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Three months after an industrial accident killed 10 people at a leather unit in Ranipet, the leather industry in Tamil Nadu is feeling the heat of stringent new regulations on effluent discharge and factory compliances.
Micro, small and medium enterprises (MSMEs), which account for a major chunk of the state's leather industry, have been the worst hit, industry representatives said.
Some 48 tanneries, mainly supplying hides, have closed in the last few months, according to Rafeeque Ahmed, chairman of the Council of Leather Exports and former president of the Federation of Indian Exporters' Organisations. With hides in short supply, product development companies are unable to meet their commitments and have also downed shutters.
In February, one of the two tanks at the common effluent treatment plant collapsed on the compound wall of R K Leathers, killing 10 workers.
"Our estimate is that 35,000-40,000 people have lost their jobs," said Ahmed. Tamil Nadu accounts for 35-38 per cent of leather industry revenues in India and 40-45 per cent of exports, which reported a 10.4 per cent increase to touch $6.6 billion in 2014-15.
The council estimates that during the January-March quarter Tamil Nadu's leather industry reported 20 per cent growth, but currently the growth rate is below 10 per cent.
"Tamil Nadu is losing its sheen in the leather industry. If this situation continues, units will have to look at other states like Andhra Pradesh, and this has already started happening," said Ahmed, who is meeting Andhra Pradesh Chief Minister N Chandrababu Naidu this week.
The Andhra Pradesh government is inviting the leather industry to set up units in the state by offering cheaper land, power, effluent disposal facilities and other benefits.
An industry representative complained that the Tamil Nadu Pollution Control Board frequently changes its policies and regulations. If there is a problem in one unit, the entire industry should not be punished, he said, adding that the state government should realise that the leather industry is one of the largest job creators in Tamil Nadu.
He noted that in the last three years the number of tanneries in Tamil Nadu had declined from about 820 to 450-460. The pollution control board had come down heavily on small units, which never got back their licences, as effluent treatment systems are prohibitively expensive.
Infrastructure bottlenecks, financial constraints and high interest rates are key factors making the Indian leather industry uncompetitive and impeding its growth. Besides, the major European economies, which absorb a major chunk of Tamil Nadu's leather exports, are battling recession.
The Maharashtra government's decision to ban beef is also affecting the leather industry in Tamil Nadu, which procures 40 per cent of the bull hides produced in Maharashtra. S Srinivasan, who runs a shoe manufacturing unit near Chennai, said that a new challenge comes up every day, making it difficult to run a factory.
About 42 per cent of India's registered leather and leather products factories are in Tamil Nadu, according to a March 2015 Assocham study titled Leather & Leather Products Sector in India: Strategy to Facilitate Exports. The study ranked Tamil Nadu third in terms of per-factory employment, with each leather factory on average providing employment to about 61 workers.
