................................................................................................. 40

5.7.1 export composition of finished leather (skins)........................................................................................... 40

5.7.2 competitor analysis of finished leather (skins) .......................................................................................... 41

5.7.3 potential trade finished leather (skins) ......................................................................................................... 43

5.8 finished leather (other) ............................................................................................................................................. 44

5.8.1 EXPORT COMPOSITION OF FINISHED LEATHER (OTHER) .................................................................. 44

5.8.2 competitor analysis of finished leather (other) .......................................................................................... 45

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5.8.3 potential trade for finished leather (other) .................................................................................................. 46

5.9 TARIFF ANALYSIS ....................................................................................................................................................... 47

5.10 RCA ANALYSIS ................................................................................................................................................................. 47

5.11. SWOT ANALYSIS OF INDIAN LEATHER SECTOR .............................................................................................. 51

5.12. SWOT ANALYSIS OF PAKISTANI LEATHER SECTOR ....................................................................................... 52

6. CHALLENGES FACED BY THE INDUSTRY ................................................................................................................... 53

6.1 MAJOR ISSUES ............................................................................................................................................................... 53

6.2 PRICING STRATEGIES ................................................................................................................................................ 56

6.3 ISSUES FACED BY THE INDUSTRY: ...................................................................................................................... 56

6.4 Non Tariff barriers faced by Pakistani Exporters in INDIA ........................................................................ 59

7. CONCLUSION .......................................................................................................................................................................... 61

8. RECOMMENDATIONS ......................................................................................................................................................... 63

8.1 OTHER RECOMMENDATIONS ................................................................................................................................ 64

9. BIBLIOGRAPHY ...................................................................................................................................................................... 65

ANNEXURE 1 ..................................................................................................................................................................................... 68

Bilateral trade profiles—india – pakistan. ....................................................................................................................... 68

ANNEXURE 2 ..................................................................................................................................................................................... 72

RCA ANALYSIS ............................................................................................................................................................................. 72

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List Of Tables

TABLE 1: TOTAL PRODUCTION CAPACITY OF OVERALL TANNERIES IN PAKISTAN.................................. 10

TABLE 2: HS CODE LEATHER SECTOR ............................................................................................................................. 11

TABLE 3: PERCENTAGE EXPORT GROWTH OF THE WORLD ............................................................................................ 22

TABLE 4: BILATERAL TRADE PROFILE ................................................................................................................................ 23

TABLE 5: EXPORT COMPOSITION OF LEATHER GARMENTS AND GLOVES ......................................................................... 25

TABLE 6: COMPETITOR ANALYSIS FOR LEATHER GARMENTS AND GLOVES ...................................................................... 26

TABLE 7: POTENTIAL TRADE OF LEATHER GARMENTS AND GLOVES ................................................................................. 27

TABLE 8: EXPORT COMPOSITION OF LEATHER FOOTWEAR ............................................................................................... 28

TABLE 9: COMPETITOR ANALYSIS FOR LEATHER FOOTWEAR ........................................................................................... 29

TABLE 10: POTENTIAL TRADE FOR LEATHER FOOTWEAR .................................................................................................. 30

TABLE 11: EXPORT COMPOSITION OF LEATHER GOODS FOR INDUSTRIAL USE ................................................................. 31

TABLE 12: COMPETITOR ANALYSIS OF LEATHER GOODS FOR INDUSTRIAL USE ................................................................ 32

TABLE 3: POTENTIAL TRADE FOR LEATHER GOODS FOR INDUSTRIAL USE ........................................................................ 33

TABLE 14: EXPORT COMPOSITION FOR LEATHER GOODS CONSUMER ARTICLES .............................................................. 34

TABLE 15: COMPETITOR ANALYSIS FOR LEATHER GOODS CONSUMER ARTICLES ............................................................ 36

TABLE 16: POTENTIAL TRADE FOR LEATHER GOODS CONSUMER ARTICLES ..................................................................... 37

TABLE 17: EXPORT COMPOSITION OF FINISHED LEATHER HIDES ...................................................................................... 38

TABLE 18: COMPETITOR ANALYSIS FINISHED LEATHER HIDES .......................................................................................... 39

TABLE 19: POTENTIAL TRADE FINISHED LEATHER HIDES .................................................................................................. 40

TABLE 20: EXPORT COMPOSITION OF FINISHED LEATHER SKINS ...................................................................................... 41

TABLE 21: COMPETITOR ANALYSIS OF FINISHED LEATHER SKINS ..................................................................................... 42

TABLE 22: POTENTIAL TRADE FINISHED LEATHER SKINS .................................................................................................. 43

TABLE 234: EXPORT COMPOSITION OF FINISHED LEATHER OTHER .................................................................................. 44

TABLE 24: COMPETITOR ANALYSIS OF FINISHED LEATHER OTHER ................................................................................... 45

TABLE 25: POTENTIAL TRADE FOR FINISHED LEATHER OTHER ......................................................................................... 46

TABLE 26: TARIFF ANALYSIS ............................................................................................................................................... 47

TABLE 27: RCA ANALYSIS OF LEATHER SECTOR .............................................................................................................. 48

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ACKNOWLEDGEMENT

The author greatly acknowledges the Director Research PITAD Dr. Adil Khan Mian Khel

for his support and guidance throughout the initiation and completion of this research report. His

valuable comments and inputs add significantly in improving the research capacity of this report.

Particularly, the author is grateful to Mr. Tahir Maqsood (Director General), PITAD for his

cooperation, guidance and support all along.

The author also gratefully acknowledges the assistance of PITAD Research Team who

helped in writing this analysis through their fruitful suggestions and support. Lastly the data analysis

is the joint effort of the author and Mr. Badar ud Din Tanweer (Survey Coordinator). He has also

helped in formatting the report.

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L E A T H E R A N D F O O T W E A R I N D U S T R Y

1. INTRODUCTION

Leather industry, including leather products, is the second largest export earning sector after

textiles1 in Pakistan. Currently, this sector is contributing around $ 874 million

2 a year but has the

potential to multiply volume of exports with the improvement of quality and diversification in

different range of products, specially garments and footwear. Leather garments and footwear is a job-

oriented sector providing employment to a very large segment of the society besides earning foreign

exchange for the country.

The leather industry consists of six sub-sectors namely, Tanning, Leather, Footwear, Leather,

Garments, Leather Gloves, Leather Shoe Uppers, and Leather Goods. The Tanning industry plays a

vital role in the progress of these sub-sectors by providing the basic material i.e. leather. Today,

Pakistan is among the leading countries in the production of Leather Garments and Gloves. The

leather and leather made-ups industry plays a significant role in the economy of Pakistan and its share

in GDP is 4%3. The leather finishing and made ups industries represent an important sector in

Pakistan, contributing almost more than half a billion US dollars4 in foreign exchange earnings to the

national exchequer. Export of leather and leather items was $1.22 billion in 2007-08, $959 million in

2008-09 and $867 million in 2009-105. These figures show that in the year 2009-10 exports have

declined to 30 per cent of what Pakistan was exporting in the year 2007-08 which is an alarming

situation. Exports of 2010-11 have shown an upward trend but this was mainly due to higher prices of

leather in the international market while in quantitative terms the increase was negligible. 1.5 million

animals were perished in 2010 floods and 95,523 animals were exported from July 2010 to March

2011. This resulted in an acute shortage and increased prices of mutton from Rs270 to Rs450 and

beef from Rs154 to Rs350 per kg from 2008-09 to 2010-11.

The Ministry of Commerce has always been in favor of exporting value added products like

meat, its products and finished leather goods. The export of live animals affects local meat and leather

1Pakistan Tanneries Association (PTA) 2 Figure from ITC Trade Map 3 GDP data from Federal Bureau of Statistics 4 Figure from State Bank of Pakistan Foreign Exchange Data (2011) 5 Figures from ITC Trade Map

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industry negatively. Therefore, the government is in the process of establishing Halal Food

Certification System in Pakistan. This will help Pakistan to enter in the $600 billion6 international

market.

OBJECTIVE OF THE REPORT

Pakistan had been conducting its trade with India on a positive list approach before 26th of

March, 2012. Recently, steps have been taken to liberalize trade from positive list to negative list. In

the wake of this liberalization, there would be challenges and opportunities by opening up the new

sectors of the economy to competition from India. In the light of above, this report is being conducted

with the following objectives:

Identification of segments of Leather industry which are competitive or not competitive vis a

vis India.

Identification of Pakistan‘s export potential in leather sector to India.

Identification of Pakistan‘s import potential in leather sector from India

Identify the comparative tariffs of Pakistan and India for the particular products range.

Identify the weaknesses and opportunities of Leather sector by using Revealed Comparative

Advantage (RCA) Index.

Identification of NTBs that need to be addressed to facilitate exports of the Leather sector

towards India.

SCOPE

The scope of this report is limited to analyze the Pakistan leather and footwear sector against

India by using trade data of 2010 as trade figures of the post liberalization period are not available.

The report is aimed to identify new challenges and opportunities that would be faced by Pakistan as a

result of trade liberalization between the two countries. This report is based primarily on desk

research. Due to time, resource and budgetary constraints detailed interaction with stakeholders was

not possible so the analysis done in this report is more focused on statistical data analysis rather than

direct input and feedback from the relevant stakeholders.

6 Figure from ITC Trade Map

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2. LEATHER INDUSTRY PROFILE

2.1 HISTORY

At the time of independence there were only a few tanneries producing sole leather at a small

scale. In the early days of independence some tanneries were established in Karachi. In 1950's some

were established in Lahore and adjoining areas. The industry has flourished rapidly since then.

During 1950s well-equipped tanneries were set up at Karachi and Lahore, while during 60s and 70s

more units were established at Hyderabad , Kasur, Sialkot, Multan, Sahiwal and Gujranwala. Starting

with the production of picked and vegetable tanned hides and skins, the tanneries, today are

producing not only wet blue and crust but also fully finished leather.

2.2 PRODUCTION CAPACITY

TABLE 1: TOTAL PRODUCTION CAPACITY OF OVERALL TANNERIES IN

PAKISTAN

Particulars Estimated Production

Capacity

Actual Production Utilization Rate

Tanned leather 90 Million Sqr meter 60 Million Sqr meter 67%

Leather

Garments/Apparels

7 Million Pieces 5 Million Pieces 71%

Leather Gloves 10 Million pairs 5 Million pairs 50%

Leather Footwear 200 Million Pairs 100 Million Pairs 50%

Source: Pakistan Tanneries Association7

NOTE: Against a capacity of producing 90 million square feet of tanned leather, the tanneries

are presently producing only 60 million square feet tanned leather per year8.

Presently, there are some 461 leather garments/apparels making units, which annually produce

some 5.0 million pieces against a capacity of producing 7.0 million pieces. The 524 footwear units in

the country are currently producing 100 million pairs against a capacity for producing 200 million

pairs, while 348 leather gloves units are producing 5.0 million pairs against a capacity of making 10

7 Pakistan Tanneries Association Website (www.pakistantanners.org) 8 Pakistan Tanneries Association Website (www.pakistantanners.org)

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million pairs annually9. These statistics clearly show that the capacity of this sector remains highly

under-utilized.

2.3 LOCATIONS OF TANNERIES AND MANUFACTURING UNITS IN PAKISTAN

In Pakistan there are more than 2500 tanneries (registered& Un registered) and footwear

manufacturing units running in Pakistan. Over the years, the number of registered tanneries in the

country has increased from 529 in 1999 to 600 in 2003 and to 725 at present.These are located in

Karachi, Hyderabad, Lahore, Multan, Kasur, Faisalabad, Gujranwala, Sialkot, Sahiwal, Sheikhupura

and Peshawar10

.The increase in the number of tanneries and increased export can be attributed to

increase in demand of tanned leather in the foreign market.

2.4 CATAGORIES OF LEATHER

Leather Sector is divided into the following categories.

TABLE 2: HS CODE LEATHER SECTOR

S. No Leather PRODUCTS Number of Tariff Lines at 6 Digit HS

1 Leather Garments & Gloves 5

2 Leather Footwear 9

3 Leather Goods

I Industrial 3

Ii Consumer 17

4 Finished Leather

I Leather Hides 4

Ii Leather Skins 8

Iii Other Leather 6

Source : ITC Trade Map Definitions of HS

Sub sector wise percentage share in Total export of Pakistan and India has been annexed.

2.5 SOURCES OF RAW MATERIAL

Pakistan is fortunate that the raw material required by the industry is available in the country

in abundance. Local availability of raw materials and low wage cost gives the country a competitive

edge in the world market. In the leather industry the raw materials are by-products of the meat

9 Pakistan Tanneries Association (www.pakistantanners.org) 10 UNIDO. Diagnostic study of Korangi tanneries

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industry, with the meat having higher value than the skin. Taxidermy also makes use of the skin of

animals, but generally the head and part of the back are used. Hides and skins are also used in the

manufacture of glue and gelatin. The primary sources of raw material for the tanning industry are

hides and skins from animals slaughtered for human consumption.

The following are the types of basic raw materials which are being used by this industry: -

Cow hides - Buffalo hides - Goat skins - Sheep skins.

1. Buffalo:

Buffalo is considered as the specialty of Pakistan in World, because of its ample availability in

Pakistan

2. Cow:

The cow material is considered a superior raw material upon buffalo because of its fine, tight and

comparatively uniform structure.

3. Goat:

It is good for making shoe upper leathers, garment and goods leather.

4. Sheep:

Leather made from sheep raw materials has a very good and softer touch and is considered best for

leather garments.

The industry meets 75% of its needs of raw hides from local sources while rest of the 25-30

per cent is met through imports11

.Pakistan imports raw hides from Saudi Arabia, Iran, and China,

Dubai, Sudan, Kenya, Australia and Italy.

