In For A Tanning

The past five years have seen the maturing of an aggressive environment lobby in the country. In many cases, for example, the Narmada and Tehri dams, the lobby has not really succeeded in making its view-point accepted. But in some, the results have been immediate and with direct consequences for industry, that old bugbear of activists the world over.

The leather industry in the country appears to be a prime example. On April 8, 1996, in response to a writ petition, the Supreme Court closed down around 250 of the bigger tanneries in the state of Tamil Nadu (TN) and gave them a deadline of December 15 to establish pollution control devices.

 

So why should the closure of tanneries in one state affect the leather industry as a whole? The answer is: What impacts Tamil Nadu is likely to affect the industry all over the country. While other centres in India are prominent in the value-added sector, the tanning industry happens to be pre-dominant in TN. And, of the 15,000 million sq. ft. of leather processed in the country annually, around 70 per cent is done in the state. And it is more serious considering that India exports seventy per cent of its leather.

Tanning is crucial in the process of converting hide to leather that can be worked on by the value-added product manufacturers. It involves sub-processes that result in large scale water pollution levels. If the polluted water is not treated, it destroys the land that it is released on; approximately 40 litres of water is estimated to be required in tanning one kg of leather. According to estimates, around 40 million litres of untreated water is discharged every day in TN.

There are eight major tanning centre in the state including Ranipet, Ambur, Dindigul, and Erode. Fifty per cent of Indias leather exports are from this state. In 1995-96 exports from TN were Rs 2,747.29 crore as compared to Rs 2,477.22 crore in the previous year. Seventy per cent of these exports are on value added items, that require tanning.

The court order resulted in the closure of some 250 tanneries. However for a short time, the monitoring of other tanneries became more stringent and for two odd months, according to M. Rafeeque Ahmed, vice chairman, Council of Leather Exports(CLE), around two- thirds of the tanning industry had to close down.

Setting up of effluent treatment plants (ETPs) is the recommended solution to effective pollution control. In order to maximise the impact, the industry in TN is setting up central effluent treatment plants (CETPs) which can service a cluster of tanneries at the same time. Industry sources estimate that Rs 100-150 crore will have to be invested in order to meet the deadline.

The impact on the leather industry is both in the short and long term. One, that a greater majority of tanneries in the state were out of action for two months leading to a short term spurt in tanned leather prices. Their closure meant that leather processing had to be carried out outside TN. This resulted in a rise in costs. The price of the basic raw material, tanned leather, used by value-added leather manufacturers has gone up, in some cases, by almost 16 per cent in the last few months. Erode, a major tanning centre, has according to Aditya Goenka, owner of Leather Craft India, a private company, become simply a distribution centre for tanned leather.

There are other problems as well. It is anticipated that environment related will continue for some time to come. The reason is that no one in the industry can put an actual figure to the tanneries that are present today in TN; guesstimates vary from 900 to 2500, but the tanneries that have been shut are the larger ones.

Sources say, the rise in input costs works out to around 5-7 per cent as tanning contributes takes up 30 per cent of the total cost of the finished product. In the past few months the tanning industry, or the part that is still functioning, has been able to pass on the rise in costs. According to Goenka, The price of the tanned leather has gone up from Rs 50 to around Rs 58 in the past few months.

But it is this rise that cannot be passed on by value-added manufacturers. They say that the industry has had to face increased competition from China, Bangladesh, Pakistan and south-east Asian nations where pollution control norms are not so stringent. Second, according to R. Balasubrom-anian, executive director, Indian Leather Products Asso-ciation, fashion trends the world over are changing again-st leather wear. He also states that leather prices as such have always been on an uptrend in the past two-three years anyway and this latest increase, while significant, is one in many.

The future direction of the leather industry in TN (and therefore the country) will also depend on a long term solution. In the short term several tanneries may actually go in for CETPs, though the investment is bound to increase their costs and processing prices (which is already happening). But in the long term funding the working of the tanneries and paying for their maintenance costs could be another stumbling block. CETPs, such as the one that services a tannery cluster in Pallavarum near Madras, have been known not to function simply because members of the serviced group could not pay for the upkeep.

Industry sources are of the opinion that there could be a real decline in leather exports from the country; their prediction could be borne by the latest statistic from Director-General of Commercial Intelligence & Statistics in Calcutta. Leather exports, between April and August this year, have fallen by 19.8 per cent to end at $578 million from $ 721 million in the same period last year. Says an industry source, Most of the decline in exports can be traced to the rise in raw material prices and subsequent increase in costs and the lack of leather tanning facilities.