Production in leather clusters down by 60% due to demonetisation: Assocham

Trade in major clusters of leather and leather products in India has been hit hard by the union government's move of demonetisation, according to Assocham. “There has been significant decline in arrival of animal hide, while tanneries in Chennai have recorded more than 60 per cent fall in skin arrival, other major leather clusters - Agra, Kanpur and Kolkata - have recorded more than 75 per cent decline in this regard,” noted the association’s survey-cum-analysis titled ‘Impact of demonetisation on leather industry’, which was released on Monday.

According to Assocham, the leather industry is reeling under stress as butchers are not providing animal hide for they are not being paid in cash, tanneries are not able to get the hide transported as they are not able to pay the drivers in cash, moreover shortfall in coal supply for boilers is also adding to the industry’s woes.

The association had interacted with representatives of about 100 tanneries in major leather clusters – Agra, Chennai, Kanpur and Kolkata in the last fortnight to assess the impact of the Centre’s move to demonetise Rs 500 and Rs 1,000 currency notes in November.

The Assocham analysis observed that leather industry in aforementioned centres has been facing grave difficulties in production activity due to demonetisation as they are unable to make payments on every level be it for raw material, for transportation and the workforce.

Majority of total respondents said that their production has declined by over 60 per cent while number of workers in leather factories in aforesaid cities has come down drastically by about 75 per cent as they are not being paid on time and even industries have also laid off employees due to lack of finances, highlighted the survey-cum-analysis.

About 60 out of 100 respondents said they are no longer taking export orders in wake of demonetisation as they would not be able to complete order on time. Many of the industry representatives in these clusters said that leather industry would take 9-12 months’ time to recover from this impact.