SIDBI mulls testing lab for leather products in Kanpur

The Small Industries Development Bank of India (SIDBI) is keen on developing a leather cluster in Kanpur. The bank also wants to develop a testing lab for leather products in association with Indian Institute of Technology, Kanpur (IIT-K).

The bank is also working on a plan to develop a common effluent plant in the city under the public private partnership model. SIDBI is already at an advanced stage of talks with the Kanpur Leather Association and a private company to partner for the project.

The Kanpur leather industry has been losing ground due to poor infrastructure and lack of adequate support from the government.

Basant Seth, deputy general manager, SIDBI, said the bank had conducted a study with a view to designing and implementing interventions for market growth using business development services (BDS) in the leather cluster.

The promotion of market-oriented BDS in selected SME clusters is one of the components of a project supported by International Bank for Reconstruction and Development, UK-based Department for International Development (DFID), KfW and GTZ, with the purpose to foster a substantially improved framework for the development of SMEs in both rural and urban areas.

SIDBI is the implementing agency and the Banking Division of Department of Economics Affairs of the Ministry of Finance is the nodal agency for this project.

The project aims to create an enabling framework for financing of SMEs by the bank, mitigating banks’ risks related to SME lending and reducing transactions costs . The project also aims to strengthen SMEs, so that they can access market oriented business development services, thereby improving their profitability and competitiveness.

Kanpur leather cluster, for purpose of this study, includes units situated in Kanpur Urban and Unnao districts. The erstwhile Kanpur district has now been bifurcated into Kanpur urban and Kanpur rural districts and leather and leather products units are mostly situated in Kanpur (urban) district.

The major concentration of units are at Jajmau Unnao, Banthar and Kanpur city. The cluster has a diversified range of products, but is mainly famous for processing of buffalo hides, making safety shoes, sandals and chappals and saddlery and harness.

For the BDS project, SIDBI has identified 20-35 clusters in the country. In the first phase, Kanpur is one of three identified clusters. Infrastructure Leasing and Financial Services (IL&FS) has been selected by SIDBI for implementation of BDS component of the project in the Kanpur leather cluster.

Under the cluster approach, business development services are slated to be provided by three categories of providers including government support institutions (like the Council of Leather Exports, the Central Leather Research Institutes and IIT-K, etc), industries associations and private BDS providers (like chartered accountants, management consultants, design inputs from chemical suppliers, etc).