2.6 TRAINING INSTITUTES:

There are various training institutes that have been established to provide leather based

academic degrees. Some of them are:

1. National Institute of Leather Technology, Karachi (NILT).

2. Leather productsdevelopment Institute, Sialkot (LPDI).

3. Institute of Leather Technology, Gujranwala (ILT).

4. Footwear training Institute, Charsadda (FTI).

11 UNIDO. Diagnostic study of Korangi Tanneries Zone.(2006)

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2.7 CAPITAL AND MACHINERY

i. Around 80 to 95% of machinery is imported from countries like Italy and France.

ii. The high percentage of import in terms of machinery is a reflection of the insignificant

manufacturing base in Pakistan.

iii. Around 5 to 10% machinery used by the small tanneries is locally produced. Such

machinery is locally known as chukrum. These are smaller in size and available at

reasonable prices.

2.8 RESEARCH & DEVELOPMENT:

i. There are numerous institutes related to leather, yet the rate at which research and

development is being carried out is very slow and is in it‘s initial stages.

ii. The big players of the industry such as Nova leathers and Mahmood Brothers have come

up with a new dyeing technology(steel dyeing drums) which ensure better quality of

dyeing12

.

iii. The university of veterinary and animal sciences(UVAS), Lahore and Pakistan Tanneries

Association (PTA) have signed a research project for the identification of skin diseases in

animals and geographical patterns of these diseases.

2.9 INFRASTRUCTURE:

i. There are severe infrastructure problems faced by the Leather industry.

ii. The industrial hub of Karachi, Korangi Industrial Area (sector 7-A) does not have a single

metal road. These tanneries are also deprived of the basic utilities(such as water and

electricity).

iii. Being a water-based industry, tanneries have to purchase water and they have also

arranged for company-owned generators to ensure uninterrupted power supply.

iv. The drainage system is in a very poor condition as well.

3. PRODUCTION PROCESS

3.1 TYPES OF PROCESSES

12 Pakistan Tanneries Association Website (www.pakistantanneries.org)

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There are a number of processes whereby the skin of an animal can be formed into a supple,

strong material commonly called leather.

1. Vegetable-tanned leather is tanned using tannin (hence the name "tanning") and other

ingredients found in vegetable matter, tree bark, and other such sources. It is supple and

brown in color, with the exact shade depending on the mix of chemicals and the color of the

skin. Vegetable-tanned leather is not stable in water; it tends to discolor, and if left to soak and

then dry it will shrink and become less supple and harder. In hot water, it will shrink

drastically and partly gelatinise, becoming rigid and eventually brittle. Boiled leather is an

example where the leather has been hardened by being immersed in hot water, or in boiled

wax or similar substances. Historically, it was occasionally used as armor after hardening, and

it has also been used for book binding. This is the only form of leather suitable for use in

leather carving or stamping.

2. Chrome-tanned leather, invented in 1858, is tanned using chromium sulfate and other salts

of chromium. It is more supple and pliable than vegetable-tanned leather, and does not

discolor or lose shape as drastically in water as vegetable-tanned. Also known as wet-blue for

its color derived from the chromium. More esoteric colors are possible using chrome tanning.

3. Aldehyde-tanned leather is tanned using glutaraldehyde or oxazolidine compounds. This is

the leather that most tanners refer to as wet-white leather due to its pale cream or white color.

It is the main type of leather used in chrome-free leather often seen in infant's shoes and in

automobiles that prefer a chrome-free leather. Formaldehyde tanning (being phased out due to

its danger to workers and the sensitivity of many people to formaldehyde) is another method

of aldehyde tanning. Brain-tanned leathers fall into this category and are exceptionally water

absorbent. Brain tanned leathers are made by a labor-intensive process which uses emulsified

oils often those of animal brains. They are known for their exceptional softness and their

ability to be washed. Chamois leather also falls into the category of aldehyde tanning and like

brain tanning produces a highly water absorbent leather. Chamois leather is made by using

oils (traditionally cod oil) that oxidise easily to produce the aldehydes that tan the leather.

4. Synthetic-tanned leather is tanned using aromatic polymers such as the Novolac or Neradol

types. This leather is white in color and was invented when vegetable tannins were in short

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supply, i.e. during the Second World War. Melamine and other amino-functional resins fall

into this category as well and they provide the filling that modern leathers often require. Urea-

formaldehyde resins were also used in this tanning method until dissatisfaction about the

formation of free formaldehyde was realized.

5. Alum-tanned leather is tanned using aluminum salts mixed with a variety of binders and

protein sources, such as flour, egg yolk, etc. Purists argue that alum-tanned leather is

technically "tawed" and not tanned, as the resulting material will rot in water. Very light

shades of leather are possible using this process, but the resulting material is not as supple as

vegetable-tanned leather.

6. Rawhide is made by scraping the skin thin, soaking it in lime, and then stretching it while it

dries. Like alum-tanning, rawhide is not technically "leather", but is usually lumped in with

the other forms. Rawhide is stiffer and more brittle than other forms of leather, and is

primarily found in uses such as drum heads where it does not need to flex significantly; it is

also cut up into cords for use in lacing or stitching, or for making many varieties of dog

chews.

3.2 STAGES OF LEATHER FORMATION:

1. Warehousing and sorting

In the raw material area the skins are preserved in salt, stored in controlled cool rooms and

before processing, presorted for quality and weight.

2. Soaking

The skin is soaked to remove dirt and salt.

3. De-Fleshing

During this process tissue, flesh and fat remnants are removed by a roller mounted knife.

4. Liming

By adding lime and sulphur compound the hair is removed from the skin.

5. Bating, pickling, tanning

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During bating and pickling the skins are treated with acid and salt in preparation for tanning.

During tanning the skin fibres absorb the tanning agents. That's when the skin becomes

leather.

6. Samming

During this process water is removed.

7. Splitting

In order to achieve an even specified thickness the leather is reduced in substance. The

resulting split-leather can than be processed further as suede.

8. Skiving

The grain leather is brought to an even thickness. Irregularities are removed from the reverse

side and the leather is separated into color-batches.

9. Sorting

The leather is sorted into various quality grades.

10. Neutralizing, filling out, dyeing and greasing

The acid resulting from the tanning process is neutralized. Then the dyeing takes place, where

appropriate with anilin-dye-stuffs. The greasing procedure will finally achieve the correct

softness.

11. Drying

Two methods are used to dry leather. The vacuum process during which moisture is removed

by suction and the hanging process, when leather is hung and taken through ovens.

12. Staking

Following drying the leather is mechanically staked in order to soften it. Further processes

take place in preparation for finishing.

13. Finishing

Here the leather is given its final surface treatment and look. Through processes of base coat,

coloring, embossing, ironing the leather becomes, depending on the demands of fashion, matt

or shiny, two-tone or uni-coloured, smooth or grained. The art of finishing lies in working in

wafer-thin layers without disturbing the natural look of the leather and its characteristics such

as suppleness and breath ability.

14. Quality Control

In between every process quality is controlled. Final control checks to ensure each individual

production is to specification and sortation into various trades.

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15. Dispatch

The leather is measured electronically, wrapped and dispatched.

3.3 TECHNOLOGICAL LEVEL

The tanning industry in Pakistan uses machinery which are out dated and believed to be

imported from various countries in the 1970‘s and 1980‘s. Though, the country took advantage of

these second hand machines by bringing in a large amount of foreign earnings, it failed to create a

friendly environmental atmosphere in the process. A large part of the country is subjected to air

pollution due to the burning of chemical residual during tanning process into the atmosphere. This

pollution has a dangerous effect on the health of the local population, mainly in the cities of Karachi,

Kasur and Sialkot.

The leather industry has implemented many progressive interventions and technologies in the

past to deal with its numerous environmental and energy challenges. The representative association of

leather industry i.e. Pakistan Tanners Association (PTA) has long been facilitating a number of

initiatives to address the environmental issues of the industry. This has resulted into a more

competitive, sustainable and progressive leather industry of Pakistan.

For sustainability of already implemented steps and in view of the continuous needs of the

leather and tanning sector, PISD will work and transfer environmental and energy-related knowledge

and technologies to the industry in order to address the ongoing issues of leather sector of Pakistan.

Cleaner Production Institute (CPI) has started the Programme for Industrial Sustainable

Development (PISD). Cleaner (Energy Efficiency) Technology Project for Karachi Tanneries (CTP-

KT) is a component project of PISD. CTP-KT intends to provide free of cost technical services to

Karachi-based leather processing units in implementing energy efficient and environment friendly

technologies.

3.4 DYES AND CHEMICALS

i. 90% of the dyes and chemicals used in the tanning of leather are imported mainly from

Germany, Spain and Italy.

ii. 10% dyes and chemicals are taken from MNCs which have got their set ups in Pakistan.

The big players of the Industry are Sandoz, Bayer, BASF and Clarient.

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3.5 LABOUR SITUATION

i. The leather industry provides employment to 200,000 people of Pakistan13

ii. Almost 80% of the labour is skilled( they have the required expertise to operate the

machinery)14

iii. Approximately 20% are the unskilled workers who are basically helpers( they help in

unloading, loading and packaging)15

iv. The bigger players in the Industry employ 15 to 20% graduates , engineers and diploma

holders while The smaller tanneries have 2 to 5% of graduates in their workforce.16

v. Almost all the tanneries have the minimum age requirement of 18 years, below which

they do not employ the candidate.

vi. Basic training methodology prevalent is the ―Ustaad-shaagird17

“ method.

vii. They believe that the expertise that the workers have is sufficient enough to meet the

buyer preferences.

4. OVERVIEW OF GOVERMENT POLICIES AND INCENTIVES

To stem decline in leather exports, the government has announced a number of steps for

giving a boost to leather apparel industry in its 3-year strategic trade policy framework 2009-12.

These steps, as announced by federal minister for commerce, on July 26, 2009, include facilities from

Export Investment Support (EIS) Fund for procurement of expert advisory services, matching grant to

establish design studios/centres and establishment of research and development centres in Karachi

and Sialkot. In addition, this sector would be able to avail EIS Fund facilities that include sharing 25

per cent financial cost of setting up laboratories and matching grant for setting up of effluent

treatment plants.

13 SMEDA . Leather Goods Sector Brief 14 Pakistan Tanners Association 15 SMEDA .Leather Goods Sector Brief 16 SMEDA. Leather Goods Sector Brief 17 In most of the Industries in Pakistan, the method of teaching and training a new worker is not through class room or laboratory /workshop based training. Experienced workers who become masters in their field through experience are called “Ustaads” and take help of new workers whoo are known as “shaagird”and train them while doing their jobs. This method is called “Ustaad – Shaagird method”.

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4.1 TRADE POLICY (STPF 2009-2012)

The Strategic Trade Policy Framework 2009-2012 had endeavored to come up with a clear

vision and road map in consultation with the major players of leather sector and Ministry of

Industries. To address supply side constraints and to encourage leather sector regain its lost share,

following measures had been recommended in the Trade Policy 2009-12.,

1) Providing on the floor expert advisory / consultancy services to leather apparel manufacturers

cum exporters.

2) Matching grant to establish design studios or design centers in factories.

3) Establishing R&D Centers in Karachi and Sialkot by Pakistan Leather Garments

Manufacturers and Exporters

4) Association for providing Research & Development support to Leather Garments & Leather

Goods Exporters.

5) Installation of flaying machines at district level slaughter houses.

6) Sharing 25% financial cost of setting up of design centers and labs in the individual tanneries.

7) To provide matching grant for setting up of effluent treatment plants in individual tanneries

4.2 DEMAND OF LEATHER INDUSTRY FROM THE GOVERNMENT

1) The leather garment industry strongly recommended for imposition of 20 per cent export duty

on export of semi-finished and finished leather in the new trade policy (2012-2015)18

. This

would help availability of good quality leather produced locally.

2) 'Fox Furs' are much in demand abroad. This should be removed from negative items list

under import/export order. Export of garments using allowable fox fur trimmings for

decoration should also be permitted for boosting export of value added leather garments.

3) There is an immediate need for establishment of a Leather Board in Pakistan which should

operate as an independent body and funded by the government from export development fund.

The board should be headed by a person exporting value-added leather products.

18 http://www.fibre2fashion.com/news/daily-textile-industries-ews/newsdetails.aspx?news_id=112692

http://www.fibre2fashion.com/news/daily-textile-industries-ews/newsdetails.aspx?news_id=112692

20

4) Value-added exports like leather garments where there cannot be any further value-addition

should be exempt from Export Development Surcharge.

5) Re-export of temporarily imported goods supplied by buyers should be allowed without sight

letter of credit or advance payment if supplied as free of cost. The present policy does not

provide provision for export of such goods in original and unprocessed form due to

cancellation of export order or changes in design/style of the order.

6) The exporters may also be allowed to retain 5 per cent of their export earnings for

international advertisements and commission etc

4.3 PERFORMANCE OF THE GOVERNMENT

The government has failed to implement the strategic trade policy framework (STPF) 2009-

2012. The government had not released funds for the strategic trade policy framework (STPF).

Though the budget 2009-10 earmarked a hefty amount of Rs40 billion for achieving various

initiatives under the STPF for the growth of exports but no amount has been released. It is even more

disturbing for the trade and industry that against most of the initiatives of the STPF public notices

were also issued but the ministry of finance failed to release the required funds.

Trade Development Authority of Pakistan (TDAP) under the directives of the ministry of

commerce issued public notices for various schemes included in the STPF. In response to these

notices different segments of trade and industry applied to avail the schemes and also incurred

sizeable expenditures to meet the conditions of these initiatives. Even on holding several meetings

with the high-ups of the MoC the funds were not made available. However, it was later disclosed that

the finance has not released funds allocated in the last budget for STPF because most of these funds

had been diverted to other schemes like Benazir Income Support Programme (BISP), for Internally

Displaced Persons (IDPs) and fiscal relief packages given to Khyber Pakhtunkhwa and FATA19

.

