MARKETING MIX FOR KOLAHAPURI CHAPPAL

In the early 1960's, Professor Neil Borden at Harvard Business School identified a number of company performance actions that can influence the consumer decision to purchase goods or services. Borden suggested that all those actions of the company represented a “Marketing Mix”. Professor E. Jerome McCarthy, also at the Harvard Business School in the early 1960s, suggested that the Marketing Mix contained 4 elements: product, price, place and promotion.

In popular usage, "marketing" is the promotion of products, especially advertising and branding. However, in professional usage the term has a wider meaning which recognizes that marketing is customer-centered. Products are often developed to meet the desires of groups of customers or even, in some cases, for specific customers. E. Jerome McCarthy divided marketing into four general sets of activities. His typology has become so universally recognized that his four activity sets, the Four Ps, have passed into the language.

The four Ps are:

Product : The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and support.

Pricing : This refers to the process of setting a price for a product, including discounts. The price need not be monetary - it can simply be what is exchanged for the product or services, e.g. time, energy, psychology or attention.

Promotion : This includes advertising, sales promotion, publicity, and personal selling, branding and refers to the various methods of promoting the product, brand, or company.

Placement (or distribution): refers to how the product gets to the customer; for example, point of sale placement or retailing. This fourth P has also sometimes been called Place, referring to the channel by which a product or services is sold (e.g. online vs. retail), which geographic region or

industry, to which segment (young adults, families, business people), etc.

These four elements are often referred to as the marketing mix,[1] which a marketer can use to craft a marketing plan. The four Ps model is most useful when marketing low value consumer products. Industrial products, services, high value consumer products require adjustments to this model. Services marketing must account for the unique nature of services. Industrial or B2B marketing must account for the long term contractual agreements that are typical in supply chain transactions. Relationship marketing attempts to do this by looking at marketing from a long term relationship perspective rather than individual transactions.

As a counter to this, Morgan, in Riding the Waves of Change (Jossey-Bass, 1988), suggests that one of the greatest limitations of the 4 Ps approach "is that it unconsciously emphasizes the inside–out view (looking from the company outwards), whereas the essence of marketing should be the outside–in approach". Nevertheless, the 4 Ps offer a memorable and workable guide to the major categories of marketing activity, as well as a framework within which these can be used.

MARKETING MIX OF RAJASTHANI CHAPPAL

FIRM’S NAME- RAJASTHANI CHAPPAL LTD.

COMPANY PROFILE- Rajasthani Chappals as the name suggests find its genesis in the district of jaipur in the state of Rajasthan , India. Rajasthani chappals are handcrafted leather sandals, and this craft has gained much popularity and the ubiquitous jaipuri chappals are today widely favored the world over.

History of the company

Traditional Handcrafted Rajasthani Leather Footwears

Traditional Handcrafted Rajasthani Leather Footwears

Place of Origin: India27243 Model No: JM0014

Company Info

Date Joined: 2006

Online Postings: Products (50), Selling Leads (138)

Country/Territory: India

Business Type: Manufacturer

Number of Employees: 5 - 10 People Contact this Member

Offline

Price Terms: FOB new delhi or mumbai USD 6~8

Terms of Payment: T/T,Western Union,MoneyGram

Supply Ability: 500 Pair per Month

Minimum Order: 50 Pair

Packaging: Box, Net bag, As per buyers requirement

Delivery Lead Time: 15 days

Detailed Product Description

We are proud to introduce ourselves as the well renowned manufacturers and wholesalers of the

famous traditional embroidered Indian beaded ladies shoes, khussa, Rajasthani Jutti, Mojari, Nagra,

Khussa Shoes (Footwear) of India. We guarantee authenticity of all our products as each pair is

crafted by the skilled artisans residing in rural areas of Rajasthan who are engaged in making Juttis

since generations. We also make custom-based Jutti as per the buyers specific requirements. Our aim

is to provide customized and innovative products through research and development and that too at

most competitive prices.

Beautiful, trendy and extremely comfortable Khussa Punjabi Jaipuri Jutti made from Natural Camel

Leather and Designer Footwear in textile-specially Silk-both plain & embroidered, handcrafted in

exclusive designs, are worn by men, women and kids alike, with just about any traditional Indian dress-

be it Churidar Kurta, Sherwani or even a Sari or denim jeans, long skirts, it is fit with all. Exclusive

ethnic product of The Pink City, famous worldwide available in all sizes and colors. Our products are

available in following categories: -

Mojari

Khussa

Jaipuri Jutti

Punjabi Jutti

Indian Shoes

Beaded ladies shoes

These products are available for men, ladies and kids: -

For Men: Casual juttis, formal footwear, slippers, chappals etc.

For Women: Beaded Punjabi juttis, Hand embroidered slippers, leather chappals etc.

