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May 16, 2000
The Rediff Business Special/Neena Haridas
Leather industry sees 'calculated move' to harm India's growing clout in world market
The Punihanis are millionaires, having made the most of a lone opportunity they got decades ago. But now they are only scared. And it is an animal rights group that has sparked off this alarm.
The India-Pakistan partition brought the Punihanis to Delhi. The Punihanis -- five brothers and their families -- had left Lahore with a just bag of clothes and a lot of hope.
They merged with the refugees in Delhi, and went looking for a livelihood. A neighbour introduced Manpreet Punihani to a leather shop owner, who promised a mark-up on every leather item sold. There has been no looking back ever since. Today, the Punihani Export House is a super-star trading house, with annual turnover in excess of Rs 3 billion.
Many such stories abound in the flourishing Indian leather sector today. India exports leather worth over $ 1.75 billion every year. But, today, the sector is at the crossroads, with animal rights activists and environmentalists questioning the ethics of the industry and exerting pressure on global retail chains to ban Indian leather goods.
"We are a 100 per cent export-oriented unit. We export leather apparel to big retail chains in the United States, Europe and Russia. Our clients include Armani, Calvin Klein, Macy's, etc. They give us their specifications and we cater to them. The retail chains then puts their tag on these goods and sell them at a premium," says Amarjeet Singh Punihani, managing director, Punihani Group.
"However, with the animal rights groups seeking a ban on Indian leather goods, we are worried. This will lead to big losses because we are not allowed to sell in the domestic market."
The government, in a bid to increase foreign exchange earnings, had encouraged export-oriented units by giving them tax benefits a decade ago.
Earlier this month, the US-based People for Ethical Treatment of Animals, or PETA, announced that it had persuaded three major retailers -- Gap Inc, Old Navy and Banana Republic -- to stop importing Indian leather since "the animals faced brutal treatment in India".
"The ban seeks to end the cruel treatment meted out to animals in India in the manufacture of leather products. Our campaign in this regard is part of the global movement to protect animal rights," says Jason Baker, coordinator, PETA India.
"Demand for cheap leather in the West has spawned a horribly cruel underground industry in India. Since it is illegal to slaughter cows and young cattle in most Indian states, corrupt skin-dealers use bribes to smuggle the animals at night across borders. Cows and calves are marched for days and crammed into lorries. Those who collapse have chilli peppers and tobacco rubbed into their eyes and their tails broken in an effort to keep them moving," he adds.
However, the leather industry sees this as a "calculated move" to jeopardise India's growing prominence in the world leather market. India's export share in the global market has been on the rise -- especially in the US, the UK and Germany -- in the recent past.
India's share in total leather imports by the US has increased from 1.37 per cent in 1995 to almost 10 per cent in 1999. Of the total Indian leather exports, which stand at around $ 1.7 billion a year, the US alone imports leather goods worth over $ 100 million from India.
Arnab Kumar Jha, vice-president of the Indian Leather Technologists' Association, or ILTA, too feels the ban imposed by Gap is the West's ploy to weaken the flourishing leather industry in India.
"The economic recession in South Asia notwithstanding, there has been a noticeable boom in the Indian leather industry. This, apparently, hasn't gone down very well with the US. Hence, this ploy to ban Indian leather," says Jha.
However, US Consul General in India, Christopher Sandrolini, clarifies his government's stand: "The manufacturers of leather goods in India need not be alarmed over what Gap has done. Although animal activists in the US have had a successful campaign back home, one has to draw a distinction between the action taken by the private companies and the government's stand.
"Please do not mistake it to be a part of non-tariff barriers. I do not want to say whether or not Gap is right in imposing a ban on Indian leather. However, even these companies know that sometimes the best way is to avoid confrontation. In any case, I can't see a global leather market without India's participation," Sandrolini adds.
Moti Lal Sethi, president Indian Leather Garments Association, says, "If the campaign by PETA continues, the leather garments exports would be imperilled. It would jeopardise the industry at home and lead to unemployment for about 1.7 million people. The turnover of the leather industry in India is about $ 2.5 billion annually, including export sales of $ 1.7 billion. India's market share in the $ 65-billion world trade in leather is about 2.5 per cent. The government will stand to lose a lot in terms of foreign exchange if things are not straightened out."
PETA, meanwhile, promises more aggression. According to Baker, the association will persuade Hush Puppies, Florshiem and other shoe retail chains to ban Indian leather.
And how does PETA plan to convince these retail chains against Indian leather?
"We have video tapes which show the brutality with which cows are treated in India. We have succeeded in showing these to people who come to shop at these retail outlets. Then, we also have support from celebrities such as Pamela Anderson, Kula Shaker, etc. They believe in the cause and are able to influence their peers and consumers," says Baker.
However, the moot question within Indian leather circles is why was India singled out for this protest.
Says M Mohamed Hashim, chairman, Council for Leather Exports, or CLE, "Interestingly, India is the only country which has a law on ethical treatment of animals. The country guarantees equal rights to animals to exist peacefully. So, if people engaged in the leather business are cruel to animals, they can be punished under Article 51 of the Indian Constitution.
"Pakistan, Bangladesh and China do not have any such laws. Hence, it is not entirely right for the activists to claim that only India is immune to the issue," he says.
Atul Aggarwal, a leading Delhi-based leather retailer, says, "This kind of ban will have long-term implications on our image in global markets. I don't think it is possible for people to just go and kill animals for their hide: the very economics does not work out. For instance, first the person requires a government veterinary doctor's permission to slaughter the animal. Anybody cannot just go and kill an animal and make money out of it."
"A healthy cow usually costs around Rs 6,000 to Rs 8,000, whereas its hide costs just Rs 300 to Rs 400. Why would anyone kill his cow worth thousands of rupees merely to obtain her hide, which will fetch him a paltry sum of Rs 300?" asks ILTA's Jha.
The CLE chairman said that hardly 10 per cent of leather derived from cows is used by the industry. Of this, 6 per cent is procured from fallen animals and 90 per cent is taken from buffaloes and goats.
"Nevertheless, we have asked the government to take action if animals are being treated cruelly. We are chalking out a detailed plan of action with appropriate government and non-government agencies -- including animal welfare boards and Society for Prevention of Cruelty to Animals, or SPCA -- to educate traders on proper methods of transport and slaughter of animals.
"I do not agree with PETA's claim that the value of hide derived from live animals taken for slaughter was more than 55 per cent of its total value. The value of hide never exceeds 10 per cent of the total value of the animal. It is, therefore, not true that slaughter of cows takes place at the instance of the leather industry," the CLE chairman says.
Cattle population in India is currently estimated at about 205 million. The annual production of cattle hides is only 21.72 million, representing 10.60 per cent offtake rate compared with the offtake rate in the US of 38.80 per cent, in Australia of 35.50 per cent, and in Russia of 34.90 per cent.
In these countries, animals are reared for meat, whereas in India, it is primarily for milk. According to a survey conducted recently, more than 60 per cent of the cattle hides coming to the market in India are from dead cattle.
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