Fawad Ijaz Khan, former chairman Pakistan Leather Garments Manufacturers and Exporters

Association (Plgmea) said in a speech that the major chunk of the Rs40 billion allocated for STPF

under the budget would have gone to the textile sector and around Rs1 billion for the leather

sector.The schemes designed under STPF included setting up of design centre for leather garments,

19 http://archives.dawn.com/archives/169664

http://archives.dawn.com/archives/169664

21

hiring of foreign experts and creation of research and development cell in trade bodies, bearing 25 per

cent cost for laboratory in tanning industry and for effluent treatment plant20

.

4.4 AFTER WTO & FUTURE PERSPECTIVES

As far as the implications of WTO on the leather industry are concerned, the Agreement on

Technical Barriers to Trade (TBT) and the Agreement on the application of Sanitary and

Phytosanitary Measures (SPS) can have significant impact on Pakistan‘s ability to increase the

exports in this sector. TBT Agreement prevents use of national and regional technical requirements or

standards in general, as unjustified technical barriers to trade. SPS measures aim to protect human,

animal and plant life. Both the agreements lead to non-discrimination, avoidance of unnecessary

obstacles to trade, harmonization, equivalence, mutual recognition and transparency.21

However, the

environmental issues related with the leather industry in Pakistan could have significant negative

effects on its exports. Another problem could be related to the quality of Pakistan's leather exports. If

the Pakistani exporter does not improve the quality of the product, the current competitive advantage

that Pakistan has in this field could quickly fade away.

Leather products like jackets, shoes and gloves account for more than two-thirds of leather

exports while tanned unfinished leather accounts for a third. But the industry is struggling to compete

in an increasingly tough market.

China and India are fighting for market share by beating Pakistan with cheaper input costs.

Meanwhile, in Pakistan the debate in the leather sector rages about whether unfinished leather should

be exported.

Hides and skins and leather are covered under the Agreement on Agriculture of WTO.

Moreover, the Agreement on Agriculture also has indirect implications for the sector through meat

and dairy policies. However, leather and leather products are covered under the general provisions of

the GATT 1994. No import tariffs are applied to raw hides and skins in Pakistan at present. Tariff

20 http://www.plgmea.pk/funds-not-released-for-export-schemes.php 21 Trade Liberalization and Environment Protection; Responses of Leather Industry in Brazil, China and India. (http://www.jstor.org/discover/10.2307/4418354?uid=3738832&uid=2&uid=4&sid=56300054473)

http://www.plgmea.pk/funds-not-released-for-export-schemes.php

http://www.jstor.org/discover/10.2307/4418354?uid=3738832&uid=2&uid=4&sid=56300054473

22

escalation is an issue for leather and leather products as import tariffs vary according to the level of

processing; i.e. finished leather, leather bags, leather shoes etc. carry high tariffs in some countries.

5. TRADE DATA ANALYSIS

5.1 EXPORT ANALYSIS

TABLE 3: PERCENTAGE EXPORT GROWTH OF THE WORLD

Years

Leather Sector World Export

(US $ Billions) Growth

2005 89.16

2006 98.23 10.2%

2007 111.21 13.2%

2008 117.03 5.2%

2009 97.06 -17.1%

2010 116.82 20.4%

2011 139.48 19.4%

Source : ITC TRADE MAP22

Total Export of Leather sector increased from the US $ 89.16 billion in 2006 to US $ 98.23

billion in 2006. 10.2% increase depicts the increased sales before the global economic recession. In

2007 the world export increased by 13.2% and by 2008 the percentage increase of the total world

export started falling .This decline attributes to overall decline in sale of Leather articles and

22 ITC Trade Map (www.trademap.org)

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

2005 2006 2007 2008 2009 2010 2011

Leather Sector (World Export to World)

Leather Sector World Export

23

garments due to global financial recession. In the year 2009 the export growth declined from being

positive at 5.2% to negative at 17.1%. The decrease in the leather sector was mainly due to the

Chinese Footwear and other leather articles Replica of major brands using artificial leather instead of

real leather. Their prices are less than one fourth of the actual brands but they are true copies of the

real brand. During the years 2008-09 Animal activists were successful in campaigning to stop the use

of animal skins. They argued that animals and rare animals are being killed for the sake of their skins.

A fashion show was also held in Paris and the theme of that show was ―Say No to Skins‖. This leads

to negative export growth. Another major reason was the implementation of stringent SPS laws in the

developing countries. The law prohibits handling of agricultural goods and sea food with bare hands.

In the year 2010 Total world exports of Leather sector achieved a positive 20.4% growth and an

export volume of US $ 116.82 billion. This increase in the Leather exports was due to fashion trend

of wearing leather jackets and leather trousers. The fashion hype boosted after the 2010 Gran Prix

Moto Bike Championship in Europe and USA.

TABLE 4: BILATERAL TRADE PROFILE

Product label Bilateral Trade Profile for Leather Sector

2005 2006 2007 2008 2009 2010 2011

Total Exports of

Pakistan 16.0 16.9 17.8 20.2 17.5 21.4 25.3

Leather Sector of

Pakistan 0.9 0.8 0.9 1.0 0.7 0.8 0.9

% Share in Total

Exports 5.78% 5.27% 5.27% 5.03% 4.42% 4.08% 3.81%

Total Exports of

India 100.3 121.2 145.8 181.8 176.7 220.4 225.3

Leather Sector of

India 2.4 2.5 2.9 3.3 2.8 3.2 4.9

% Share in Total

Exports 2.41% 2.14% 1.99% 1.82% 1.63% 1.47% 2.22%

Source: ITC Trade Map US $ billion

24

The share of Leather sector in the Total export in Pakistan has always been more than what

India is contributing to its total exports. Pakistan‘s export of the leather sector shows a stagnant trend.

Neither the export increased or decreased by large volume in the years 2005 to 2011. While India‘s

leather sector has been progressing with a trough in 2009. Pakistan‘s leather export for the year 2011

is US $ 0.9 billion while India‘s export for the leather sector for the year 2011 is US $ 4.9 billion.

5.2 LEATHER GARMENTS AND GLOVES

5.2.1 EXPORT COMPOSITION OF LEATHER GARMENTS AND GLOVES

The Pakistani export of leather garments and gloves in 2010 was around $13 billion as

compared to $15 billion in 2005. The five-year trend indicates a negative growth (an average of -7%

per annum) for leather garments. Leather garments exports consist of article of leather apparel (62%)

and other leather clothing accessories (19%). China is the leading exporter of leather garments for the

last five years and shared 28 % of the total international trade for the year 2010. India comes with 8%

at number 3 while Pakistan has managed to capture 8 % at number 4 of the market in this sub sector.

Turkey has 3 % while Italy and Germany have 13 % and 5 % of the market share respectively

0

1000000

2000000

3000000

4000000

5000000

6000000

2005 2006 2007 2008 2009 2010 2011

Leather Sector of Pakistan

Leather Sector of India

25

TABLE 5: EXPORT COMPOSITION OF LEATHER GARMENTS AND GLOVES

Product code Product label

Exported

Value in

2005

Exported

Value in

2010

'420329 Gloves mittens&mitts,o/t for sport,of leather o

of composition leather 0.1 0.1

'420310 Articles of apparel of leather or of composition

leather 0.3 0.3

'420340 Clothing accessories nes, of leather or of

composition leather 0.02 0.002

'420321 Gloves,mittens & mitts,for sports,of leather or

of composition leather 0.03 0.1

'420330 Belts and bandoliers of leather or of



5.2.2 COMPETITOR ANALYSIS FOR GARMENTS AND GLOVES

Pakistan is the fourth largest exporter of leather garments to the world and contributed 8% of

the total leather garments export to the world. Top three exporters to the world in this product

category are China (28%), Italy (13%) and India (8%).

'42032919%

'42031062%

'4203400%

'42032118%

'4203301%

Export Composition of Leather Garments and Gloves (2010)

26

TABLE 6: COMPETITOR ANALYSIS FOR LEATHER GARMENTS AND GLOVES

Ranking Garments 4203

1 China (28%)

2 Italy (13%)

3 India (8%)

4 Pakistan (8%)

5 Hong Kong, China (7%)

6 Germany (5%)

7 France (5%)

8 Turkey (3%)

9 United States of America (3%)

10 Netherlands (3%)

Source: ITC Trade Map


The above chart clearly shows that India is performing better in Leather garments and gloves sector.

5.2.3 POTENTIAL TRADE FOR GARMENTS AND GLOVES

Pakistan is exporting Leather Garments to India. Indian imports from Pakistan were US $ 0.1

million in 2010 while India imported US$8.8 million of Leather Garments from the world. Pakistan

0

200000

400000

600000

800000

1000000

1200000

Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Leather Garments and Gloves of Pakistan

Leather Garments and Gloves of India

27

exported US$590.7 million of Leather to the world indicating a strong potential for Pakistan in Indian

market.

Below table also reveal that the potential for Pakistan in Leather Gloves export to India.

Pakistan exports around US$ 0.187 million of Leather Gloves to India while India imports about

US$883.3 million of Leather Gloves from the world. Pakistan‘s export to the world is around

US$590.7 million..

TABLE 7: POTENTIAL TRADE OF LEATHER GARMENTS AND GLOVES

Product

code Product label

Pakistan's

exports to

India

India's

imports

from world

Pakistan's

exports to

world

Indicative

potential

trade

Y 2010 Y 2010 Y 2010 Y 2010

'420321

Gloves,mittens & mitts,for

sports,of leather or of

composition leather

0.1 0.2 106.9 0.1

'420310 Articles of apparel of leather

or of composition leather 0.04 1.4 365.7 1.4

'420329

Gloves mittens&mitts,o/t for

sport,of leather o of

composition leather

0.02 1.0 111.3 0.9

'420330

Belts and bandoliers of

leather or of composition

leather

0.001 4.9 4.4 4.4

'420340

Clothing accessories nes, of


leather

0 1.0 2.1 1.0

Source: ITC Trade Map US $ million

5.3 LEATHER FOOTWEAR

5.3.1 EXPORT COMPOSITION OF LEATHER FOOTWEAR

There is a huge international market for leather footwear. A total of $ 0.7 billion worth of

leather footwear was exported worldwide in 2010. Moreover, because of rising costs of

manufacturing units in the developed countries, footwear manufacturing base has shifted to low cost

regions and Asia has become a major footwear-manufacturing center. Footwear is the sub-sector that

has the maximum potential for value addition in finished leather . Pakistan has an inherent advantage

due to local availability of high quality hides & skins and a developed tanning industry. As a result,

28

good quality leather for footwear is easily available with minimum lead times. But in spite of this,

Pakistan has not been able to gain a sizable share in exports.

TABLE 8: EXPORT COMPOSITION OF LEATHER FOOTWEAR

Product

code Product label

Exported

Value in 2005

Exported

Value in 2010

'640312 Ski-boots, snow-board boots, uppers of leather 0.00009 0.0001

'640359 Footwear, outer soles and uppers of leather, nes 0.006 0.002

'640399 Footwear, outer soles of rubber/plastics uppers of

leather, nes 0.008 0.04

'640319 Sports footwear,o/t ski,outr sole of

rbr/plas/leather&upper of leather 0.0002 0.01

'640340 Footwear,outr sole of rber/plas/leathr,uppers of

leathr w/met toe-cap 0.003 0.001

'640391 Footwear,outer soles of rubber/plast uppers of

leather covg ankle nes 0.028 0.004

'640330 Footwear,wooden,outer soles of rubber/

plas/leather&uppers of leather 0.00001 0

'640320 Footwear,outr sole/uppr of leathr,strap across the

instep/arnd big toe 0.005 0.008

'640351 Footwear, outer soles and uppers of leather,

covering the ankle, nes 0.0006 0.000007


'6403120%

'6403594%

'64039956%

'64031921%

'6403401%

'6403916%

'6403300%

'64032012%

'6403510%

Composition of Leather Footwear Export of Pakistan (2010)

29

5.3.2 COMPETITOR ANALYSIS FOR FOOTWEAR

China is the biggest Exporter of leather Footwear of the world with 35% share in world top

ten exporters and Italy is number 2 with a 27% share in world top ten exporters. Pakistan and India

are not present in the top ten leather footwear exporters list. Pakistan stands at 44rth while India at

29th

ranking in the world.

TABLE 9: COMPETITOR ANALYSIS FOR LEATHER FOOTWEAR

Ranking Footwear 6403

1 China (35%)

2 Italy (27%)

3 Germany (8%)

4 Belgium (6%)

5 Indonesia (7%)

6 Spain (6%)

7 Portugal (6%)

8 Netherlands (5%)

29 India (0.03%)

44 Pakistan (0.01%)


Source: ITC Trade Map US $ 000

Likewise the Leather Garments and Gloves sector , India is performing better in Leather

Footwear sector as well. Total leather sector exports for the year 2011 for Pakistan is US $ 0.085

billion while for India is US $ 2.0 billion.

0

500000

1000000

1500000

2000000

2500000

Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Leather Footwear of Pakistan

Leather Footwear of India

30

5.3.3 POTENTIAL TRADE FOR LEATHER FOOTWEAR

TABLE 10: POTENTIAL TRADE FOR LEATHER FOOTWEAR

Product

code Product label

Pakistan's

exports to

India

India's

imports

from world

Pakistan's

exports to

world

Indicative

potential

trade

Y 2010 Y 2010 Y 2010 Y 2010

'640320 Footwear,outr sole/uppr of leathr,strap across

the instep/arnd big toe 0.004 8.5 8.9 0

'640319 Sports footwear,o/t ski,outr sole of

rbr/plas/leather&upper of leather 0.003 7.8 15.4 0.1

'640340 Footwear,outr sole of rber/plas/leathr,uppers

of leathr w/met toe-cap 0 0.2 1.0 9.4

'640391 Footwear,outer soles of rubber/plast uppers

of leather covg ankle nes 0 3.6 4.7 4.5


nes 0 3.5 2.8 0.003

'640399 Footwear, outer soles of rubber/plastics

uppers of leather, nes 0 12.4 41.5 0.001


covering the ankle, nes 0 2.3 0.007 0

'640312 Ski-boots, snow-board boots, uppers of

leather 0 0.8 0.1 3.8

'640330 Footwear,wooden,outer soles of rubber/

plas/leather&uppers of leather 0 0 0 0.3


Table shows that Pakistan is currently exporting Leather Footwear to India. Indian imports

from Pakistan were only US$ 0.007 million in 2010 while Table shows that India imported

US$394.02 million of Leather from the world. Pakistan exported US$747.5 million of Leather to the

world and so a strong potential lies with Pakistan to export more to India.