For Kids: Embroidery Jutti

Traditional Handcrafted

Rajasthani Leather Footwears

Vision and mission

Rajasthan chappal LTd. has a worldwide reach, with operations across 5 continents managed by 4 regional meaningful business units (MBUs). Each unit benefits from synergies specific to their environment, such as product development, sourcing or marketing support. Each MBU is entrepreneurial in nature, and can quickly adapt to changes in the market place and seize potential growth opportunities.

Rajasthan chappal LTD… today… Serves 1 million customers per day Employs more than 40,000 people Operates 4,600 retail stores Manages a retail presence in over 50 countries Runs 40 production facilities across 26 countries

Incorporated as Bata Shoe Company Private Limited in 1931 in India, the company went public in 1973 when it changed its name to Bata India Ltd.

Rajasthan Chappal today… Serves 1 Lakh customers per day Employs more than 8000 people Operates 950 retail stores Runs 5 production facilities across India

Initial capital investment 2,00000 laks.

Turnover of the company 10.2 million US $

Source. Economic times

Kolhapuri Chappals

Kolhapur is one of the few cities in Maharashtra that are renowned for being home to rich arts and crafts. Amongst its most popular crafts are its beautiful jewelry and extremely comfortable chappals (slippers). The chappals and sandals produced in the city are handmade and have leather as the preparing material. These chappals and sandals are so good looking and so comfy that they have become famous throughout the world.

Popularly known as the Kolhapuri chappals, these slippers are quite simple in their style and this is one of the main reasons why they are so relaxing for the feet. The quality of leather used in making the sandals is very good. The cost of these sandals and chappals differ according to the quality of leather used and the intricacy of designs. Though the chappals are made through the city of Kolhapur, the best place to buy them is the Bhausinji Road.

This is because here, the variety is almost endless and the prices are quite reasonable. Other places where good Kolhapuri chappals can be found are Mahadwar Road and Shivaji Road. You can also check out the shops situated around the bus station in the Rajarampuri area. If you are looking for the cheapest prices, then Shetkaari Bazaar is just the place for you. So, whenever you manage to visit Maharashtra, make sure to buy a pair of these for yourself.

Kolhapuri Chappals as the name suggests find its genesis in the district of Kohlapur in the state of Maharashtra, India. Kolhapuri chappals are handcrafted leather sandals, and this craft has gained much popularity and the ubiquitous kolhapuri chappals are today widely favored the world over.

What makes this footwear unique are the intricate patterns that are cleverly incorporated and handcrafted with the use of leather. The leather used is obtained from the hide of bulls, cows and goats. In order to cater to different styles and tastes the leather used is either dyed brown or dark maroon. However, natural tan color leather is usually the most preferred. This footwear is a perfect depiction of the traditions and cultures of India and has evolved over the years to make this footwear a favorite not only in India but abroad as well.

Kolhapuri chappals essentially complement all Indian ethnic outfits. But the USP of this product remains that the product can be worn by both genders, can be incorporated as formal or informal wear, it is reasonably priced and perfectly depict the rich and unique Indian traditional footwear styles. It is most commonly worn with Kurta and jeans both by men as well as women. However, it can perfectly complement many other outfits like saris, suits etc. Kolhapuris are quite

comfortable and are perfect for the hot and humid climates. Moreover they are extremely durable and come in varied colors and sizes. The price can range anywhere between a few dollars to hundreds of dollars depending on the leather quality as well as the level of craftsmanship and designs.

The other advantage of this footwear is that it is usually free from all allergic properties unless of course if the wearer is allergic to specific types of leather. The making of kolhapuri slippers does not involve the use of any nails and the sandals are stitched with cords that are also made of leather. This offers additional comfort and durability. The sole is usually made of two or more pieces of leather which are then pasted together and stitched with thongs to impart it with solid strength and durability. The designs could involve intricate patterns which are further enhanced with golden cords called "gota". So the customer has a wide variety to choose from, be it simple patterns or intricately to moderately embellished kolhapuris. Many new designs in this footwear have been incorporated over the years. These include thong-like straps or even pink or maroon colored pom poms that are stitched into thong like straps. The traditional designs essentially include Kachkadi, bakkalnali, and pukari. Over the years the superior viabilities of Kolhapuri chappals have been recognized en masse and its popularity is fast catching up in the west as well. This intricately handcrafted footwear has been able to retain its uniqueness and ingenuity primarily due to skilled craftsmanship and the fact that it complements most Indian outfits perfectly. Recently more creative and fanciful designs have lent this footwear a more modern appeal and versatili

SQUATTING on the floor, Sambhaji Harkare (59) bangs away with a steel hammer on a piece of water-soaked leather which will go to form the sole of the famed Kolhapuri chappals. "My son is not interested in doing what I do and has set up shop in Kolhapur town to frame pictures," he says.

