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Brief Introduction
Indian and Italian Leather Industry
Trade Between India and Italy
Comparative Advantage (CA) in Leather Trade
Revealed Comparative Advantage (RCA)
Challenges for India and Italy in Leather Trade
Strengthening of CA
Cooperation between India and Italy
Brief Introduction 3
HS 41 HS 42 HS 6403
Import 0% 10% 10%
Export 0% 10% 12.5%
Indias Position in Exports to Italy 8
India has largest available live stock, still India China in largest supplier of leather articles
is not major trading partner for Italy followed by India at 5th position
Comparative Advantage Indian 9
Leather Industry
Global leather firms are shifting manufacturing bases to developing
countries because of high wage levels and strict environment
norms, this is in favor of Indias leather trade and is evident from
India Italy trade data
Indias advantage of low cost skilled labor is quite relevant to labor
intensive manufacturing of leather goods and footwear
Availability of abundant raw material, production and processing
know-how is helping Indias trade
Presence of support industry like leather chemicals
Foot wear industry is environment and power friendly and leather
constitutes 20% of total footwear sector.
Comparative Advantage Italian 10
Leather Industry
Italian leather designer goods are considered to be one of the best
in world. Italy is house to renowned brands.
Italy's leather-making industry banks on quality, innovation and lean
manufacturing to beat low-cost competitors
Italy has worked on cluster model for leather industry Providing
resources at one place helps in reducing cost
Automation has helped manufacturers to improve quality and Yield
Presence of strong base of manufacturers of machinery used for
leather goods
Well established tanneries cater to 70% of EU
Revealed Comparative 11
Advantage - RCA
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. It is based on the Ricardian comparative advantage concept.
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
http://wits.worldbank.org/
Leather Value Chain 13
Costly labor
Pressure from environmental support lobby and PETA against use of
leather for personal goods
Many non-EU countries maintain export bans and restrictions for raw
hides and skins
Strict environment protection laws increasing cost of leather
tanneries and in turn cost of end product
Challenge from dumping by China of cheap leather products
Strengthening of Comparative 16
Advantage - India
India focus is on leather processing which is evident from numerous
institutes in this area, for e.g. The Central leather Research Institute
(CLRI) Worlds largest research institute in leather technology
The GoI has also supported India leather industry and is evident from
following initiatives
Concessional duty on imported machinery and chemicals.
Free export and import of raw hides & skins, semi-finished and finished
leather.
The design development center at NIFT campus in New Delhi An
initiative to build design of leather garments
Footwear, Leather & Accessories sector is amongst 25 priority sectors under
Make In India
Strengthening of Comparative 17
Advantage - Italy
Well established design houses and training institutes
Advance level of work in design and style innovation
Thrust on sustainable development and overcoming challenges of
environment protection
Growth in manufacturing of machinery used in leather to make quality
and value products
International trade fairs to boost trade in leather goods
India Italy Cooperation 18