Report on Interactive Session with Custom held on 12th January 2017 at Conference Room, New Custom House, New Delhi

Commissioner of Customs in collaboration with Council for Leather Exports organized an Interactive Session with Custom on 12th January 2017 at Conference Room, New Custom House, New Delhi to address the issues faced by the member exporters while exporting leather and leather products and simultaneously to highlight the problems faced by Custom officials while dealing with leather exporters.

Shri Sanjay Kumar, Regional Director – North, Council for Leather Exports (CLE) welcomed Shri S.R. Baruah, Commissioner (Custom), New Custom House, New Delhi, officials of Custom and members of the leather industry. He conveyed that this session will help to solve the issues faced by the industry members and custom officials.

Shri S.R. Baruah, Commissioner (Custom), New Custom House, New Delhi interacting with the member exporters of leather industry

Shri Sanjay Kumar, Regional Director – North, CLE welcoming Shri S.R. Baruah, Commissioner (Custom), officials of Custom and members of the leather industry

Shri Sanjay Kumar, Regional Director – North, CLE presented a power point presentation on Indian Leather Sector wherein he gave an overview of the industry. He informed that there was export of footwear of 2.73 billion USD in 2015-16 as compared to 2014-15(2.54 billion USD). Leather and accessories had export value of 3.12 billion USD compared to 4.00 billion USD in 2014-15. He informed that European Union (56%) has the largest share of exports in 2014-15. The major 12 markets which together accounts for nearly 76% of India’s total leather and leather products are:-

Germany

USA

U.K.

Italy

France

Hong Kong

Spain

Netherlands

China

Denmark

UAE

Belgium

India is one of the few countries in world with capabilities in:

– Uniqueness of Leather – Fashion Choice

– Fine Quality of Skins – Abundance of Human Resource – Easily Accessible Raw Material – Prevalence of Production Chain from Village to Fashion – Versatile Bio-Polymer Collagen – Policy Support from the Government – Encouragement by International-Development Agencies

Shri Sanjay Kumar, Regional Director – North, CLE presenting a power point presentation on Indian Leather Sector

He further explained about different leather sectors.

1. Finished Leather India’s F/L Export 1.33 billion USD in 2014 F/L is 20% of Total Indian Leather Sector Export 41% of 2.3 billion sqft Indian production is exported China (41%)and Italy (13%) are the largest importers from India Major tanning clusters are Chennai, Ambur, Ranipet, Kolkata, Kanpur, Jalandhar etc 2091 tanneries – 45% in Tamil Nadu, 26% in West Bengal, 18% in Uttar Pradesh Availability of best tanning technology – Eco-sustainable tanning processes Indian colors continuously being selected at the MODEUROPE Congress

2. Leather Garment

Estimated annual production capacity is 16 million pieces, which accounts for 11.76% share of India’s total export

Share in Global Production – 33.33% (Global Production : 120 million pieces) 2nd Largest producer in the world after China (70 mn Pieces) 3rd largest exporter to the world after Italy & China. Moving from general bombers to fashionable garments. Designs and patterns with leading brands – working on entire programmes ARMANI, ZEGNA, ABERCROMBIE & FITCH, MARCO POLO, MANGO, COLEHAAN, ANDREW

MAARC, GUESS are some of the leading brands Germany is a major export market for leather garments India has captured 20% of market share in both German and EU markets Other markets for India are Italy, U.K., U.S.A. France, Spain and Netherlands. Denmark,

Switzerland and Canada are among latest export destinations

3. Leather Goods Leather goods export share is of 22.87% This product segment includes the products like bags, handbags, hand gloves, industrial

gloves, wallets, ruck sacks, folios,brief cases, travel ware, belts, sports goods, upholstery saddlery goods etc

Estimated annual production capacities 63 million pieces of various leather articles 52 million pairs of Industrial gloves 12.50 million pieces of Harness & Saddlery items It accounts for 24.56% share of India’s total export Major production clusters are in Kolkata, Chennai, Kanpur, Mumbai etc

Over 9% share in world saddlery market.