Sambhaji forms a part of the labour force of four men and two women who work off and on in the spacious hall of the Footwear Production Centre belonging to the Leather Industries Development Corporation of Maharashtra (LIDCOM), which was set up to encourage the Kolhapuri chappal industry. Some 10 to 12 years ago the Centre employed about 65 men and women when the industry was going through a boom. Today there are few orders, raw material costs are soaring and the villagers in and around Kolhapur have wound up business.

Around 9 in the morning our autorickshaw wound its way into Subhash Nagar, where the centre is located. Passing through the dirty frontyard of the centre which has some six dishevelled shacks and a few pigs scurrying around one enters the office to meet G.K. Adsul, manager, supervising the thin activity. Everything about the work place at the centre is a sign of bad days: Water leaking all over the floor, little light, white walls wearing a brown look and an absence of any activity. "There is nothing left here. The Kolhapuri chappal industry is living in the past and it has no future as the new generation is not keen to continue the tradition,'' admits Adsul.

The centre was set up years ago to manufacture Kolhapuri chappals sourcing tanned leather from its sister unit at Satara. But the shortage of raw leather, mainly supplied by Chennai and high costs have cut into margins. Bagtan leather (BT leather) made from buffalo, cow or bullock skins are the best for the sole of the chappal and their prices have gone up by about 10 per cent per year over the last five to six years and are ruling at around Rs 120-130 per kg. For the uppers, there is number one Gavi leather with number two sheepskin or goat skin leather costing between Rs 600 and Rs 800 per kg. With Chennai and other raw material centres exporting uppers, little is available for the Kolhapuri chappal cottage industry. The introduction of artificial leather has killed the original all-pure leather Kolhapuri chappals, admits Adsul.

There are no numbers or firm estimates available on the number of units or workers. But going by talks with a large number of retailers, manufacturers and the rest one gains the impression that the industry is stuck forever in the handmade mould. Arun Kumar Satpute who has his small works attached to his home employing 10 to 12 workers at Subhash Nagar and a few others admit to the business losing sheen. Adsul explains that a committee at LIDCOM decides the price every year and that does not allow much room to accommodate a rise in raw materials.

For the current year, the raw material cost has been worked out at Rs 93.28, labour charges come to Rs 37.90 and the overhead costs come to Rs 26.23 putting the total cost at around Rs 157 for a pair of Kolhapuri. On both sides of the Shivaji Market in Kolhapur town, a pair sells at between Rs 200 and Rs 250 which should ideally help the centre to make profits. If that is not happening it is because they cannot hold costs at the estimates made. Rashtriya Leather Works, with five showrooms, has a sizable production base at Subhash Nagar where only women are employed to keep costs down. The private outfits pay less to its workers than at the centre run by LIDCOM and the labour force does not enjoy any other benefits like PF.

Inquiries show a pair should not cost beyond Rs100 or at best Rs 125 at the private outfits. At the retail price of Rs 200-250, a private manufacture earns at least Rs 50 per pair with the rest going to the retail shop owner. In fact these steep profit margins help the private sector run a scheme of "advances" for its workers. Owners compete for the best workers by paying them higher advances, which ranges between Rs 10,000 and Rs 25,000 and is not deductible. A worker in any of these units initially starts on an advance of Rs 10,000 and leaves the shed for another owner on an advance of Rs 25,000 after paying up the initial advance of Rs 10,000. Most of the workers earn a daily wage of about Rs 27 to Rs 28 with no fixed time schedule. Most of the owners complain of the advance being frittered away which cost is laced on to the final price.

The centre despite higher wages cannot attract talent as they do not participate in the practice of "advances", says Adsul. Men are preferred for the hard work of softening processed leather by beating it over hours with steel hammers with the women doing the light work of stitching the upper to the sole. The thud, thud, thud of the steel hammer meeting the leather is the lone music which we got used to over two days of visiting production sites at Kolhapur, Miraj and Athani in Karnataka. In earlier times, villages around Kolhapur supplied the sole or the uppers to the bigger units but all that is now over with the business seeing bad times since the 1990s.

For a leather expert like Adsul, Khas Kolhapuri chappals are the best with the upper made of sheepskin. Walking around Shivaji Market, one could see Kolhapuri chappals fighting for the public eye with other brands. Anil R. Dhoiphode of Kumar Footwear has stopped selling Kolhapuri. "In olden times cow calf leather was used and today it is not used. Today most of our customers ask for branded leather products even if they are costly," he says.

N.D. Kadam of Navyog Leather admits exports have dropped by over 80 per cent in the last 10 years with none from Kolhapur in the business. "A couple of years ago, our exporters earned the industry a bad name after sending consignments which did not match the original samples. Overseas importers have lost faith in us. Another problem is the entire process of making Kolhapur is hand-made and standards are hard to meet. One pair differs from another while the foreigner wants every pair to look and feel alike. Also, if at all foreigners place orders they do it in huge lots of 10,000 or 20,000 pairs and insist on each pair being the same. None is able to meet these demands," Kadam admits. His son is in the trade of selling Kolhapuri chappals but not into manufacture. The biggest market is Kolkata and the North-East followed by New Delhi.