5.4 LEATHER INDUSTRIAL GOODS

5.4.1 EXPORT COMPOSITION OF LEATHER INDUSTRIAL GOODS

Pakistan also produces saddlery and harness goods and export it to the world. The saddlery

industry was established in the 19th century primarily to cater to the needs of military and police.

Karachi and Sialkot are the major production centre for saddlery goods in Pakistan accounting for

more than 95% of the total exports of saddlery items from Pakistan. Karachi because of its

specialisation in tanning and finishing of buffalo hides is the only centre in the country where harness

31

leather, which is major input for saddlery industry, is manufactured. The export of saddlery and

harn'ess items have showed an annual negative growth rate of about 40% reaching US $ 1.3 million

in 2010 from US $ 6.4 million in 2005. The major importers of Pakistani saddlery are Germany,

USA, UK, France, Scandinavia, Netherlands, Japan, Australia and New Zealand.

TABLE 11: EXPORT COMPOSITION OF LEATHER GOODS FOR INDUSTRIAL USE

Product

code Product label

Exported

Value in 2005

Exported

Value in 2010

'420400 Articles of leather or of composition leather, for

technical uses 0.01 0

'420500 Articles of leather or of composition leather, nes 0.04 0.006

'420100 Saddlery and harness for any animal, of any

material 0.002 0.006


5.4.2 COMPETITOR ANALYSIS OF LEATHER INDUSTRIAL GOODS

The largest exporters for Leather Goods for Industrial use (HS 420100) are China (36%) and

Germany (18%). The third largest exporter in the list is India with 11% export share in the world.

France with 24% share and China with 23% export share are the first and second largest exporters of

Leather Goods for Industrial use (HS 420500).

'4204000%

'42050050%

'42010050%

Composition of Leather Goods (Industrial) Export of Pakistan (2010)

32

TABLE 12: COMPETITOR ANALYSIS OF LEATHER GOODS FOR INDUSTRIAL USE

Ranking Goods 420400 Goods 420100 Goods 420500

1 Morocco (80%) China (36%) France (24%)

2 Ukraine (10%) Germany (18%) China (23%)

3 Netherland Antilles (7%) India (11%) Hungary (9%)

4 United Arab Emirates (3%) United States of

America (7%)

United States of

America (8%)

5 Italy (6%) Mexico (7%)

6 France (6%) Hong Kong, China (7%)

7 United Kingdom (5%) Croatia (6%)

8 Chinese Taipei (5%) Italy (6%)

9 Viet Nam (3%) Poland (5%)

10 Ireland (3%) Austria (5%)



Total Leather Goods for Industrial use sector export for the year 2011 for Pakistan is US $

0.15 billion while for India it is US $ 0.2 billion.

5.4.3 POTENTIAL TRADE FOR LEATHER GOODS INDUSTRIAL

It is evident that Pakistan exported Leather Goods (Industrial) to India. Indian import from

Pakistan was only US$ 0.025 million in 2010 while India imported US$ 8.0 million of Leather from

0

50,000

100,000

150,000

200,000

250,000

Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Leather Goods Industrial of Pakistan

Leather Goods Industrial of India

33

the world. Pakistan was exporting US$13.2 million US Dollars of Leather to the world. So a strong

potential lies with Pakistan, to export more to India.

TABLE 3: POTENTIAL TRADE FOR LEATHER GOODS FOR INDUSTRIAL USE

Product

code Product label

Pakistan's

exports to

India

India's

imports

from

world

Pakistan's

exports to

world

Indicative

potential

trade

Y 2010 Y 2010 Y 2010 Y 2010

'420400

Articles of leather or of

composition leather, for

technical uses

0 0 0 0

'420100 Saddlery and harness for any

animal, of any material 0.005 0.1 6.5 6.5

'420500 Articles of leather or of

composition leather, nes 0.02 7.9 6.6 6.6


5.5 LEATHER GOODS CONSUMER ARTICLES

5.5.1 EXPORT COMPOSITION FOR LEATHER GOODS CONSUMER ARTICLES

Items produced by this sector include bags, handbags, handgloves and industrial gloves,

wallets, ruck sacks, folios, brief cases, travelware, belts, sports goods, upholstery. A surfeit of modern

units in Sialkot, Karachi and Kasur employing skilled human resources and sophisticated machinery

account for a diversified range of superlative small leather goods including bags, purses, wallets,

industrial gloves etc. made of quality leathers of cows, sheep, goats and buffaloes. The products meet

the requirement of bulk buyers and consumers in Europe, USA and Australia. The major market for

Pakistani leather goods is Germany, USA, UK, France and Italy. With products ranging from

designer collections to personal leather accessories, this sector has a share of 20.53 per cent in the

leather industry.

34

TABLE 14: EXPORT COMPOSITION FOR LEATHER GOODS CONSUMER ARTICLES

Product code Product label

Exported

Value in

2005

Exported

Value in

2010

'420221 Handbags with outer surface of leather 0.002 0.003

'420229 Handbags, of vulcanised fibre or of paperboard 0.0002 0.0009

'420292 Containers,with outer surface of sheeting of plas or tex

materials,nes 0.00009 0.003

'420231 Articles carried in pocket or handbag, with outer

surface of leather 0.001 0.0009

'420219 Trunks, suit-cases and similar containers, nes 0.0006 0.0005

'420222 Handbags w outer surface of sheetg of plastics o of

textile materials 0.00009 0.002

'420299 Containers, nes 0.0004 0.0004

'420211 Trunks,suit-cases & similar containers with outer

surface of leather 0.0009 0.001

'420212 Trunks,suit-cases&sim container w/outer surface of

plastics/textiles 0.0007 0.0009

'420232 Articles carrid in pocket/handbag,w/outer surface

sheetg of plas/tex 0.000004 0.00005

'420239 Articles carried in pocket or handbag, nes 0.0006 0.0001

'420291 Containers, with outer surface of leather, nes 0.00001 0.0003

'420329

Gloves mittens&mitts,o/t for sport,of leather o of


'420310 Articles of apparel of leather or of composition leather 0.3 0.3

'420340

Clothing accessories nes, of leather or of composition

leather 0.028 0.002

'420321

Gloves,mittens & mitts,for sports,of leather or of


'420330

Belts and bandoliers of leather or of composition

leather 0.002 0.004


35

5.5.2 COMPETITOR ANALYSIS FOR LEATHER GOODS CONSUMER ARTICLES

Though India has 2% share in the top ten exports of Leather Goods for Consumer use

(Chapter 42) but Pakistan is not there. China is the biggest Exporter (49% share followed by Hong

Kong (15% share) France 11% share and Italy 11% share.

India and Pakistan both stand at an Export share of 10% in the top ten total world exports of

Leather Goods for Consumer use (Chapter 43) ,. While the largest exporters are China with 34%

export share and Italy with 16% export share.

0

50000

100000

150000

200000

250000

300000

350000

400000

'42

02

21

'42

02

29

'42

02

92

'42

02

31

'42

02

19

'42

02

22

'42

02

99

'42

02

11

'42

02

12

'42

02

32

'42

02

39

'42

02

91

'42

03

29

'42

03

10

'42

03

40

'42

03

21

'42

03

30

Composition of Leather Goods (consumer) Export of Pakistan (2010)

Composition of Leather Goods (consumer) Export of Pakistan (2010)

36

TABLE 15: COMPETITOR ANALYSIS FOR LEATHER GOODS CONSUMER

ARTICLES

Ranking Goods (Chapter 42) Goods (Chapter 43)

1 China (49%) China (35%)

2 Hong Kong, China (15%) Italy (16%)

3 France (11%) India (9%)

4 Italy (11%) Pakistan (9%)

5 Germany (3%) Hong Kong, China (9%)

6 Viet Nam (3%) Germany (6%)

7 Belgium (3%) France (6%)

8 United States of America (2%) Turkey (4%)

9 India (2%) United States of America (3%)

10 United Kingdom (1%) Netherlands (3%)



Total export of Pakistan for Leather goods consumer articles for the year 2011 is US $ 0.6

billion while for India it is US $ 2.0 billion.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Leather Goods Consumer of Pakistan

Leather Goods Consumer of India

37

5.5.3 POTENTIAL TRADE FOR LEATHER GOODS CONSUMER ARTICLES

Strong potential lies with Pakistan, who can export more to India. Table 14--shows that

Pakistan exported Leather Goods (Consumer) to India. Table shows that Indian imports from

Pakistan were only US$ 0.5 million 2010 while India imported US$101.7 million of Leather from the

world. Also Pakistan exported US$605.6 million US Dollars of Leather to the world.

TABLE 16: POTENTIAL TRADE FOR LEATHER GOODS CONSUMER ARTICLES

Product

code Product label

Pakistan's

exports to

India

India's

imports

from world

Pakistan's

exports to

world

Indicative

potential

trade

Y 2010 Y 2010 Y 2010 Y 2010

'420292 Containers,with outer surface of sheeting of plas

or tex materials,nes 0.3 3.3 3.4 3.1

'420222 Handbags w outer surface of sheetg of plastics o

of textile materials 0.08 15.0 2.5 2.4

'420299 Containers, nes 0.001 10.3 0.4 0.4

'420229 Handbags, of vulcanised fibre or of paperboard 0.001 3.9 0.9 0.9

'420221 Handbags with outer surface of leather 0 7.4 3.4 3.4

'420231 Articles carried in pocket or handbag, with outer

surface of leather 0 3.2 0.9 0.9

'420219 Trunks, suit-cases and similar containers, nes 0 5.0 0.5 0.5

'420211 Trunks,suit-cases & similar containers with

outer surface of leather 0 3.4 1.1 1.1

'420212 Trunks,suit-cases&sim container w/outer surface

of plastics/textiles 0 40.0 0.9 0.9

'420232 Articles carrid in pocket/handbag,w/outer

surface sheetg of plas/tex 0 0.3 0.05 0.005

'420239 Articles carried in pocket or handbag, nes 0 0.1 0.1 0.1

'420291 Containers, with outer surface of leather, nes 0 0.3 0.3 0. 3

'420321 Gloves,mittens & mitts,for sports,of leather or of

composition leather 0.1 0.2 106.9 0.1

'420310 Articles of apparel of leather or of composition

leather 0.04 1.4 365.7 1.4

'420329 Gloves mittens&mitts,o/t for sport,of leather o

of composition leather 0.02 1.0 111.3 0.9

'420330 Belts and bandoliers of leather or of composition

leather 0.001 4.9 4.4 4.4

'420340 Clothing accessories nes, of leather or of

composition leather 0 1.0 2.1 1.0


5.6 FINISHED LEATHER (HIDES)

5.6.1 EXPORT COMPOSITION OF FINISHED LEATHER (HIDES)

38

The annual availability of 166 million pieces of hides and skins is the main strength of the

industry. This is expected to go up to 218 million23

pieces by the end of year 2010. Some of the

goat/calf/sheep skins available in Pakistan are regarded as specialty products commanding a good

market. Abundance of traditional skills in training, finishing and manufacturing downstream products

and relatively low wage rates are the two other factors of comparative advantage for Pakistan.

TABLE 17: EXPORT COMPOSITION OF FINISHED LEATHER HIDES

Produc

t code Product label

Exported

Value in 2005

Exported

Value in 2010

'410441 Full grains leather, unsplit and grain splits leather, in

the dry stat 0.03 0

'410449 Hides and skins of bovine "incl. buffalo" or equine

animals, in the dr 0.1 0.01

'410411 Full grains, unsplit and grain splits, in the wet state

"incl. wet-blu 0.001 0.000007

'410419 Hides and skins of bovine "incl. buffalo" or equine

animals, in the we 0.0007 0.001


5.6.2 COMPETITOR ANALYSIS FINISHED LEATHER (HIDES)

23 UNIDO. Daignostic study of Korangi Tanneries. 2006

'4104410%

'41044989%

'4104110%

'41041911%

Composition of Finished Leather (hides) Export of Pakistan (2010)

39

The biggest exporter among the top ten Exporters of the World for Finished Leather (Leather

hides Chapter 41) are Argentina (19%) and Brazil (19%). They are followed by the USA with 17%

export share and Italy 12% export share. Pakistan and India do not fall among the top ten exporters of

the World. Pakistan has 1.2% export share while India has less than 1% export share for the world

export of finished leather (Leather hides Chapter 41).

TABLE 18: COMPETITOR ANALYSIS FINISHED LEATHER HIDES

Ranking Finished 4104

1 Brazil (19%)

2 Argentina (19%)

3 United States of America (17%)

4 Italy (12%)

5 Chinese Taipei (9%)


7 Thailand (6%)

8 Australia (4%)

9 Viet Nam (4%)

10 Egypt (3%)

11 Pakistan (1.2%)

12 India (0.9%)




0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Finished Leather Hides of Pakistan

Finished Leather Hides of India

40

Total Finished Leather (Hides) sector export for the year 2011 for Pakistan is US $ 0.00 5

billion while for India it is US $ 0.07 billion. Pakistan export is declining because its own leather

manufacturer industry has so grown that the leather hides production barely meets its local demand.

