Leather industry faces grave difficulties in production activity, says ASSOCHAM report

Some industries have also laid off employees due to lack of finances.

Leather industry faces grave difficulties in production activity, says ASSOCHAM report

Demonetisation has hit the leather industry hard. Trade in major clusters of leather and leather products in India has nose-dived since the announcement of demonetisation.

This is the inference of a survey-cum-analysis done on leather industry by ASSOCHAM. The report of the survey on Impact of demonetisation on leather industry was released earlier today.

“There has been significant decline in arrival of animal hide. Tanneries in Chennai have recorded more than 60 per cent fall in skin arrival while other major leather clusters viz Agra, Kanpur and Kolkata have recorded more than 75 per cent decline in this regard,” says the survey.


“The leather industry is reeling under stress as butchers are not providing animal hide for they are not being paid in cash, tanneries are not able to get the hide transported as they are not able to pay the drivers in cash, moreover shortfall in coal supply for boilers is also adding to the industry’s woes,” it says.

To assess the impact of the Centre’s move to demonetise Rs 500 and Rs 1,000 currency notes in November, ASSOCHAM interacted with representatives of about 100 tanneries in major leather clusters of Agra, Chennai, Kanpur and Kolkata in the last fortnight.

The survey shows that leather industry in all these centres has been facing grave difficulties in production activity due to demonetisation as they are unable to make payments on every level be it for raw material, for transportation and the workforce.

85 of the total 100 respondents said that their production has declined by over 60 per cent while number of workers in leather factories in aforesaid cities has come down by about 75 per cent. This is because they are not being paid on time, and in cash. Some industries have also laid off employees due to lack of finances.

About 60 out of 100 respondents said they are no longer taking export orders as they would not be able to complete order on time due to lack of work force.

The industry representatives opine that the leather industry would take at least 9-12 months’ time to recover from this impact.