Adsul says the sector is reserved for the small scale sector and that disables them from adopting new technology or

even new designs. Rajender Mahadev More at Miraj runs a factory styled Master Industries. His father is today a retired school teacher and used to make a few chappals every day in his spare time. His son today has named the unit Master Industries as a village teacher goes by the sobriquet of Master. Manufacturing about 5,000 pairs per month and content to meet demand from outstation centres, More is happy with his "seva" for the common man.

"Years ago some 100 to 150 villages around Miraj were busy making chappals but today they do not exist. Novelty and quality are musts though they do not happen. Even good cattle has disappeared from the villages making it difficult to source raw material as agriculture is not paying," he says. Banks have been busy funding the industry but a large part of advances have gone sour. More admits to bank funding and today has let out space to the bank, which funded him in the first instance. LIDCOM does provide subsidy and the Central Government is keen on the activity, says Adsul, but there are no takers

THE INDIAN LEATHER INDUSTRY  OVERVIEW OF THE INDUSTRYLeather Industry occupies a place of prominence in the Indian economy in view of its massive potential for employment, growth and exports. There has been increasing emphasis on its planned development, aimed at optimal utilisation of available raw materials for maximising the returns, particularly from exports. The exports of leather and leather products gained momentum during the past decades. There has been phenomenal growth in exports from Rs.32 crores in the year 1965-66 to Rs. 6436 crores in 1998-99. Indian leather industry today has attained well-merited recognition in the international market besides occupying a place of pride among the top export earners of the country. The exports from leather sector constitute 7% of country’s export basket.The leather industry has undergone dramatic transformation from mere exporter of raw materials in sixties to that of value-added finished products in nineties. Policy initiatives taken by the Government of India since 1973 have been instrumental to such transformation. In the wake of globalisation of the Indian economy supported with liberalised economic and trade policies since 1991, the industry is poised for further growth to achieve greater share in the global trade.Apart from being a significant foreign exchange earner, leather industry has tremendous potential for employment generation. Its potential for employment generation among weaker sections of the society and women is

immense.Direct and indirect employment generated in the industry is around 2 million. Most of the people engaged in the sector are from downtrodden and weaker sections of the society. The skilled and semi-skilled workers constitute nearly 50% of the total work force. The estimated employment in different sectors of leather industry is furnished in the following table: -  

(Figures in lakhs)

Sector Total Employment

Women Employment

% Share

Flaying, Curing and Carcass Recovery

8.00 0.35 4.00

Tanning & Finishing 1.25 0.25 20.00

Full Shoe 1.75 0.55 31.00

Shoe Uppers 0.75 0.63 84.00

Chappals (Indian style open footwear) & Sandals

4.50 1.50 33.00

Leather Goods & Garments

1.50 1.23 82.00

(Source: Council for Leather Exports)

 

 

MANPOWER

There is an abundant supply of labour, available at reasonable wages. In the leather sector, a number of well equipped training institutions work in close collaboration with reputed foreign institutions, and impart training in leather

and leather products. These apart, Indian traditional skills in embroidery, handcrafting, etc., are areas of strength.

Moreover, the Government of India through its various developmental Plan schemes like the Indian Leather Development Programme, Leather Technology Mission, and the UNDP assisted Small Industries Development and Employment Programme in the Leather Sector (SIDE-NLDP) is extending support to the unorganised/artisan sector for improving their productivity levels and quality of products and contribute towards sustainable human resource development.

STRENGTH OF THE INDUSTRY

There exists a large raw material base. This is on account of population of 194 million cattle, 70 million buffaloes and 95 million goats. According to the latest census, India ranks first among the major livestock holding countries in the world. With 48 million of sheep, it claims the sixth position. These four species provide the basic raw material for the leather industry.

The annual availability of about 200 million hides and skins is the main strength of the industry. Some of the goat/calf/sheep skins available in India are regarded as speciality products commanding a premium market. Abundance of traditional skills in tanning, finishing and manufacturing downstream products and relatively low wage rates are the two other factors of comparative advantage for India.

TANNING & FINISHING CAPACITY

With tanning and finishing capacity for processing 192 million pieces of hides and skins per annum spread over different parts of the country, most of which is organised along modern lines, the capability of India to sustain a much larger industry with her raw material resource is evident. In order to augment the domestic raw material availability, the Indian Government has allowed duty free import of hides and skins from anywhere in the world. It is an attraction for any foreign manufacturer who intends to shift his production base from a high cost location to low cost base. 

