The seven mega clusters for leather, announced in Budget 2011-12, will entail a total

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investment of Rs 875 crore or Rs 125 crore each and are expected to be operational in two years. It is estimated that once operational, these mega clusters will help to double leather exports, including footwear, garments and accessories, from India in five years from $ 3.5 billion now.

Department of industrial policy and promotion (DIPP) has made its initial proposals to the Planning Commission for an in-principle approval and hopes to finalise the scheme by middle of this year. The seven mega clusters are expected to come up in UP, Rajasthan, Tamil Nadu, Andhra Pradesh, West Bengal, Haryana and Bihar.

According to sources in DIPP, these mega clusters will be greenfield projects being executed by a special purpose vehicle formed for the purpose. “This is a huge investment and we are pitching it in place of leather parks as they had failed to take off. We hope to finalise the scheme by the middle of this year after which it will be open to discussions with industry stakeholders,” sources in DIPP told Financial Chronicle.

While DIPP is still finalising the details on the subsidy from government and the contribution of private players, it is learnt that the Leather Export Promotion Council has proposed 80 per cent subsidy from government, including the land.

“We have requested to keep the size as small as 25 acres for leather garments and accessories as vertical growth can happen in these categories whereas manufacturing of footwear needs large sheds. These mega clusters will help us to develop world-class facilities with additional capacity required to cater to the growing demand in the global market,” Raseeque Ahmed, chairman of Leather Export Promotion Council said.

Currently, India is the second largest manufacturer of leather footwear behind China but ahead of Brazil. However, only one-sixth of it is being exported because of lack of capacity.

The major markets for Indian leather products are Germany with a share of 14.4 per cent, UK (13.4 per cent), Italy (11.7 per cent), USA (8.7 per cent) Hong Kong (7.35 per cent), France (7.5 per cent), Spain (6.4 per cent), Netherlands (4 per cent), Belgium (1.9 per cent), UAE (2.03 per cent) and Australia (1.58 per cent). These 11 countries together accounts for nearly 79.2 per cent of India’s total leather products export.