5.6.3 POTENTIAL TRADE FINISHED LEATHER (HIDES)

Trade statistics for Finished Leather reveal that Indian imports from Pakistan were valued at

US$10.3 million while Indian imports from the world were valued at US$297.6 million. Pakistan

exports about US$180.7 million of Finished Leather and so in the category of Finished Leather

Pakistan has weak potential while India has a strong position.

TABLE 19: POTENTIAL TRADE FINISHED LEATHER HIDES

Product

code Product label

Pakistan's

exports to

India

India's

imports

from world

Pakistan's

exports to

world

Indicative

potential

trade

Y 2010 Y 2010 Y 2010 Y 2010

'410449 Hides and skins of bovine "incl.

buffalo" or equine animals, in the dr 0.5 62.5 15.3 14.8

'410419 Hides and skins of bovine "incl.

buffalo" or equine animals, in the we 0.001 103.5 1.8 1.8

'410441 Full grains leather, unsplit and grain

splits leather, in the dry stat 0 2.7 0 0

'410411 Full grains, unsplit and grain splits,

in the wet state "incl. wet-blu 0 13.6 0.007 0.007


5.7 FINISHED LEATHER (SKINS)

5.7.1 EXPORT COMPOSITION OF FINISHED LEATHER (SKINS)

In respect of leather, a sizeable percentage of goat and sheep skins as also calf skins are

processed for animal skins. The quality of finished skins produced in Pakistan is highly regarded

globally; however, processed heavy hides have limited range and average finish. Korangi has

emerged as the main centre of buffalo leather and cow leather.vNew products such as upholstery

leather are now manufactured by tanneries in Sialkot.

41

TABLE 20: EXPORT COMPOSITION OF FINISHED LEATHER SKINS

Product

code Product label

Exported Value

in 2005

Exported

Value in 2010

'410530 Skins of sheep or lambs, in the dry state

"crust", without wool on, wh 0.0004 0.0009

'410510 Skins of sheep or lambs, in the wet state "incl.

wet-blue", tanned, wi 0.005 0.0001

'410622 Hides and skins of goats or kids, in the dry

state "crust", without wo 0.001 0.0003

'410692 Hides and skins of antilopes, deers, elks,

elephants and other animals 0.00001 0.000003

'410632 Hides and skins of swine, in the dry state

"crust", without wool on, w 0 0

'410621 Hides and skins of goats or kids, in the wet

state "incl. wet-blue", t 0.01 0.0004

'410640 Tanned or crust hides and skins of reptiles,

whether or not split (exc 0 0


elephants and other animals 0.0009 0.00009


5.7.2 COMPETITOR ANALYSIS OF FINISHED LEATHER (SKINS)

Islamic republic of Iran is the biggest Exporter of Finished Leather (Leather Skins Brown)

with 27% Export share in the World. Followed by Saudi Arabia with 24% export share and Spain

with 13% export shares. Pakistan and India do not fall among the Top Ten Exporters of Finished

'41053045%

'41051010%

'41062216%

'4106920%

'4106320%

'41062124%

'4106400%

'4106915%

Composition of Finished Leather (Skins) Export of Pakistan (2010)

42

Leather Skins. Pakistan‘s export share in the world is 0.03% while India‘s export share is 0.01% in

the world.

Another largest Exporter of Finished leather (Leather Skins Blue) is Nigeria in the world, with

81% export share. Then its China with 5% export share, Hong Kong with 3% export share e.t.c.

TABLE 21: COMPETITOR ANALYSIS OF FINISHED LEATHER SKINS

Ranking Finished (Leather Skins Brown) Finished (Leather Skins Blue)

1 Iran (Islamic Republic of) (27%) Nigeria (81%)

2 Saudi Arabia (24%) Chinese Taipei(5%)

3 Spain (13%) Hong Kong, China (3%)

4 Syrian Arab Republic (8%) Italy (2%)

5 Ethiopia (8%) Kenya (2%)

6 Hong Kong, China (5%) Poland (2%)

7 Italy (4%) Ethiopia (2%)

8 New Zealand (4%) Bangladesh (1%)

9 Indonesia (4%) Viet Nam (1%)

10 Kenya (3%) United States of America (1%)

11 Pakistan (0.03%) Pakistan (0.05%)

12 India (0.01%) India (0.01%)




0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Finished Leather Skin of Pakistan

Finished Leather Skin of India

43

Total Finished Leather (Skins) sector export for the year 2011 for Pakistan is US $ 0.005

billion while for India it is US $ 0.07 billion.

5.7.3 POTENTIAL TRADE FINISHED LEATHER (SKINS)

It is evident from the below table that Pakistan has weak potential while India has a strong

position.

TABLE 22: POTENTIAL TRADE FINISHED LEATHER SKINS

Product

code Product label

Pakistan's

exports to

India

India's

imports

from

world

Pakistan's

exports to

world

Indicative

potential

trade

Y 2010 Y 2010 Y 2010 Y 2010

'410530 Skins of sheep or lambs, in the dry state

"crust", without wool on, wh 0.0001 7.3 1.0 0.9

'410510 Skins of sheep or lambs, in the wet state

"incl. wet-blue", tanned, wi 0 42.9 0.1 0.1

'410622 Hides and skins of goats or kids, in the

dry state "crust", without wo 0.008 0.3 1.7 0.3


elephants and other animals 0 1.0 0.003 0.003

'410632 Hides and skins of swine, in the dry

state "crust", without wool on, w 0 0.2 0 0

'410621 Hides and skins of goats or kids, in the

wet state "incl. wet-blue", t 0 7.1 0.4 0.4

'410640 Tanned or crust hides and skins of

reptiles, whether or not split (exc 0 0.007 0 0


elephants and other animals 0 9.5 0.09 0.09


44

5.8 FINISHED LEATHER (OTHER)

5.8.1 EXPORT COMPOSITION OF FINISHED LEATHER (OTHER)

Other Leather includes type of leather used for different articles and other characteristics. Like

Chrome Leather, Suitcase Leather, Embossed Leather, Belting Leather, Leather for molded articles.

TABLE 234: EXPORT COMPOSITION OF FINISHED LEATHER OTHER

Product

code Product label

Exported Value

in 2005

Exported Value in

2010

'410719 Leather "incl. parchment-dressed leather" of

the whole hides and skins 0.0004 0.017

'410799 Leather "incl. parchment-dressed leather" of

the portions, strips or s 0.0003 0.019

'410791 Full grains leather "incl. parchment-dressed

leather", unsplit, of the 0.00001 0

'410712 Grain splits leather "incl. parchment-dressed

leather", of the whole h 0 0

'410711 Full grains leather "incl. parchment-dressed

leather", unsplit, of the 0.0001 0.0004

'410792 Grain splits leather "incl. parchment-dressed

leather", of the portion 0 0.0001


'41071946%

'41079952%

'4107910%

'4107120%

'4107111%

'4107921%

Composition of Leather (Other leather) Export of Pakistan (2010)

45

5.8.2 COMPETITOR ANALYSIS OF FINISHED LEATHER (OTHER)

Italy is the biggest exporter of finished leather (Leather items) with 37% export share among

the top ten exporters of the world. Then comes China and Hong Kong with 17% export share , Brazil

with 12 % export share among the top ten Exporters to the world.

TABLE 24: COMPETITOR ANALYSIS OF FINISHED LEATHER OTHER

Ranking Finished 4107

1 Italy (37%)


3 Brazil (12%)

4 Republic of Korea (8%)

5 Germany (6%)

6 India (6%)

7 Austria (5%)

8 Argentina (3%)

9 Spain (3%)

10 China (3%)




Total Finished Leather (Other) sector export for the year 2011 for Pakistan is US $ 2.9 million

while for India it is US $ 557.3 million.

0

100,000

200,000

300,000

400,000

500,000

600,000

Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Finished Leather Other of Pakistan

Finished Leather Other of India

46

5.8.3 POTENTIAL TRADE FOR FINISHED LEATHER (OTHER)

Trade statistics for Finished Leather reveal that Indian imports from Pakistan were valued at

US$10.3 million while Indian imports from the world were valued at US$297.6 million. Pakistan

exports about US$180.7 million of Finished Leather and so in the category of Finished Leather

Pakistan has weak potential while India has a strong position.

TABLE 25: POTENTIAL TRADE FOR FINISHED LEATHER OTHER

Product

code Product label

Pakistan's

exports to

India

India's

imports

from world

Pakistan's

exports to

world

Indicative

potential

trade

Y 2010 Y 2010 Y 2010 Y 2010

'410719 Leather "incl. parchment-dressed

leather" of the whole hides and skins 3.8 21.2 76.9 17.3

'410799 Leather "incl. parchment-dressed

leather" of the portions, strips or s 3.7 23.3 25.5 19.6

'410791 Full grains leather "incl. parchment-

dressed leather", unsplit, of the 1.1 0.248 5.4 0

'410712 Grain splits leather "incl. parchment-

dressed leather", of the whole h 0.548 0.518 15.6 0

'410711 Full grains leather "incl. parchment-

dressed leather", unsplit, of the 0.294 0.778 7.1 0.484

'410792 Grain splits leather "incl. parchment-

dressed leather", of the portion 0.005 0.199 29.0 0.194

Source: Trade Map ICT Unit : US $ million

47

5.9 TARIFF ANALYSIS

TABLE 26: TARIFF ANALYSIS

S. No Leather

PRODUCTS

Number of

Tariff Lines at

6 Digit HS

MFN

INDIA

MFN

PAK

MFN

SAFTA

Pref.

CHINA

Other

Requirements

in India

1

Leather

Garments &

Gloves

5 10% 25% 11% 25% NIL

2 Leather

Footwear 9 10% 25% 11% 25% NIL

3 Leather Goods

a Industrial 3 30% 5% 7.8% 5% NIL

b Consumer 17 10% 25% 5% 25% NIL

4 Finished Leather

a Leather Hides 4 10% 0% 5% 0% NIL

b Leather Skins 8 10% 0% 5% 0% NIL

c Other Leather 6 10% 0% 5% 0% NIL

Source: FBR

Table 24 reveals that India has kept the MFN rate of duty to 10% for the Leather sector but

only Leather Goods for Industrial use has been protected with a higher rate of duty at 30%24

.

While in case of Pakistan in the Leather sector protection has been provided to Leather

garments, Leather Footwear, Leather Goods for Consumer use and Leather Gloves industry with an

applied custom duty of 25%. While Finished Leather imports are treated as Duty Free.

For SAFTA Members a concession has been provided in leather garments, leather footwear

and leather gloves. The Custom Duty for them is 11%. While other sectors of Leather are levied with

5% Custom Duty and only Leather Goods for Industrial Use is taxed at 7.8% duty.

5.10 RCA ANALYSIS

In order to study the comparative advantage in leather sector by both countries (Pakistan and

India) a revealed comparative advantage indices was performed for the year 2010 at HS 6 digit level.

The RCA will give us an indication of how much a country (Pakistan or India) is exporting a given

24 Federal beauru of Statistics / Compendium of department of commerce and Industry , Ministry of Commerce, Government of India (http://compendium.iift.ac.in/Search.aspx?id=VuPq4k7RI+k=&type=JftmDtbZVIA=)

http://compendium.iift.ac.in/Search.aspx?id=VuPq4k7RI+k=&type=JftmDtbZVIA=

48

product relative to how much the world is exporting that same product / commodity. A country is aid

to have a revealed comparative advantage when its share of export of a given product exceeds the

equivalent share of export of the world. This is derived when the numerator is bigger than the

denominator or equivalently when RCA is greater than 1. An RCA below 1 indicates that a country

does not have a revealed comparative advantage in a given product or equivalently that the world

share of that given product is higher than that of the country under analysis25

.

TABLE 27: RCA ANALYSIS OF LEATHER SECTOR

Category Product

code (HS) Product label

Revealed

Comparative

Advantage

Pakistan

Revealed

Comparative

Advantage

India

Y 2010 Y 2010

Leather

Garments

and Gloves

'420329

Gloves mittens&mitts,o/t for

sport,of leather o of composition

leather

50 6

'420310 Articles of apparel of leather or of

composition leather 71 7

'420321

Gloves,mittens & mitts,for

sports,of leather or of composition

leather

131 2

Leather

Footwear

'640320

Footwear,outr sole/uppr of

leathr,strap across the instep/arnd

big toe

16 23

'640351 Footwear, outer soles and uppers of

leather, covering the ankle, nes 0 17

Leather

Goods for

Industrial

Use

'420100 Saddlery and harness for any

animal, of any material 5 6

leather

Goods for '420231

Articles carried in pocket or

handbag, with outer surface of 0 6

25 The revealed comparative advantage is an index used in international economics for calculating the relative

advantage or disadvantage of a certain country in a certain class of goods or services as evidenced by trade flows. Its

formula is RCA = (Eij / Eit) / (Enj / Ent) where: E=exports, i=country index, n=set of countries, j= commodity index, t= set

of commodities. A comparative advantage is “revealed” if RCA>1. If RCA is less than unity, the country is said to have a

comparative disadvantage in the commodity or industry.

http://en.wikipedia.org/wiki/Index_(economics)

http://en.wikipedia.org/wiki/International_economics

49

Consumer

use

leather

'420219 Trunks, suit-cases and similar

containers, nes 2 5

'420310 Articles of apparel of leather or of

composition leather 71 7

'420340 Clothing accessories nes, of leather

or of composition leather 10 3

Finished

leather Hides '410449

Hides and skins of bovine "incl.

buffalo" or equine animals, in the

dr

14 0

Finished

leather Skins '410530

Skins of sheep or lambs, in the dry

state "crust", without wool on, wh 7 0

Finished

Leather

Other

'410719

Leather "incl. parchment-dressed

leather" of the whole hides and

skins

41 9

Source: ITC Trade Map26

The above Table gives RCA analysis of only major products where either India or Pakistan

has a marginal comparative advantage. Rest of the RCA calculations of all the tariff lines of leather

sector is annexed at the end of the report.

