A Parliamentary panel has favoured financial support to the leather industry for improving infrastructure and upgrading technology to make the sector competitive globally.
The Parliamentary Standing Committee on Commerce in its report on development of the leather industry also said the government should set up more leather parks and SEZs to augment investment, production and marketing of its products.
"In order to improve competitiveness of the leather sector in the international market, the government should provide financial support ... Since major portion of the funds accessible top this sector come from internal sources of inherently family-owned business," the panel said.
On account of huge slump in the global demand, leather exports fell short of target by $400 million at $3.6 billion in 2008-09.
The US and Europe, which account for 70 per cent of India's leather exports, are facing the heat of global recession.
Forced by credit crunch and lower demand, many leather firms have cut down their costs by 20-25 per cent in the past six months, while few have also put down their shutters, an exporter said. The sector employs 2.5 million workers.