STRUCTURE OF THE INDUSTRY

The leather industry is spread in different segments, namely, Tanning & Finishing, Footwear & Footwear Components, Leather Garments, Leather Goods including Saddlery & Harness, etc. The estimated production capacity in different segments is furnished in the following Table:-

 

Product Capacity

Leather

Hides

Skins

 

64 million pieces

166 million pieces

Footwear & Footwear Components.

a) Shoes

b) Leather shoe uppers

c) Non-leather shoes/chappals, etc.

 

100 million pairs

120 million pairs

125 million pairs

Leather Garments 13 million pieces

Leather Goods 70 million pieces

Industrial Gloves 40 million pairs

Saddles 0.10 million pieces

(Source: Council for Leather Exports)

The major production centres for leather and leather products are located at Chennai, Ambur, Ranipet, Vaniyambadi, Trichi, Dindigul in Tamil Nadu, Calcutta in West Bengal, Kanpur in Uttar Pradesh, Jallandhar in Punjab, Bangalore in Karnataka, Hyderabad in Andhra Pradesh, and in and around Delhi.

The leather industry is concentrated in small and medium sector. Some mechanised tanning and footwear units operate in large scale, which are

mainly for export market.

DOMESTIC MARKET

The domestic market for leather products in India is steadily growing. Though at present the market for leather footwear and leather products is perceived as price sensitive, there is a vast latent untapped potential. As per a survey, the per capita consumption of footwear in India is 0.5 pairs. With the increase in middle class population, this consumption is likely to increase, the signs of which have been evident in the last five years or so. Many of the manufacturers have successfully launched new brands including international brands of shoes which have been well accepted in the domestic market.

EXPORT POTENTIAL

The leather industry, one of the major foreign exchange earners of the country recorded significant growth since the beginning of the decade. Today the share of value added finished products in the total exports from leather sector is over 80% as against 20% in the 1970s.

Graph reg. Export of leather vis-à-vis leather products up to 1999 enclosed The overall exports of leather and leather products for the last five years are shown in the table below: -

 

(Value in million US$)

Category 1994-95 1995-96 1996-97 1997-98 1998-99

Finished Leather

382.96 370.36 301.07 295.83 265.20

Leather Footwear

302.49 329.69 337.46 281.90 290.22

Footwear Components

247.49 253.72 222.74 240.48 243.74

Leather 387.12 415.24 424.38 425.21 368.60

Garments

Leather Goods

292.04 353.72 320.20 413.28 462.35

Total 1612.10 1722.72 1604.85 1656.69 1630.11

(Source: Deptt. of Commerce)

 

The industry has recovered from the severe blows of the last couple of years. To take advantage of the emerging situation, there is need to focus on better use of technology and marketing skills. Innovations in marketing are necessary to convert the comparative advantage of India into a commercial success.

Keeping in view the past performance of leather and leather products industry, the export targets for the year 1999-2000 are estimated to be as under:-

(Value in million US$)

PRODUCT SECTOR TARGET

Finished Leather 250

Leather Footwear 250

Footwear components 280

Leather garments 380

Leather goods including saddlery

540

Non-leather Footwear 24

TOTAL 1724

(Source: Council for Leather Exports)

Major importing countries of Indian Leather & Leather Products

(Value in Million US$)

Country 1997-98 1998-99 % change %Share in 1998-99

Germany 363.05 362.35 -0.19% 22.23%

USA 250.51 253.70 1.28% 15.56%

Italy 221.22 194.92 -11.89% 11.96%

UK 215.76 228.36 5.84% 14.01%

France 75.75 75.93 0.25% 4.66%

Spain 54.86 72.72 32.56% 4.46%

Russia 50.22 23.66 -52.90% 1.45%

Portugal 31.89 29.05 -8.91% 1.78%

Australia 36.08 34.31 -4.91% 2.10%

Denmark 21.72 18.94 -12.80% 1.16%

Netherlands 43.37 49.85 14.94% 3.06%

Hong Kong 53.93 52.93 -1.86% 3.25%

Others 238.33 233.39 -2.07% 14.32%

Total 1656.69 1630.11 -1.60% 100.00

(Source: Council for Leather Exports)

 

POSITIONING OF INDIA IN THE GLOBAL MARKET:

India has been slowly but steadily transforming her traditional leather industry over the past more than 10 years. To begin with, India was a major

exporter of hides and skins to the advanced west but right from the middle of the 1970's India has been following the policy of adding value to its raw material before export. Over the past few years, India has witnessed growth of various leather products manufacturing units in the country catering almost exclusively to export. This export oriented modern production sector co-exists with a network of traditional production base for leather and leather products.

Strengthening the traditional base of micro enterprises/artisan level manufacturing is possible at a very low cost. However, there is no contradiction between setting up state-of-art modern units and micro-enterprise sector as they can be quite complementary to each other. For this, relatively smaller investments (as opposed to fully mechanised units being set up) would lead to greater results, in particular in areas such as standardisation of shoe sizes at micro-enterprise level and marketing linkages between the micro enterprises and bigger units.

