CHENNAI: The ban on sale of cattle for slaughter will cause a shift in the sourcing pattern for the leather industry in the state, say industry players. Tamil Nadu, which relies on imported and locally-sourced cow and buffalo hide and locally sourced skin from goat and sheep, will compensate for the reduction in raw material by further increasing the imports. It is a double-whammy for the export market. With import prices slated to go up, owing to GST imposed on finished leather and raw hide, procuring leather will be more expensive. "Initially , it was zero rated duty on imports. Now, with the GST rolled in, finished leather would be costlier by 12% and the price of raw leather would go up by 5% owing to the import duty. We are seeking a clarification with the government to reduce or remove the duty," said vice chairman of Council of Leather Exports, Aqeel Panaruna.
Even without the import duty, raw materials imported from Brazil and Argentina cost 25% more than locally sourced materials. Panaruna said that with a virtual ban on cow slaughter from beforehand, buffalo leather was preferred by exporters and buyers. "Usually weak animals, mostly buffaloes, were slaughtered for raw materials," he said.
However, Tamil Nadu is better positioned, compared to Uttar Pradesh, which relies more on hide from buffaloes and cows. Factories in Tamil Nadu, which use between 40-50% of locally sourced leather from goat and sheep, look to increase this alternative avenue. "Products made using goat and sheep skin have a different texture compared to products made from buffalo hide, which is preferred because of less wastage. For leather exports 50% of raw material is sourced locally, out of which 80% is already procured from goat and sheep and the rest from cows and buffaloes. If we increase the reliance on imports, there will be a 5% increase in cost of raw materials," said director of Farida Group of Companies, Israr Mecca.
With 400 tanneries, Tamil Nadu accounts for 40% of the total exports from the country.
Source: timesofindia.indiatimes.com