Pakistan Trade Liberalization Sectoral Study On Leather Sector in Pakistan

1
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 profilesindia 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 AT HE R AND F OOT WE AR I ND US T R Y
1. INTRODUCTION
Leather industry, including leather products, is the second largest export earning sector after
textiles
1
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 dollars
4
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 2009-10
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. 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

1
Pakistan 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 billion
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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 Pakistans export potential in leather sector to India.
Identification of Pakistans 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.

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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 Association
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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 year
8
.
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

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Pakistan Tanneries Association Website (www.pakistantanners.org)
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Pakistan Tanneries Association Website (www.pakistantanners.org)
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million pairs annually
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. 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 Peshawar
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.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 imports
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.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).

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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 its 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
dyeing
12
.

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

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Pakistan Tanneries Association Website (www.pakistantanneries.org)
14
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
16
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.
17
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 1970s and 1980s. 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 Pakistan
13

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-shaagird
17
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 shaagirdand train them while
doing their jobs. This method is called Ustaad Shaagird method.
19
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
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 FATA
19
.
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
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 plant
20
.
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 Pakistans 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)
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 MAP
22

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. Pakistans 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 Indias
leather sector has been progressing with a trough in 2009. Pakistans leather export for the year 2011
is US $ 0.9 billion while Indias 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
0.03 0.1
'420330
Belts and bandoliers of leather or of
composition leather
0.002 0.004

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%).

'420329
19%
'420310
62%
'420340
0%
'420321
18%
'420330
1%
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. Pakistans 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

'640312
0%
'640359
4%
'640399
56%
'640319
21%
'640340
1%
'640391
6%
'640330
0%
'640320
12%
'640351
0%
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
29
th
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
'640359
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
'640351
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 I NDUSTRIAL 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).

'420400
0%
'420500
50%
'420100
50%
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
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 0.028 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 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
'
4
2
0
2
2
1
'
4
2
0
2
2
9
'
4
2
0
2
9
2
'
4
2
0
2
3
1
'
4
2
0
2
1
9
'
4
2
0
2
2
2
'
4
2
0
2
9
9
'
4
2
0
2
1
1
'
4
2
0
2
1
2
'
4
2
0
2
3
2
'
4
2
0
2
3
9
'
4
2
0
2
9
1
'
4
2
0
3
2
9
'
4
2
0
3
1
0
'
4
2
0
3
4
0
'
4
2
0
3
2
1
'
4
2
0
3
3
0
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
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 (HI DES)
5.6.1 EXPORT COMPOSITION OF FINISHED LEATHER (HI DES)
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 million
23
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 (HI DES)

23
UNIDO. Daignostic study of Korangi Tanneries. 2006
'410441
0%
'410449
89%
'410411
0%
'410419
11%
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 FINI SHED 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
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
'410691
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
'410530
45%
'410510
10%
'410622
16%
'410692
0%
'410632
0%
'410621
24%
'410640
0%
'410691
5%
Composition of Finished Leather (Skins) Export of
Pakistan (2010)
42
Leather Skins. Pakistans export share in the world is 0.03% while Indias 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 FINI SHED 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
'410692
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
'410691
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

'410719
46%
'410799
52%
'410791
0%
'410712
0%
'410711
1%
'410792
1%
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" 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=)
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 analysis
25
.
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.

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
10 3
Finished
leather Hides
'410449
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" of the whole hides and
skins
41 9
26

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 etc
27
.
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 leather
28
. 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 kilogram
29
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 NEQS
31
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 daily
32
. 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 skin
33
.
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 Banks 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 imported
34
.

xii. Poor coordination among the cluster-players
The clusters in Kasur, Sialkot and Karachi are the most important. Yet there isnt 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 testing
35

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
Pakistans 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 Pakistans exports is; Indias 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 Indias 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 leather
36
. 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

66

Shareef, Farhan (Bloomberg) Pakistans 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.
http://prgmea.org/nc/28-06-12.html

Hussain, Fayyaz Pakistans 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 Pakistans Leather Tanning SMEs Dept. of
Management Technology University of Moratuwa.
http://www.pafkiet.edu.pk/LinkClick.aspx?fileticket=wDeTwwpe44Y%3D&tabid=515&mi
d=1805
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.
http://www.jstor.org/discover/10.2307/4418354?uid=3738832&uid=2&uid=4&sid=21101150
729977

SMEDA, Sectoral Briefs Leather sector Small and Medium Enterprises Development
Authority.
http://www.smeda.org/business-development/sector-briefs.html

68
ANNEXURE 1
BILATERAL TRADE PROFILESINDIA 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
Product label
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
Product label
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
Product label
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)
Product label
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)
Product label
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)
Product label
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
L
e
a
t
h
e
r

G
a
r
m
e
n
t
s

a
n
d

G
l
o
v
e
s

'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
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
L
e
a
t
h
e
r

F
o
o
t
w
e
a
r

'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
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
L
e
a
t
h
e
r

G
o
o
d
s

f
o
r

I
n
d
u
s
t
r
i
a
l

U
s
e

'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
l
e
a
t
h
e
r

G
o
o
d
s

f
o
r

C
o
n
s
u
m
e
r

u
s
e

'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
F
i
n
i
s
h
e
d

l
e
a
t
h
e
r

H
i
d
e
s

'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
F
i
n
i
s
h
e
d

l
e
a
t
h
e
r

S
k
i
n
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
F
i
n
i
s
h
e
d

L
e
a
t
h
e
r

O
t
h
e
r

'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

Pakistan Trade Liberalization Sectoral Study On Leather Sector in Pakistan

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Pakistan Trade Liberalization Sectoral Study On Leather Sector in Pakistan

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PAKISTAN INSTITUTE OF TRADE & DEVELOPMENT

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