Globalisation of the Indian economy is a major objective of the Government. It has been appreciated that given the right type of policy support and framework India would be able to substantially augment her exports. The basic thrust of Indian economic policy in the recent years has been to integrate the Indian economy with the global economy and expose the Indian manufacturers to the global market and competition.

 

PARTICIPATION OF INDIA AS ‘PARTNER COUNTRY’ IN GDS INTERNATIONAL SHOE FAIR AT DUSSELDORF, GERMANY

During the 88th GDS International Shoe Fair held at Dusseldorf, Germany from 9th to 12th September, 1999, India participated in the Fair as a ‘Partner country’. The focus in this national participation was on footwear components, footwear manufacture and ethnic footwear. The results of participation were quite satisfactory as mentioned below:

(i) good orders were received by footwear component manufacturers

(ii) the micro entrepreneurs/manufacturers received extremely encouraging results

(iii) the most remarkable has been the achievement of the ethnic footwear namely ‘Mojari’ from Rajasthan and ‘Kolhapuri’ from Athni (Karnataka). This was the first time that ethnic footwear was exhibited in an international fair outside India. Trial orders for Mojaris and Kolhapuris were received from Japanese. 

INDIAN LEATHER DEVELOPMENT PROGRAMME:

For the first time in leather sector, a Plan Scheme titled Indian Leather Development Programme (ILDP) has been approved under the Ninth Five Year Plan, which is being implemented by the Ministry of Commerce & Industry, Department of Industrial Policy & Promotion. The objectives of ILDP are mainly to bridge critical gaps in the infrastructure for integrated development of leather industry, activate national agencies towards tackling of perceived gaps in the industry to promote and accredit productivity, value addition and employment, to undertake investment/trade development activities and build up an information base for the leather industry. Activities identified and taken up under ILDP are as follows:

Organisation/Participation in Technology cum Investment Promotion activities.

Technical up-gradation and improvement in productivity

Set up Design Studios for manufacture of leather goods.

Set up Design Studios for pattern making for footwear.

Set up Decentralised Common Facility Centres for sole adhesion and shoe finish for artisans.

Facilitating Component Industry.

Under the ILDP, in collaboration with National Leather Development Programme, UNIDO and Council for Leather Exports, Intechmarts (Investment & Technology buyers and sellers Meeting) have been arranged in Chennai, Calcutta and Delhi for the last three years giving opportunities to Indian entrepreneurs to have direct one to one meetings with overseas buyers/technology sellers. Besides, Designs Studios and Decentralised Common Facility Centres for leather goods and footwear have been set up in Kanpur (U.P.), Madhya Pradesh and Delhi with financial support from

ILDP. Another Design Studio is in the process of being set up in Hyderabad with support of the Government of Andhra Pradesh. 

TANNERY MODERNISATION SCHEME

Despite the fact that India has a comparative advantage in leather sector on account of abundance of raw material, low cost labour and availability of trained manpower, there continues to be acute deficit of good quality finished leather. Most of the existing tanneries adopt outdated technology and inadequate pollution control measures. Modernisation of tanneries is central to any policy intervention for leather. One of the important constraints of modernisation relates to availability of finance and cost of capital. Keeping these facts in view, Department of Industrial Policy & Promotion has launched Tannery Modernisation Scheme under the Indian Leather Development Programme. The Scheme was formally launched on 18th January, 2000 by Hon’ble Commerce & Industry Minister, Shri Murasoli Maran. Salient features of the Scheme are as follows:

OBJECTIVE

To support existing tanneries for undertaking modernisation programme for positive environmental impact, becoming competitive, effecting better capacity utilisation, achieving productivity gains and reducing wastage etc.

FINANCIAL ASSISTANCE

Small scale sector 30% of cost of plant & machinery subject to a ceiling of Rs. 28 lakhs.

Non-Small scale sector 20% of cost of plant & machinery subject to a ceiling of Rs. 35 lakhs.

 

ELIGIBILITY

Financial assistance payable only for modernisation programme approved by Banks/Financial Institutions after notifications of the Scheme.

In case of self-finance modernisation programme, financial assistance payable if order for purchase of machinery placed after date of notification

of the Scheme.

IMPLEMENTATION STRATEGY

Implementing Agency – Programme Management Unit of SIDE-NLDP (National Leather Development Programme)

Nodal Agency – Small Industries Development Bank of India (SIDBI)

Applications to be submitted in the Prescribed Form to SIDBI/Banks/SFCs.

SIDBI/Banks/SFCs to send their recommendations for sanction to the Steering Committee of which National Programme Manager, SIDE-NLDP is the Member-Convenor.

