Jalandhar mega leather cluster yet to come up

The mega leather cluster proposed by the Centre in 2012, to be located at Jalandhar, has yet to come up. Industrialists have formed an SPV (special purpose vehicle) to execute the project and also identified a plot of land, but the failure of the state government to decide whether it will take equity in the project has delayed matters.

The leather industry in Jalandhar - consisting of tanneries and manufacturers of shoes, bags, jackets, purses and belts - is dominated by small and medium enterprises (SMEs), with the industry size estimated at Rs 800 crore.

Exports amounted to Rs 350 crore in 2012-13, up from Rs 300 crore in 2011-12, industry sources said. In the current fiscal year, the industry expects 15 per cent export growth. Industrialists said that owing to rising demand from domestic and export markets, they need to expand capacity.

In 2012, Commerce Minister Anand Sharma announced that the Union government would set up a mega leather cluster at Jalandhar at a cost of Rs 125 crore (the money was to take the form of a subsidy that would pay for infrastructure) to boost the leather industry in the northern region. The proposed cluster was among seven such clusters being set up by the department of industrial promotion and policy (DIPP).

Stevan Kaler, managing director of the SPV, Punjab Mega Leather Cluster (P) Ltd, told Business Standard, "There are over 125 SMEs in Jalandhar engaged in leather processing and finished products. The industry needs to expand and the proposed cluster would have provided all requisite infrastructure. We have formed a SPV as required by the DIPP policy and also identified 160 acres of land for the project. To ensure speedy implementation we wrote to the state government to take up equity in the project, as required by the policy. But we have not received any letter from the state government regarding their participation in the project, which has delayed it."

The project cost is an estimated Rs 300-400 crore. The cluster would have also enabled many industrialists to expand. About 60 per cent of the units in Jalandhar want to expand capacity but in the absence of the proposed cluster, their projects are on hold. The leather industry can be set up at only those locations where there is requisite infrastructure such as effluent treatment plants.

Ajay Sharma, director, Punjab Effluent Treatment Society said, "We have an agreement with industrialists who wish to set up their units on identified land in the proposed cluster. For speedy implementation of the project, we want the government to be on board through equity participation."