Over 2% share of Indian leather export industry

4. Footwear Industry India 2nd largest footwear producer after China produces Leather Shoes 1009 million

pairs & Exports 115 million pairs Footwear comprises about 43% share of India’s total export Growing at about 10% annually. Major clusters at Chennai, Ambur, Ranipet, Kanpur, Agra, Mumbai, Delhi and Karnal

5. Non-Leather Footwear

Large production of Non-Leather Footwear - 1056 million pairs Huge domestic retail market Out of total 2065 pairs of footwear produced in India,

1950 million pairs (95%) are sold in domestic market.

He further elaborated on Role of CLE for the development of Industry:

Hand holding role- Promotion , facilitating FDI into India, JV, Technical collaborations & strategic alliances

Disseminating market information, trends & policy.

Participating in major Intl fairs & specialized trade shows across the globe, BSM in India and abroad besides B2B meets in focus countries.

Offering technical, marketing & design assistance to Indian exporters.

Inviting key resource personnel

vital connecting link between the government and the industry

He also briefed on Infrastructural Development Projects Taken by CLE:-

Ambur Trade Centre

Testing Laboratory at Kanpur Unnao Leather cluster

Multi Skill Dev. Centre at Kanpur Unnao Leather Cluster

Common Facility Centre at Jalandhar Leather Cluster

Testing Laboratory at Ranipet Leather cluster

Agra Trade Centre - Testing Lab. & Design Studio at Agra

Lastly, the target for Leather Industry under “Make in India” by 2020 is as follows:

Details 2015-16 2019-20

Exports 6.50 15.00

Domestic Sales 6.00 12.00

Total Turnover 12.50 27.00

Subsequently after the presentation of Shri Sanjay Kumar, Dr. R. Aravindhan, Scientist, Central Leather Research Institute (CLRI) presented a presentation on Finished Leathers. He informed that leathers are assessed under 13 different categories as per the Public Notice No. 21 / 2009-14.

I – Leathers with Finishing Coat

Finishing coat shall contain a film forming material/ binder in combination with colorants such as pigments or dyes or a combination of both.

Leather sample to be examined is placed on the stage of the microscope with the grain facing the objectives and then the surface is focused.

If finish coat is sprayed on the grain surface, it will be present throughout, including depressed areas and both the depressed and other areas will produce the same type of reflection which is clearly visible under the microscope.

II – Suede Leathers and III – Nubuck Leathers

Buffing – An operation to produce a clean flesh surface to produce nap on leather by the action of emery wheel or a buffing machine.

Snuffing – The process of buffing the grain side of leather usually done by buffing machine, with visible evidence of removal of grain.

Shaving – A mechanical operation of reducing the substance of leather to uniform thickness by scrapping off layers from flesh or grain side

IV – Lining Leathers

Thickness less than or equal to 1.0 mm Dyeing in light/pastel/medium/dark shades o in the case of doubt, the presence of dye to be ascertained by chromatographic

technique o For skins finishing is compulsory o For hides of bigger size finishing is not compulsory

V – Gloving Leathers

Thickness should be less than or equal to 1.0 mm and run should be minimum of 15% a. Tanning b. Dyeing (optional c. Fatliquoring d. Wax coat “Run” is non-elastic stretch which gives the comfort to the

customer while wearing a leather glove.

VI – Burnishable Leathers

Burnishable Effect – Rubbing on grain surface of leather should show a distinct gloss with a darkening of the shade giving rise to a burnishing effect. Minimum CIE ΔL value of – 5.0 on 10 dry rubbing on SATRA or any other fastness tester.

Pull up Effect – Leather shall produce a distinct pullup effect showing a contrast light color from the base minimum CIE ΔL value of +5 as measured by the reflectance spectrophotometer.