Disbursals to be made by SIDBI

The contents of the brochure on Tannery Modernisation Scheme along with Application Form for assistance under the Scheme are available at the website of the Ministry viz. http://indmin.nic.in

 

NATIONAL LEATHER DEVELOPMENT PROGRAMME (NLDP) AND SMALL INDUSTRIES DEVELOPMENT & EMPLOYMENT PROGRAMME IN LEATHER SECTOR (SIDE-NLDP):

Leather development programme is an umbrella programme of the Government of India, which is supported by the UNDP. It aims to ensure holistic and integrated development of leather sector in the country. Its first Phase called NLDP was flagged off in April 1992 and it ended in August 1998. The objectives of Phase 1 of the programme were as under:

Development of an improved and more practical institutional framework for human resources development

Improvement of product development and marketing capabilities in footwear manufacturing

Strengthening of R &D capacity of leather sector

Evolving a strategy for controlling pollution by identifying an appropriate technology

Enhancement of exports, and

Introduction of systems of effective co-ordination within the Indian leather sector and generating information for the preparation of integrated and coherent policies for future development

Initially the programme was to be concluded in March 1996 but it was extended up to August 1998 for facilitating and promoting pilot initiatives related to development of artisans. UNDP allocation was US$15.050 million and contribution of Govt. of India was US$11.065 million. For extended Phase UNDP contributed US$2.18 million.

The programme has been very successful and it was able to create institutional facilities of international standards and capacity to meet trained manpower for future needs. To consolidate the gains of this project and in line with Sustainable Human Development (SHD) concerns of Govt. of India and UNDP, Phase II of the programme namely SIDE-NLDP (Small Industries Development & Employment Programme in Leather Sector) was launched in 1998. Its major focus is on promoting poverty alleviation and sustained livelihood and building linkages between the organised and unorganised sector. The programme was launched in September 1998 and 14 projects in different parts of the country have taken off. The Programme is to be completed by March 2002. The UNDP allocation towards SIDE-NLDP is US$ 7.15 million at present. Several State Governments have also committed to financially support this Programme in a major way.

 

LEATHER TECHNOLOGY MISSION

The Government of India launched in January 1995 a Leather Technology Mission (LTM) aimed at the proving and referencing of technologies under the social contexts of the country. The focus of LTM has been on the tanning sector primarily. The four-year mission with a human face has been a technology mode programme. The programme aimed at wide variety of

technology elements being proved on ground in several locations.

LTM has addressed to total of 172 activities covering a total of 16 States in the country. In the first phase, it has been able to prove the benefits of technology. Top down decisions to propagate the successful elements of technologies proved under LTM under a successor programme to LTM have been taken.

The Mission has been co-ordinated by the Council of Scientific and Industrial Research with its constituent organisation viz. Central Leather Research Institute at Chennai.

NINTH PLAN PERSPECTIVE

Leather and Leather Products as a sector has been given considerable attention by the Government of India at various levels due to its inherent strengths and prospective features.

Many Expert Committees were formed by the Government from time to time to suggest measures for strengthening Indian leather industry and to enhance exports. The performance of the Industry over the last 20 years, the value addition levels achieved, employment generation, etc. was reviewed by the Working Group on Leather & Leather Products for the Ninth Five Year Plan 1997-2002.

 

 

POLICY FRAMEWORK:

Coupled with the opportunities and innate strengths upon Indian Leather Industry as well as the encouraging policy initiatives from the Government have helped increasing exports of value added leather products from 70% in 1990-91 to above 80% in 1998-99. The policy framework pertaining to leather and leather products Industry can be broadly classified as follows: -

INDUSTRIAL LICENSING POLICY

No industrial licence is required for processing of hides and skins from wet blue stage to finished leather. However, the location of industrial projects will be subject to Central or State Environmental laws or regulations including local zoning and land use laws and regulations.

No industrial licence is required also for setting up integrated leather processing units for manufacture of finished leather from raw stage itself. However such units would have to abide by the additional conditions that (i) the unit would manufacture semi-finished leather only as an intermediate product for captive use for manufacture of finished leather as the final and saleable product, and (ii) the unit shall not sell or export any semi-finished leather manufactured in the unit.

Industrial undertakings desiring to process leather have to file an Industrial Entrepreneur Memorandum (IEM) in the prescribed format with requisite fees to Secretariat for Industrial Assistance in Ministry of Commerce & Industry, Government of India, Udyog Bhawan, New Delhi - 110 011.

Manufacture of semi-finished leather, leather footwear, footwear uppers, leather goods, leather garments, leather gloves, etc., are reserved for the small scale sector. Small scale sector units are defined in terms of investment in plant and machinery.

For non-small scale units, industrial licences for manufacturing these items are granted subject to 50% export obligation. Application for industrial licence with prescribed fees may be filed in form FC-IL to the Secretariat for Industrial Assistance in Ministry of Commerce & Industry, Government of India, Udyog Bhawan, New Delhi - 110 011

For manufacture of capital goods for processing of leather or any leather item, no industrial licence is required and filing of IEM is sufficient.

