In order to compete with China on the price front, the government will soon give its nod to 10 proposed dedicated parks for the leather industry. According to sources, the ministry of commerce and industry has given a positive response to this proposal and it has been sent to the Planning Commission. A Public Private Partnership (PPP) model is under consideration for the project, where 10 per cent equity support would come from industry.

Under the project, there will be large-scale tanneries in three separate tannery parks, a leather machinery park and six leather product parks. The project would require more than Rs 400 crore for infrastructure development, which would come from the National Manufacturing Competitive Council (NMCC) fund. A special purpose vehicle (SPV) model has been proposed for such parks with Rs 40 crore equity support from industry. NMCC and the Department of Industrial Policy and Promotion (DIPP) would set up the SPV.

At present, environmental factors and competition from low cost producers like China have undermined the growth of Indian leather exports in the international market. The recent strengthening of the rupee has also hit the sector badly. The industry expects that the setting up of the 10 proposed leather parks during the Eleventh Five Year Plan would double leather exports to $7 billion by 2010-11. Over the past decade, the industry’s growth rate has been 6.3 per cent per annum. For the industry to reach $7 billion by 2010, the growth rate would have to quadruple to almost 24 per cent per annum.

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