VII – Oil/Wax Pull up leathers

VIII – Heavy Leathers (Sole, Harness, Belting)

Heavy Leathers including sole leather, harness and belting leathers (Bovine hides/sides including butts and bends).

Heavy substance with thickness of 3.0 mm or more and with minimum apparent density of 0.9 gm/cc.

Vegetable Tanning

IX – Hair/ Wool on Leathers

X – Laminated Leathers

XI – Chamois Leathers

XII – Shrunken Grain Leathers

Should have pronounced change in the grain pattern/texture of grain Dyeing (in the case of doubt, the presence of dye to be ascertained by chromatographic

technique Wax coat

XIII – Wax/ Oil Coated Leathers

Wax particulate matter should be seen under Microscope (100x) after the application of xylene on the grain surface.

A small drop of xylene is placed on the surface of the leather. The surface is scrapped gently using a glass rod. Leather is left for 2 or 3 minutes.

The dried leather surface is observed under microscope for the presence of wax crystals on the surface.

Dr. R. Aravindhan, Scientist, CLRI giving a power point presentation on Finished Leathers

Dr. R. Aravindhan also showed samples of leather in order to explain about different types of leather and norms associate with different leathers.

Dr. R. Aravindhan, Scientist, CLRI showing samples of leather to custom officials and members of the leather industry

Shri Gursimerdeep Singh, COA Member, CLE from M/s. Jalandhar Leather (India) Pvt. Ltd, Jalandhar is a manufacturer and exporter of Finished Leather. He raised his concern regarding problems to get certificate from CLRI for naked finish/drum eyed/Aniline leathers. These types of leather are mostly used for high end shoes/hand bags and such leathers appear to be crust leather. CLRI only certify to such leather which is having a top finishing coating onto it. Due to this problem the company faces tough competition from other countries such as Bangladesh, Indonesia, Russia and Ukraine. From these countries naked drum dyed leather can be bought easily but from India the naked leather has to be export with finish coating over it. He suggested that a technical team or by some other medium this problem should be worked out so that Indian Leather Industry can be able to compete with other countries. He also showed a sample to Scientist, CLRI in order to have further clarification about type of leather covered under CLRI norms.

Shri Gursimerdeep Singh, COA Member, CLE from M/s. Jalandhar Leather (India) Pvt. Ltd, Jalandhar raising a query regarding regarding problems to get certificate from CLRI for naked

finish/drum eyed/Aniline leathers

Shri Puran Dawar, Regional Chairman – North, CLE replied that this matter should be taken to DGFT as the officials of DGFT can only explain to this query. Shri S.R. Baruah, Commissioner (Custom), New Custom House, New Delhi suggested that the consignment should be bought by the exporter only when they get certificate from CLRI. He also asked the custom official to give pending list of such cases where the consignment is held due to non – submission of CLRI certificate.

One of the custom officials raised a query sample leather gets certification for only one colour when consignment of two or three colour arrive then we have to clear the consignment as with naked eye nothing is clear and we have to depend totally on certificate given by CLRI for one colour. Shri Puran Dawar, Regional Chairman – North, CLE suggested that in such cases a sample should be drawn and given to CLRI for certification for each colour.

Custom official raising his concern on certificate provided by CLRI for sample leather of one colour

Shri Rajesh Kumar Sehgal, COA Member, CLE from M/s. Oom Exports, Agra raised few queries as follows:

1. The process of air cargo is smooth but the problem comes when the concerned officer is not at his/her desk. Shri S.R. Baruah clarified that sometimes concerned officers have to be present in a meeting but if such problems are faced on a regular basis then this should be informed to the custom and necessary action will be taken against this.

2. The request for amendment in the papers taken 4-5 days which is a time consuming process. Shri S.R. Baruah replied that soon the whole process will be online helping the exporters in ease of doing business.