  

The Forms IEM and FC-IL are available at any outlet dealing in Government publications and in all Indian Embassies. The Forms can also be downloaded from the official web-site http://indmin.nic.in

FOREIGN INVESTMENT/TECHNOLOGY POLICY

Foreign investment and technology transfer is welcome in the leather industry. A lump sum fee of US$ 2 million for technology transfer and royalty @ 5% for domestic sales and @ 8% for exports would qualify for automatic approval for all technological collaborations in leather sector. Any regional office of the Reserve Bank of India is competent to grant such automatic approval.

For foreign investment, if a small-scale unit desires to retain its small-scale status while inviting foreign investment, induction of foreign investment up to 24% of equity is permitted. However, higher equity is permitted if the mandatory export obligation is taken and an industrial licence is obtained from the Government. For non-resident Indians investing in a joint venture however the 24% equity cap is not relevant and higher equity participation is possible without the industrial licence, and the unit may retain the SSI status. Further, if the activity for which foreign investment is being sought is reserved for the small-scale sector and investment exceeds the small scale permissible limit, an industrial licence with the mandatory export obligation would need to be obtained.

For proposals involving foreign investment, and for proposals for technology collaboration not fulfilling the parameters of automatic approval, application in Form FC-IL should be submitted to the Secretariat for Industrial Assistance (SIA), Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Udyog Bhawan, New Delhi - 110 011. Application for foreign investment proposals are also accepted by all Government of India Missions abroad and forwarded to the SIA for further processing.

 

 

 

TRADE POLICY

An outward looking trade policy is one of the main features of India’s programme of economic reform. Changes in trade policies have included a

significant scaling down of tariff barriers, virtual dismantling of the system of import and export licences and simplification of procedures. The trade policy is spelt out in the Export-Import Policy 1997-2002. Procedures for import and export of goods have been simplified and these procedures are contained in the Hand Book of Procedures 1997-2002 (Volume-I).

Export of most of the items of leather and leather products industry are freely allowed without any physical restriction and export duty. However, export of raw hides and skins and semi-processed leather excluding E.I. tanned hides and skins require export licence.

Export of E.I. tanned hides and skins has been made free vide Government of India’s Gazette Notification dated 13th January, 2000. As per the Notification, exporter shall be required to register the export contract with the Council for Leather Exports indicating the price, quantity etc. 

The new trade policy has brought about a substantial liberalisation in India’s import regime. Some of the salient features of the Exim Policy are as follows:

Capital goods, raw materials, intermediates, components, consumables, etc., can be imported into India without any restrictions.

Raw-materials such as raw hides and skins, wet blue chrome tanned leather, crust leather as well as finished leather are allowed to be imported without any licence.

Import of machinery and equipment required by leather and leather product industry is freely allowed.

Duty structure is being rationalised through annual budget exercises. 

EXPORT PROMOTION SCHEMES

The following schemes have been incorporated in the Export Import Policy 1997-2002 to stimulate country’s exports by facilitating access to required raw materials, components, consumables and capital goods from

international market :-

(a) Export Promotion Capital Goods Scheme

(b) Duty Exemption Scheme

(c) Duty Entitlement Pass Book Scheme

(d) Special Import Licences

(e) Duty Drawback Scheme

BENEFITS AVAILABLE TO UNITS IN THE EXPORT PROCESSING ZONE (EPZ) AND 100% EXPORT-ORIENTED UNITS (EOUs)

In order to encourage exports, the Government of India has provided special benefits for the units set up primarily for manufacturing goods for export. Such units can be set up in designated Export Processing Zones or can be 100% Export Oriented Units outside zones. The benefits available to such units are: -Import of all capital goods and materials required in the manufacture of the export product will be allowed without any duty or licence. Even the second hand machinery can be imported duty free.

(ii) Power, water, telecommunication and other basic requirements will be provided a priority.

(iii) Exemption from payment of corporate income tax for a block of 10 years.

(iv) 100% foreign equity participation permitted.

(v) Concessional rent for plot/building for units located in zones.

(vi) Labour discipline maintained within zone.

The units in EPZ and 100% EOUs can make DTA (Domestic Tariff Area) sale upto 50% of the FOB value of exports subject to payment of applicable duties and fulfilment of minimum stipulated NFEP (Net Foreign Exchange Earning as a percentage of exports).

 

Customer focusRajasthan chappal LTD. international has a customer focus (or customer orientation). This implies that the company focuses its activities and products on consumer demands. Generally there are three ways of doing this: the customer-driven approach, the sense of identifying market changes and the product innovation approach.In the consumer-driven approach, consumer wants are the drivers of all strategic marketing decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a market offering, including the nature of the product itself, is driven by the needs of potential consumers. The starting point is always the consumer. The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy. History attests to many products that were commercial failures in spite of being technological breakthroughs.