5.10.1 Leather Garments & Gloves (5 Tariff Lines)

Pakistan has a comparative edge with India in Leather Garments(HS 420310) where RCA

Pakistan =71 and RCA INDIA =7 and Leather Gloves (HS 420329, HS 420321) where RCA

Pakistan =(50,131) and RCA INDIA =(6,2).

5.10.2 Leather Footwear (9 Traiff Lines)

India has a comparative edge with Pakistan in Leather Footwear (HS 640320, HS 640351)

where RCA Pakistan =(16,0) and RCA INDIA =(23,17). HS 640320 include leather outersoles,staps

and instep toes while HS 640351 include leather outersoles, covering of ankles and uppers of leather

shoes.

26 ITC calculations based on UN COMTRADE statistics

50

5.10.3 Leather Goods for Industrial Use (3 Tariff Lines)

For Leather Goods for Industrial Use (HS 420100) Pakistan and India almost face the same

comparativeness (RCA Pakistan =5, RCA INDIA =6). HS 420100 includes saddler and harness for

animals.

5.10.4 Leather Goods for Consumer Use (17 Tariff Lines)

In some leather goods for Consumer Use (HS 420231, HS 420219) India has a comparative

edge with Pakistan where RCA Pakistan =(0,2) and RCA INDIA =(6,5).HS 420231 includes leather

articles carried in pockets and handbags, HS 420219 includes trunks, suitcases and other leather

containers.

While in some other leather goods for Consumer Use (HS 420310, HS 420340) Pakistan has

a comparative edge with India where RCA Pakistan =(71,10) and RCA INDIA =(7,3).HS 420310

includes articles of apparel of leather while HS 420340 includes clothing accessories of leather.

5.10.5 Leather Finished Hides (4 Tariff Lines)

Pakistan has a comparative edge with India in Leather Finished Hides (HS 410449) where

RCA Pakistan =14 and RCA INDIA =0.HS 410449 includes Hides and skins of bovine inclusive

buffalo or equine animals.

5.10.6 Leather Finished Skins (8 Tariff Lines)

Pakistan has a comparative edge with India in Leather Finished Skins (HS 410530) where

RCA Pakistan = 7 and RCA INDIA =0. HS 410530 includes skins of sheeps or lambs in dry state

crust without wool.

5.10.7 Leather Finished Other (6 Tariff Lines)

Pakistan has a comparative edge with India in Other Finished Leather articles (HS 410719)

where RCA Pakistan = 41 and RCA INDIA = 9. HS 410719 includes Leather inclusive parchment

dressed leather of whole skins and hides.

The above analysis shows that Pakistan can definitely penetrate and capture Indian market in

Leather Garments , Gloves, Leather goods for consumer use, Finished leather Hides, Finished leather

51

Skins, Finished leather Other sectors where Pakistan is more competitive than India . The biggest

opportunity for Pakistan is Leather Gloves and Leather Goods for consumer use articles sector where

Pakistan is 131, 71 times more competitive than India respectively. India has an edge in Leather

Footwear sector.

5.11. SWOT ANALYSIS OF INDIAN LEATHER SECTOR

STRENGTHS

• High Growth (average 31% annually)

• Ready availability of highly skilled and cheap manpower

• Large raw material base

• Policy initiatives taken by the Government

• Capability to assimilate new technologies and handle large projects

• Continuous emphasis on product development and design upgradation

• India has a comparative advantage in all Leather products but as compared to Pakistan , India

has an edge in Leather Footwearand Leather Goods consumer use articles (Leather trunks and

suitcases).

WEAKNESSESS

• Lack of warehousing support from the government

• International price fluctuation

• Lack of strong presence in the global fashion market

• Unawareness of international standards by many players

THREATS

• Major part of the industry is unorganised

• Limited scope for mobilising funds through private placements and public issues (many

businesses are family-owned)

• Difficulty in obtaining bank loans resulting in high cost of private borrowing

• Stricter international standards

• High competition from East European countries and other Asian countries

• Lack of communication facilities and skills.

52

• Pakistan has a competitive edge in Leather Garments, Gloves and Finished Leather, Leather

goods for consumer use (clothing accessories ) which is a threat to Indian market.

OPPORTUNITIES

• Rising potential in the domestic market

• Growing fashion consciousness globally

• Use of information technology and decision support software to help eliminate the length of

the production cycle for different products

• Use of e-commerce in direct marketing

• India can capitalize further in leather footwear sector.

5.12. SWOT ANALYSIS OF PAKISTANI LEATHER SECTOR

STRENGTHS

• Easy avalibality of raw material

• Management skills learned through experience.

• Easy availability of labor.

• Presence of institutional support for TECHNICAL, SERVICES, DESIGNING, MANPOWER

AND MARKETING.

• Export market in Europe, USA , and Far EAST.

• Export friendly Government Policies

• Pakistan has a comparative advantage over India in Leather Garments, Gloves, Leather Goods

for Consumer use (clothing accessories) and Finished Leather items (Leather Hides, Skins,

Parchment whole skin dresses).

WEAKNESSESS

• Insufficient level of modernization and technology upgradation

• Low labor productivity

• Lack of confidence among SMEs for further growth

• Lack of skilled labor

• Environmental problems

• Lack of market information

53

THREATS

• Competition from reginal players such as CHINA, INDIA , TURKEY, THIALAND,

INDONESIA, e.t.c.

• New regulations of environmental and social compliance

• WTO regulations

• India has a comparative advantage over Pakistan in Leather Footwear and Leather Goods for

Consumer use (Leather trunks and suitcases).

OPPORTUNITIES

• Room for capacities utilization

• Scope for bulk supply of Finished leather to big Units.

• Product diversification and New markets.

• Pakistan can diversify further in Leather Goods for industrial use sector. As India and

Pakistan neither has any marginal comparative advantage over each other.

6. CHALLENGES FACED BY THE INDUSTRY

6.1 MAJOR ISSUES

a) Quality:

Good quality leather is mostly exported and is not available for high value-added Leather

Garments & Leather Products.

Leather garments in Pakistan are made mostly from low grade & medium grade leather. Lack

of proper training and inadequacy of skills in slaughtering are among the most important factors

leading raw hides and skins towards lower grades or even to rejection. Furthermore, inadequate

knowledge of preservation techniques and lack of sufficiently designed collection and storage

facilities may cause problems that are associated with the lowering of the quality and quantity of raw

material. Hence, the need for strengthening training facilities for manpower at all levels through

hiring of experts.

The quality of raw hides and skins generally depends upon the quality of livestock. The hides

and skins removed out of young and healthy cattle may be taken as the best in its quality provided the

54

conditions in which these are removed and also their collection, preservation and storage is

satisfactory.

In fact, there are many factors which affect the quality of leather at pre-slaughtering, during

slaughtering and post-slaughtering stages. It is estimated that around 20-25 per cent of the hides and

skins are affected by pre-slaughtering damages, like skin-cuts, rashes, diseases, injuries etc27

.

b) Cost of production:

Cost of production is also very high in Pakistan as compared to our competitors like China

and India.The cost of various inputs especially utilities and the high taxes make our products

uncompetitive in international markets.

c) The issue of chrome

Chromium III salts are used extensively in the tanning process. Approximately 90% of the

leather manufactured is tanned using chromium III. This is because chromium is the most efficient

and versatile tanning agent available and it is relatively cheap. It has been used in the leather industry

for almost 100 years and when it was introduced as an alternative to vegetable tanning extracts from

oak bark and similar sources, it heralded a new era for the leather industry. It reduced the time taken

within the tanning process from months to days, and offered leathers with properties that were

previously unattainable. The leather industry only uses chromium in its safest and most stable form -

chromium III.

However, due to misconceptions about chromium and a failure to recognize the distinctions

between chromium III and chromium VI, which is generally understood to be toxic, the tanning

industry has often been placed under unwarranted pressure by regulatory bodies with regard to both

the use and disposal of chromium and chromium-containing materials. Chromium VI compounds are

not used by the tanning industry

d) Energy Issues

Generally, a leather unit consumes over 0.97-1.87 MJ i.e. 270-300 KWh of energy to produce

100ft2 of finished leather28

. The absence of energy efficient technologies and lack of proper

27 UNIDO. Daignostic study of Korangi Tanneries. 2006

55

maintenance of steam pipes, steam traps and insulation are causing wastage of significant amount of

energy in most leather processing units.

e) Environmental challenge:

Leather tanneries in Pakistan produce all three categories of waste: wastewater, solid

waste and air emissions. However, wastewater is by far the most important environmental

challenge being faced by Pakistan's tanneries.

Wastewater: Although the exact quantity varies widely between tanneries, a normal

requirement of around 50-60 liters of water per kilogram29

of hide is suggested. ETPI's

(Environment Technology Program for Industry)30

sample audits of tanneries in Pakistan

show that in some cases the consumption of water is as high as three times the suggested

requirement. The overall water discharge also demonstrates a high degree of seasonal and

daily fluctuation. For most part, the current practice is to discharge this water into the local

environment without any treatment.

Air Emissions: There are two sources of air pollution from tanneries in Pakistan. The first

relates to emissions from generators (diesel-based and operated only during power

breakdowns) and from boilers. Emissions were found to be well below the NEQS31

level.

Ammonia emission during processing and washing of drums, though intermittent but

important has adverse effects on workers health.

Hydrogen sulphide emission during mixing of acid and alkaline wastewater in drain is also a

serious health hazardous. Segregated discharge of acidic and alkaline effluent can help to

avoid the hydrogen sulphide gas emission.

Solid Waste: Two types of solid wastes are generated from leather production processes (i.e.

tanned and un tanned). Solid waste includes dusted curing salts, raw trimmings, wet-blue

trimmings, dry trimmings, wet-blue shavings, dry shavings, buffing, and packaging material

etc. On an average a tannery processing 10,000 kilograms of raw material per day produces

some 5,500 kilograms of solid waste daily32

. The solid wastes do have secondary use in glue

manufacturing and poultry feed making etc. However, the use of chrome-containing solid

waste for poultry feed preparation can cause serious health problems for poultry consumers.

28 Industry statistics Pakistan Tanners Association. 29 Leather sector report , EPTI.

30 Environmental Technology Program for Industry (ETPI) was initiated by the Federation of Pakistan Chambers of Commerce and

Industry (FPCCI) and the Government of Netherlands. ETPI aims to assist Pakistani industries and their associations in identifying the

most economical pollution prevention and abatement technologies, and in implementing these solutions.

31 National Environmental Quality Standards; Pakistan Environmental Protection Agency 32 Leather sector report , Environment Technology Program for Industry

56

6.2 PRICING STRATEGIES

The leather grading system employed by leather upholstery manufacturers and suppliers is

used as a means of differentiating and marketing individual types of leather by price, based on quality

or style.

The grading system is the method manufacturers use to present their pricing structures to

retail dealers. Leather suppliers also use a grading system to distinguish their leathers and prices to

manufacturers. This classification works efficiently and is simple to understand within the context of

each individual leather line, but problems crop up if one attempts to compare or contrast leathers from

line to line or from manufacturer to manufacturer. With lower grades typically beginning at "A" or

"1", one producer's "C" may be another's "5" or "6". Problems arise because the system is far from

uniform. The thing about grades that makes it confusing is there is no industry standard. The grade

represents the cost that the manufacturer pays for the leather. Leathers can look distinctly different

but reflect the same price. Leather craft's grading system features five grades, but 90% of the line

primarily addresses its four lower grades and contrasting price points, encompassing 40 patterns. The

lower grades represent various different leather qualities ranging from pigmented hides to corrected

hides to anilines. But the fifth or top grade is reserved for select European premium skins — not its

typical tonnage.

NOTE: This year the price of a cow hide ranges from Rs 1,600 to Rs 1,900, goat Rs 240 to Rs

250 per skin and for sheep the price stands at Rs 370 to Rs 400 per skin33

.

6.3 ISSUES FACED BY THE INDUSTRY:

i. The major impediment in the growth of the Leather industry is the unfavorable image

Pakistan has in the international arena.

ii. There are 4 factors that are significant for the development of any industry, which are:

1. Country Image.

2. Logistics.

3. Price

4. Quality.

33 Sector updates , Pakistan Tanners Association Website (www.pakistantanners.org)

57

iii. In Pakistan, minor attention is given to these four aspects which are otherwise essentials for

success.

iv. The law and order situation is making foreign investors reluctant to invest

v. Livestock Industry:

i. In Pakistan, meat industry is seen as of prime importance, leather is just seen as a by-

product.

ii. This perspective needs to be changed for the sophistication of local demand.

vi. Effluent treatment plant & REACH agreement

i. This plant has been made in Korangi with the collaboration of Dutch government.

vii. Fashion Industry:

i. The fashion industry of Pakistan is not up to the standards.

ii. There is lack of awareness among the masses regarding the latest trends in fashion

iii. If the fashion industry flourishes and creates awareness about its products, the leather

industry will get a boost as more and more people will be inclined to buy leather based

products(such as belts and bags)

viii. Banking and finance industry:

i. The credit availability to the leather tanneries is an ongoing issue.

ii. The borrowing cost is high which deters further investment in the industry.

iii. The initiative taken by the government to reduce the Bank‘s spread from 3% to 2% (in 06-

07) can help the industry grow.

ix. Dyes and chemicals

i. The local chemical and dye manufacturing companies are not supporting the Leather

industry. Other than a few Multinational Corporations none of the companies meet the

international standards. Local companies do not manufacture chemicals required by

leather industry. Tanners are forced to buy chemicals from the Multinational corporations

at high prices or import them.

ii. Our local chemical and dyes Industry should address various health issues associated with

the chemicals they produce in order to abide by all the set international regulations.