3. While exporting a leather product problem comes when the product is manufactured with a combination of leather and synthetic material. He suggested that some government bodies like CLRI, CLE and FDDI should give their certificate along with consignment. One of the custom officials in relation to the issue addressed conveyed that it is difficult for the custom officials to differentiate between a leather and synthetic product. Shri Puran Dawar informed that a leather product contains 60% leather which is visible by a naked eye. Shri S.R. Baruah suggested the custom officials that when they face such doubts then a sample should be drawn and sent to FDDI or CLRI for certification after which the consignment can be cleared. Dr. R. Aravindhan, Scientist, CLRI conveyed that we will give certificate for such products specifying the percentage of leather and synthetic material that a product is made up of. Shri Puran Dawar requested the Commissioner, Custom not to make this process compulsory as this will hamper the process of ease of doing business.

4. The next issue raised was regarding pilferage/theft from the consignments of export from Airport, Custom, New Delhi. Shri S.R. Baruah assured such incidents will not be tolerated and necessary appropriate action will be taken against the concerned person. He asked Shri Sanjay

Kumar, Regional Director – North, CLE to give details of consignment of member exporters where such type of incidents happened within last 3 months.

Shri Rajesh Kumar Sehgal, COA Member, CLE from M/s. Oom Exports, Agra raising queries

Shri Motilal Sethi, NRC Member, CLE from M/s. Saroj International Leathers Pvt. Ltd, New Delhi raised his concern regarding problem of valuation of products at the time of clearing consignment. Such valuation affects the drawback for that particular product. Purchase order, invoice of the product and all other necessary documents are provided to the custom but still the shipment is held which results in loss of business. He suggested that export declaration should be taken on face value so that shipment can be cleared at the earliest. Shri S.R. Baruah conveyed that the matter will be taken in the meeting with senior custom officials.

Shri Motilal Sethi, NRC Member, CLE from M/s. Saroj International Leathers Pvt. Ltd, New Delhi raising his concern regarding problem of valuation of products at the time of clearing consignment

A view of the audience

Shri Manoj Tuli, COA Member, CLE from M/s. P&G Enterprises Pvt. Ltd. conveyed that classification of leather is not clear among customs and courier officials resulting in problems to get the consignment clear on time. Shri S.R. Baruah informed that this issue will be addressed to Commissioner (General) who will look into this matter and take the necessary action.

Shri Manoj Tuli COA Member, CLE from M/s. P&G Enterprises Pvt. Ltd. conveying difficulties to get the consignment clear on time

One of the custom officials of drawback raised a query on faux leather. He informed that faux leather is imported with China and mixed with indigenous leather. Such type of activity benefits the exporter as he gets drawback of Rs. 900/- for one jacket. In this case how can we identify that whether it is faux leather or not. Shri Puran Dawar replied that in such cases testing should be done by drawing a sample and sending it to CLRI for getting certification for that product.

Shri S.R. Baruah requested CLRI to hold workshop training programme for custom officials as this will help them to enhance their knowledge and will give them a clear view about different types of leather. Moreover, such interactive session should be organized between exporters and custom officials on a regular basis so that problems can be addressed and solved at the right time.

Shri Puran Dawar, Regional Chairman – North, CLE in his key note address welcomed Shri S.R. Baruah, Commissioner (Custom), New Custom House, New Delhi, custom officials and members of the leather industry. He thanked Shri S.R. Baruah, Commissioner, Custom for organizing such interactive session in order to address the issues faced by the member exporters of the leather industry. He conveyed that there are some issues while exporting but this can be solved by taking necessary steps. He also suggested that an official of FDDI or CLRI can be deputed to airport for testing leather which will help in smooth functioning of import/export process.

Shri Puran Dawar, Regional Chairman – North, CLE giving a key note address at the interactive session with Custom

Shri Sanjay Kumar, Regional Director – North presented a formal vote of thanks. He thanked Commissioner, Custom for organizing this session for members of the industry. He suggested that a nodal officer can be appointed who can solve the issues between custom and the exporters. He thanked the members of the leather industry to participate in this important session.

Shri Sanjay Kumar, Regional Director – North, CLE presenting a formal vote of thanks