58

x. Training, research and educational institutes

i. Institutes are not working to their full capacity due to the lack of students, faculty, proper

academic curriculum.

ii. The NILT (National Institute of Leather Technology) has taken initiatives to train

individuals in Leather and Leather products but they are not capable of attracting people,

which is reflected in the minute number of the present class at the institute(currently 110)

xi. Gaps in the qualities of local supplies

This is reflected in the inefficiency of the local machinery and dyes manufacturers.

Our local machinery and dye manufacturers are not competent enough, forcing tannery owners to

import all the machines and chemicals. 80% of the chemical dyes used are imported34

.

xii. Poor coordination among the cluster-players

The clusters in Kasur, Sialkot and Karachi are the most important. Yet there isn‘t a concerted

effort taking place to turnaround things for the sector.

There isnt a shortage of institutes but there is a need of unanimity of effort. There are good five

big institutions for the leather sector but there is lack of coordination.

xiii. Cumbersome regulatory procedures

Export rebates of upto 23% were given uptil 10 years ago, which has now been reduced to a

meager 0.8 to 1% for finished goods, 0.22% for apparels, 1.76% for gloves and 2% for footwear.

This reduces our ability to compete with countries giving high export rebates. Over and above

this, the Pakistan Leather Industry is subject to high L/C Margin approximating to 35%.

xiv. Control on Smuggling & Diseases of Livestock

Leather manufacturing sector in Pakistan can also suffer because of massive smuggling of

livestock to other countries, shortage of raw material and absence of the organized dairy farming

in the country. Steps should be taken to overcome these problems

xv. Disease Control

Moreover, diseases in the livestock in Pakistan can prove hurdle in the manufacturing and exports

of finished products of leather. Concrete measures need to be taken to overcome this threat to the

livestock. As a result the live animals are suffering from different diseases that damage the quality

of the leather and tarnish the image of products at international level.

34 UNIDO Report. Qamar Zaman

59

6.4 NON TARIFF BARRIERS FACED BY PAKISTANI EXPORTERS IN INDIA

1) SGS testing35

The SGS testing and certification requirement is mandatory for all imports of ‗fabrics‘ and

‗garments‘ into India and therefore Pakistani exporters are subjected to the same. In certain cases

the Indian authorities have been known to not accept lab reports from certain labs. Some cases

have been reported by not only Pakistani exporters but by some European Union (EU) exporters

as well. In fact the EU has already reported this to the relevant Committee on NTBs at the WTO.

2) Veterinary Department of India

There are testing requirement for all imports of leather and leather products into India and SGS is

an acceptable agency for such testing and certification. Finished Leather has an added

certification requirement from the Veterinary Department of India.

3) Lack of Infrastructure

There is lack of infrastructure on Indian side of border at Wahga where only two trucks can be

ported for loading or unloading at a time while 30-40 trucks can be handled at a time on

Pakistan‘s side. As a result, exporting through trucks is not the preferred mode because in case of

rain, and with no covered area available for customer clearance, damage to imported goods is

imminent.

4) Demurrage Charges

Demurrage charges are excessive in India. A 10-hour window is given to importer to off-load for

custom clearance and then re-load to local transport. The activity of off-loading, custom

clearance, and reloading never transpires within the 10 hours and as a result the importer almost

always pays demurrage charges. No trade through container loads is allowed.

5) No Warehousing Facility

There is no warehousing facility on either side of the border. Trade only takes place between 9:00

am and 3:00 pm, after which the gates are closed.

6) Rail route not feasible

There are several bottlenecks on the rail route, such as the unavailability of necessary equipment

including rail wagons, rakes etc. and insufficient infrastructure, such as custom house agents,

sheds and weighing and x ray machines.

7) Direct banking Arrangement

Currently there is no direct banking arrangement between the two countries. The payments are

35 SGS testing ; (www.sgsgroup.in)

60

made either by informal channels or through an international bank using third country banking

channels. This increases cost due to additional service charges and longer time consumed on such

transactions.

8) Business Visa regime

The biggest NTB in promotion of Pakistan‘s exports is; India‘s Pakistan – specific visa regime.

The business visa regime is unpredictable, city specific and limited to very few days stay with

single entry.

9) Indian Security Regime

The Indian security regime for Pakistani goods and passengers has also been identified as a major

NTB which results in harassment of travelers as well as delay in clearance of goods.

61

7. CONCLUSION

Pakistan exports 52 tariff lines o f Leather sector to the world at HS-6 digit level , which

accounts to $ 874 million while India‘s exports accounts to $ 3.2 billion. Pakistan has a comparative

advantage over India in Leather Garments, Gloves and Finished Leather items. India has a

comparative advantage over Pakistan in Leather Goods for Industrial and Consumer use. While

Leather footwear sector is the one where neither India nor Pakistan has an advantage over each other.

More or less both the countries have the same market dynamics. Easy availability of raw material and

cheap labor are the strengths of both the countries. India has the capability to assimilate new

technologies and handle large projects with continuous emphasis on product development and design

up gradation. On the other hand Pakistan has insufficient resources in terms of institutional support

for technical, design, skilled manpower and marketing services. Also the unskilled labor leads to

inefficiency and wastage. In Pakistan, during slaughtering and post-slaughtering stages, It is

estimated that around 20-25 per cent of the hides and skins are affected by pre-slaughtering damages,

like skin-cuts, rashes, diseases, injuries etc. While India has modern slaughter house facilities. Cost of

production is also very high in Pakistan as compared to our competitors like China and India. The

cost of various inputs especially utilities and the high taxes make our products uncompetitive in

international markets. A leather unit consumes over 0.97-1.87 MJ i.e. 270-300 KWh of energy to

produce 100ft2 of finished leather36

. The absence of energy efficient technologies and lack of proper

maintenance of steam pipes, steam traps and insulation are causing wastage of significant amount of

energy in most leather processing units. Indian Government provides subsidies, concessions, special

incentives, international obligations and non-tariff barriers to promote and protect its leather industry

while Government of Pakistan is not doing much. Though the Strategic Trade Policy Framework

2009-2012 announced special initiatives for the Leather sector which include Export Investment

Support (EIS) Fund for procurement of expert advisory services, matching grant to establish design

studios/centres and establishment of research and development centres in Karachi and Sialkot. The

STPF initiatives were not implemented. The Leather Industry demands the availability of credit to the

leather tanneries to expand their operations because borrowing cost in the market is high which

deters further investment in the industry.

36 Industry statistics Pakistan Tanners Association.

62

Other than the issues discussed above, both Pakistan and India through negotiations need to

tackle their restrictive visa regime and point of entry facilitation. Also there is a need of reforms in

policies of both countriesin regulations of cross border trade particularly for logistics service

providers such as trucks and railways etc. These issue prohibit free trade of goods. Expansion of trade

between both the countries depend s upon a tradeoff between investment facilitation and industry

comparativeness.

63

8. RECOMMENDATIONS

1. Introducing Brand Names

Pakistani Leather and Leather products have carved a respectable place in the world market

especially leather jackets are much in demand. They are sold under the foreign renowned brand

names. Made-in-Pakistan label and brands born in Pakistan have yet to come. Steps need to be taken

by the industry in this regard.

2. Focusing on Footwear Sector

Footwear, the largest segment of the leather industry around the world has been surprisingly

neglected in Pakistan. Foreign franchised companies have become household names in Pakistan. This

is despite the fact that the entire stuff and skill they use belong to Pakistan. Pakistani companies

should seek partnership with international brand producers by offering them attractive incentives in

order to promote Leather footwear industry.

3. Tackling Environmental and Labor Issues

Regarding environmental concerns of WTO, the industry has made little progress in this

regard. Combined effluent treatment plants need to be built so that hazardous chemicals from the

tanneries do not affect the environment. Moreover, the industry needs to tackle all the labor issues to

which the consumers in the importing countries are sensitive to. It needs to be ensured that the leather

industry in Pakistan adheres to the working condition requirements that have been developed by

international bodies, particularly, the associations of leather industries in the importing countries of

the west. Under the WTO regime, member countries can impose penalties or restrict imports from

exporting countries whose industries do not observe environmental/labor concerns or social

compliance.

4. Reduction of Duties on Machinery

The duties on the import of tanneries related machinery need to be further reduced. The

machinery made locally is technologically inferior which not only increases the cost of production

but restrains from developing at par with the international market.

64

8.1 OTHER RECOMMENDATIONS

a. Major trade shows, fairs and other promotional activities should be used to build Pakistani brand

names, and thus improving the position of ―Brand Pakistan‖. E-marketing- the use of the internet

in order to make people more aware of leather industry in Pakistan

b. To attract investment, Government should provide investment incentives, higher duty drawback /

tax rebates, 6% R&D subsidy to the new startup companies in the leather sector.

c. Sustainable Pakistani leather sector competitiveness requires greater concentration on fashion and

design. Efficient fashion industry will bring new design and innovative designs in leather

garments and hence leather sector will be promoted.

d. Government of Pakistan should support the establishment of laboratories for leather and leather

products to engage in R&D.

e. The industry has some excellent clients in the US and Europe and building on these with a

marketing campaign, perhaps allied with warehousing assistance, there is potential for Pakistan to

compete for clients with countries like Turkey who deal in a generally higher price bracket.

f. Commercialization of livestock farming to make the standard of breeding practices better.

g. The people at the slaughter houses who skin the animal, should be made more aware of the use of

those hides and skins and how a little cut on the skin can make the whole skin useless.

Government should promote established of training institutions to train people at slaughter

houses.

h. More emphasis on the foot wear, as value additions brings more revenue.

i. Differentiated products in terms of design. This will bring diversification in leather portfolio,

hence more products will cater vast range of customers.

j. According to Porter's diamond model, domestic rivalry is healthy but if Pakistan is not very

capable of that, the firms in the industry should at least try to collaborate and thus contribute

global competitiveness together.

k. The cost of production is also very high in Pakistan as compared to our competitors like China,

India and Bangladesh. This is mainly due to the utilities, import costs and taxes. Government

should take strong initiatives on immediate basis to provide incentives and subsidies to cut down

the production cost. The most important agenda should have been for the Government right now

is to provide utilities at low cost in order to save leather industry.

65

9. BIBLIOGRAPHY

Ahsan, Nawaz “Trade liberalisation programme with India” Daily Times Online Newspaper

Edition.

http://www.dailytimes.com.pk/default.asp?page=2012\07\10\story_10-7-2012_pg5_1

Programme for Industrail Sustainable Development, “Analysis of Leather Industry in

Pakistan” Programme for Industrail Sustainable Development.

http://pisd-pak.org/leather.php

Arifeen, Mohammad “Tanneries causing severe environmental degredation” Business and

Finance Review Jang Online Newspaper.

http://jang.com.pk/thenews/jul2009-weekly/busrev-13-07-2009/p4.htm

Lahore Chamber of Commerce and Industry, “Leather Sector facts and Statistics” Lahore

chamber of commerce and Industry.

www.lcci.org.pk/leather.php

Pakistan Tanners Association, “A to Z of Leather Sector” Pakistan Tanners Association.

www.pakistantanners.org

Naqvi, Tahir Raza “Role of TDAP to protect the interests of Leather sector” Trade

Development Authority of Pakistan.

http://tdap.gov.pk/blog/2012/07/leather-sector-to-be-supported-by-ministry-of-commerce-

tdap/

Commercial Section, Consulate General of Pakistan Chengdu (China), “Leather Market in

China August 2011” Trade development Authority of Pakistan.

http://www.tdap.gov.pk/doc_reports/TDAP%20REPORT%20ON%20LEATHER%20MA

RKET%20IN%20CHINA.pdf

Trade Development Authority of Pakistan, “Breifs Leather sector Products” Tarde

Development Authority of Pakistan.

http://www.tdap.gov.pk/category_landing.php?cid=17&did=2

Pakistan readymade garments manufacturers and exporters association, “Request for WTO

waiver” Pakistan readymade garments manufacturers and exporters association.

www.prgmea.org/announce/82747.doc

http://www.dailytimes.com.pk/default.asp?page=2012\07\10\story_10-7-2012_pg5_1

http://pisd-pak.org/leather.php

http://jang.com.pk/thenews/jul2009-weekly/busrev-13-07-2009/p4.htm

http://www.lcci.org.pk/leather.php

http://tdap.gov.pk/blog/2012/07/leather-sector-to-be-supported-by-ministry-of-commerce-tdap/

http://tdap.gov.pk/blog/2012/07/leather-sector-to-be-supported-by-ministry-of-commerce-tdap/

http://www.tdap.gov.pk/doc_reports/TDAP%20REPORT%20ON%20LEATHER%20MARKET%20IN%20CHINA.pdf

http://www.tdap.gov.pk/doc_reports/TDAP%20REPORT%20ON%20LEATHER%20MARKET%20IN%20CHINA.pdf

http://www.tdap.gov.pk/category_landing.php?cid=17&did=2

http://www.prgmea.org/announce/82747.doc

66

Shareef, Farhan (Bloomberg) “Pakistan’s City of Looms Turns Silent as Gas Outages Shut

Mills” Pakistan readymade garments manufacturers and exporters association.

http://prgmea.org/nc/26-04-12.html

Business Recorder (June 2012), “Zafar Mehmood's efforts for enhancing Pakistan's trade

lauded” Pakistan readymade garments manufacturers and exporters association.


Hussain, Fayyaz “Pakistan’s Exports Deman: A disaggregated Analysis” State Bank of

Pakistan.

www.sbp.org.pk/research/bulletin/2010/Vol6No.2/Fayyaz.pdf

State Bank of Pakistan, “Exports Receipts by Commodity” State Bank of Pakistan.

www.sbp.org.pk/ecodata/Export_Receipts_by_Commodity.pdf

Zaman, Qamar “Diagnostic Study of Korangi Tanneries Zone (Korangi leather Cluster)”

UNIDO.

www.unido.org/.../Leather_DS_Qamar_Zaman_18-7-06.pdf

Khan, Fawad Ijaz, “Ban raw, semi-finished leather exports” Pakistan readymade garments

manufacturers and exporters association.

http://www.fibre2fashion.com/news/daily-textile-industries-

news/newsdetails.aspx?news_id=112692

The World bank (16May 2011), “Implementable Recommendations for Cleaner Production

Program in Pakistan” Ministry of Industries and production.

http://www.moip.gov.pk/IRofCPP%20160511.pdf

Khorana, Sangeeta “Barriers to Exporting to the EU: Evidence from Textiles and Leather

Good Firms in India” School of Management and Business Aberystwyth University.

http://www.freit.org/WorkingPapers/Papers/FirmLevelGeneral/FREIT363.pdf

Dasanayaka et al, “technology Issues in Pakistan’s Leather Tanning SME’s” Dept. of

Management Technology University of Moratuwa.

http://www.pafkiet.edu.pk/LinkClick.aspx?fileticket=wDeTwwpe44Y%3D&tabid=515&mi

d=1805



http://www.sbp.org.pk/research/bulletin/2010/Vol6No.2/Fayyaz.pdf

http://www.sbp.org.pk/ecodata/Export_Receipts_by_Commodity.pdf

http://www.unido.org/.../Leather_DS_Qamar_Zaman_18-7-06.pdf

http://www.fibre2fashion.com/news/daily-textile-industries-news/newsdetails.aspx?news_id=112692

http://www.fibre2fashion.com/news/daily-textile-industries-news/newsdetails.aspx?news_id=112692

http://www.moip.gov.pk/IRofCPP%20160511.pdf

http://www.freit.org/WorkingPapers/Papers/FirmLevelGeneral/FREIT363.pdf

http://www.pafkiet.edu.pk/LinkClick.aspx?fileticket=wDeTwwpe44Y%3D&tabid=515&mid=1805

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67

Chatta, Javed Ahmed and Shaukat, Mobeen , “An Assessment of Environmental concerns

in the Leather Industry and Proposed Remidies: A case study of Pakistan” GIK Institute of

Engineering Sciences and Technology.

http://www.environmental-expert.com/Files/0/articles/2226/2045.pdf

Sankar U., “Trade Liberalization and Environmental Protection: Responses of Leather

Industry in Brazil, China and India” Economic and Political Weekly at JStor Online.


729977

SMEDA, “Sectoral Briefs Leather sector” Small and Medium Enterprises Development

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http://www.smeda.org/business-development/sector-briefs.html

68

ANNEXURE 1

BILATERAL TRADE PROFILES—INDIA – PAKISTAN.

1) LEATHER GARMENTS AND GLOVES

Product label Bilateral Trade Profile

Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Total Exports

of Pakistan 16050201 16932873 17838407 20279046 17554698 21413103 25343769

Leather

Garments and

Gloves of

Pakistan

620958 618909 666691 743147 552268 590716 649464

% Share in

Total Exports 3.87% 3.66% 3.74% 3.66% 3.15% 2.76% 2.56%

Total Exports

of India 100352637 121200606 145898053 181860898 176765036 220408496 225306708

Leather

Garments and

Gloves of

India

517568 516639 529247 713648 621199 593494 984401

% Share in

Total Exports 0.52% 0.43% 0.36% 0.39% 0.35% 0.27% 0.44%

2) LEATHER FOOTWEAR


Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Total Exports

of Pakistan 16050201 16932873 17838407 20279046 17554698 21413103 25343769

Leather

Footwear of

Pakistan

52834 58357 72837 108696 96775 74751 85211

% Share in

Total Exports 0.33% 0.34% 0.41% 0.54% 0.55% 0.35% 0.34%

Total Exports

of India 100352637 121200606 145898053 181860898 176765036 220408496 225306708

Leather

Footwear of

India

741162 866409 1044946 1221363 1179326 1341309 2012643

% Share in

Total Exports 0.74% 0.71% 0.72% 0.67% 0.67% 0.61% 0.89%

69

3) LEATHER GOODS FOR INDUSTRIAL USE


Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Total Exports

of Pakistan 16050201 16932873 17838407 20279046 17554698 21413103 25343769

Leather Goods

Industrial of

Pakistan

64,004 54,766 11,391 10,822 11,765 13,214 15,471

% Share in

Total Exports 0.40% 0.32% 0.06% 0.05% 0.07% 0.06% 0.06%

Total Exports

of India 100352637 121200606 145898053 181860898 176765036 220408496 225306708

Leather Goods

Industrial of

India

136,300 134,256 150,876 148,955 125,120 130,418 212,081

% Share in

Total Exports 0.14% 0.11% 0.10% 0.08% 0.07% 0.06% 0.09%

4) LEATHER GOODS FOR CONSUMER USE


Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Total Exports

of Pakistan 16050201 16932873 17838407 20279046 17554698 21413103 25343769

Leather Goods

Consumer of

Pakistan

628,476 625,294 680,212 756,012 566,135 605,627 665,873

% Share in

Total Exports 3.92% 3.69% 3.81% 3.73% 3.22% 2.83% 2.63%

Total Exports

of India 100352637 121200606 145898053 181860898 176765036 220408496 225306708

Leather Goods

Consumer of

India

1,050,809 1,084,458 1,174,830 1,470,715 1,290,780 1,316,165 2,095,198

% Share in

Total Exports 1.05% 0.89% 0.81% 0.81% 0.73% 0.60% 0.93%

70

5) FINISHED LEATHER (HIDES)


Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Total Exports

of Pakistan 16050201 16932873 17838407 20279046 17554698 21413103 25343769

Finished

Leather Hides

of Pakistan

159,285 135,384 132,123 38,913 20,063 17,193 5,158

% Share in

Total Exports 0.99% 0.80% 0.74% 0.19% 0.11% 0.08% 0.02%

Total Exports

of India 100352637 121200606 145898053 181860898 176765036 220408496 225306708

Finished

Leather Hides

of India

74,654 90,241 76,875 34,110 7,590 8,074 74,881

% Share in

Total Exports 0.07% 0.07% 0.05% 0.02% 0.00% 0.00% 0.03%

6) FINISHED LEATHER (SKINS)


Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Total Exports

of Pakistan 16050201 16932873 17838407 20279046 17554698 21413103 25343769

Finished

Leather Skin

of Pakistan

159,285 135,384 132,123 38,913 20,063 17,193 5,158

% Share in

Total Exports 0.99% 0.80% 0.74% 0.19% 0.11% 0.08% 0.02%

Total Exports

of India 100352637 121200606 145898053 181860898 176765036 220408496 225306708

Finished

Leather Skin

of India

74,654 90,241 76,875 34,110 7,590 8,074 74,881

% Share in

Total Exports 0.07% 0.07% 0.05% 0.02% 0.00% 0.00% 0.03%

71

7) FINISHED LEATHER (OTHER)


Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

Total Exports

of Pakistan 16050201 16932873 17838407 20279046 17554698 21413103 25343769

Finished

Leather Other

of Pakistan

21,718 4,461 6,369 8,366 2,763 3,605 2,943

% Share in

Total Exports 0.14% 0.03% 0.04% 0.04% 0.02% 0.02% 0.01%

Total Exports

of India 100352637 121200606 145898053 181860898 176765036 220408496 225306708

Finished

Leather Other

of India

276,681 312,314 404,773 395,296 271,616 442,939 557,394

% Share in

Total Exports 0.28% 0.26% 0.28% 0.22% 0.15% 0.20% 0.25%

72

ANNEXURE 2

RCA ANALYSIS

1. Leather Garments and Gloves

Product

code Product label

Revealed Comparative

Advantage Pakistan


Advantage India

Y 2008 Y 2009 Y 2010 Y 2008 Y 2009 Y 2010

Lea

ther

Garm

ents

an

d G

lov

es '420329

Gloves mittens&mitts,o/t

for sport,of leather o of

composition leather

79 63 50 11 7 6

'420310

Articles of apparel of


leather

87 70 71 9 8 7

'420340

Clothing accessories nes,

of leather or of

composition leather

13 10 10 4 3 3

'420321

Gloves,mittens &

mitts,for sports,of leather

or of composition leather

129 120 131 3 3 2

'420330



leather

2 2 2 2 2 2

2. Leather Footwear

Product

code Product label


Advantage Pakistan


Advantage India

Y 2008 Y 2009 Y 2010 Y 2008 Y 2009 Y 2010

Lea

ther

Fo

otw

ear

'640312 Ski-boots, snow-board

boots, uppers of leather 0 2 1 13 2 1

'640359 Footwear, outer soles and

uppers of leather, nes 0 0 0 2 1 1

'640399

Footwear, outer soles of

rubber/plastics uppers of

leather, nes

2 2 1 1 1 1

'640319

Sports footwear,o/t

ski,outr sole of

rbr/plas/leather&upper of

leather

2 2 3 1 1 1

'640340

Footwear,outr sole of

rber/plas/leathr,uppers of

leathr w/met toe-cap

0 0 0 1 0 1

'640391

Footwear,outer soles of

rubber/plast uppers of

leather covg ankle nes

0 0 0 3 2 3

'640320

Footwear,outr sole/uppr

of leathr,strap across the

instep/arnd big toe

40 28 16 32 23 23

'640351 Footwear, outer soles and

uppers of leather, 0 0 0 22 20 17

73

covering the ankle, nes

3. Leather Goods for Industrial Use

Product

code Product label


Advantage Pakistan


Advantage India

Y 2008 Y 2009 Y 2010 Y 2008 Y 2009 Y 2010

Lea

ther

Goo

ds

for

Ind

ust

rial

Use

'420500

Articles of leather or

of composition

leather, nes

2 2 2 2 2 1

'420100

Saddlery and harness

for any animal, of any

material

5 5 5 9 7 6

4. Leather Goods for Consumer Use

Product

code Product label


Advantage Pakistan


Advantage India

Y 2008 Y 2009 Y 2010 Y 2008 Y 2009 Y 2010

lea

ther

Go

od

s fo

r C

on

sum

er u

se

'420221 Handbags with outer

surface of leather 0 0 0 3 3 2

'420229

Handbags, of

vulcanised fibre or of

paperboard

1 2 2 1 1 1

'420292

Containers,with outer

surface of sheeting of

plas or tex

materials,nes

0 0 0 0 0 0

'420231

Articles carried in

pocket or handbag,

with outer surface of

leather

0 0 0 9 7 6

'420219 Trunks, suit-cases and

similar containers, nes 1 1 2 3 3 5

'420222

Handbags w outer

surface of sheetg of

plastics o of textile

materials

0 0 0 1 1 1

'420299 Containers, nes 0 1 0 1 1 0

'420211

Trunks,suit-cases &

similar containers with

outer surface of leather

1 1 1 5 4 3

'420212

Trunks,suit-cases&sim

container w/outer

surface of

plastics/textiles

0 0 0 0 0 0

'420232

Articles carrid in

pocket/handbag,w/outer

surface sheetg of

plas/tex

0 0 0 0 0 0

'420239 Articles carried in

pocket or handbag, nes 2 2 1 1 1 1

74

'420291 Containers, with outer

surface of leather, nes 0 0 0 0 0 0

'420310

Articles of apparel of

leather or of

composition leather

87 70 71 9 8 7

'420340

Clothing accessories

nes, of leather or of

composition leather

13 10 10 4 3 3

'420330


leather or of

composition leather

2 2 2 2 2 2

5. Finished Leather Hides

Product

code Product label


Advantage Pakistan


Advantage India

Y 2008 Y 2009 Y 2010 Y 2008 Y 2009 Y 2010

Fin

ish

ed l

eath

er H

ides

'410441

Full grains leather,

unsplit and grain splits

leather, in the dry stat

3 0 0 0 0 0

'410449

Hides and skins of

bovine "incl. buffalo"

or equine animals, in

the dr

27 24 14 1 0 0

'410411

Full grains, unsplit

and grain splits, in the

wet state "incl. wet-

blu

0 0 0 0 0 0

'410419

Hides and skins of

bovine "incl. buffalo"

or equine animals, in

the we

0 0 1 2 0 0

6. Finished Leather Skins

Product

code Product label


Advantage Pakistan


Advantage India

Y 2008 Y 2009 Y 2010 Y 2008 Y 2009 Y 2010

Fin

ish

ed l

eath

er S

kin

s

'410530

Skins of sheep or lambs,

in the dry state "crust",

without wool on, wh

8 3 7 5 2 0

'410510

Skins of sheep or lambs,

in the wet state "incl.

wet-blue", tanned, wi

3 0 0 1 0 0

'410692

Hides and skins of

antilopes, deers, elks,

elephants and other

animals

3 1 0 0 0 1

'410621

Hides and skins of goats

or kids, in the wet state

"incl. wet-blue", t

1 0 3 5 1 0

'410691

Hides and skins of

antilopes, deers, elks,

elephants and other

animals

14 2 2 16 7 0

75

7. Finished Leather Other

Product

code Product label


Advantage Pakistan


Advantage India

Y 2008 Y 2009 Y 2010 Y 2008 Y 2009 Y 2010

Fin

ish

ed L

eath

er O

ther

'410719

Leather "incl.

parchment-dressed

leather" of the whole

hides and skins

30 29 41 8 6 9

'410799

Leather "incl.

parchment-dressed

leather" of the

portions, strips or s

4 8 11 8 5 7

'410791

Full grains leather

"incl. parchment-

dressed leather",

unsplit, of the

4 3 8 1 2 1

'410712

Grain splits leather

"incl. parchment-

dressed leather", of

the whole h

2 2 3 0 0 0

'410711

Full grains leather

"incl. parchment-

dressed leather",

unsplit, of the

4 2 8 13 11 11

'410792

Grain splits leather

"incl. parchment-

dressed leather", of

the portion

5 5 8 0 0 0

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