OVERVIEW OF

PAKISTAN LEATHER
INDUSTRY










Submitted By:
Muhammad Shahid Raza
Muhammad Mushtaq Ahmed
Neseer Ahmed
Falak Sher



Submitted To:
Sir Aftab

Importance of Leather Industry In Pakistan
The second largest industry in regard to exports is the Leather Industry. Contributing more
than $800 million in 2009 to the foreign exchange in Pakistan, this industry has the potential of
delivering more and providing a large number of jobs by diversifying product range and
improving quality.

The leather industry in Pakistan is as old as the history of the country. During the colonial era
just a few number of tanneries were working in large cities such as Karachi, Lahore, New
Delhi etc. In the 1950s the number of well-equipped tanneries increased in Karachi, Lahore
and other major industrial cities. This number continued to rise for due to increase in demand
of finished products as well as raw material in the national and international market. There are
as much as 800 Tanneries in the country engaged in producing best quality finished leather of
Cow, Buffalo, and Sheep & Goat skins.. Leather manufacturers & exporters are determined to
increase export of quality finished leather and leather products.. Leather is one of a prolific
contributor to the countrys GDP and foreign exchange earnings, The Leather Industry of
Pakistan is employing more than 500,000 people directly or indirectly at this time of age

Leather industrys core products in Pakistan are leather garments, gloves, tanned leather and
footwear. In the 50s and 60s most of the tanned leather was exported in raw form but soon
after the local tanning industry making semi-finished leather made rapid progress in making
finished products due to availability of raw material, labor and growing demand in the foreign
market.

More than 450 units of leather garment manufacturers in Pakistan are producing approximately
5 million pieces against the production capacity of exceeding 7.5 million pieces. Similarly a
key sector in leather industry is the leather footwear industry which is capable of producing
200 million pairs annually and its current production is just 100 million pairs. Pakistans share
in the global skin and hides production is around 7% annually which can be doubled with just
the right amount of time and effort. One can assess that these statistics show the industrys
capabilities which are highly under-utilized.

Introduction and Background:

Leather industry, including leather products, is the second largest export earning sector after
textiles1 in Pakistan. Currently, this sector is contributing around $ 874 million2 a year but has
the potential to multiply volume of exports with the improvement of quality and diversification
in different range of products, specially garments and footwear. Leather garments and footwear
is a job-oriented sector providing employment to a very large segment of the society besides
earning foreign exchange for the country.
The leather industry consists of six sub-sectors namely, Tanning, Leather, Footwear, Leather,
Garments, Leather Gloves, Leather Shoe Uppers, and Leather Goods. The Tanning industry
plays a vital role in the progress of these sub-sectors by providing the basic material i.e.
leather. Today, Pakistan is among the leading countries in the production of Leather Garments
and Gloves. The leather and leather made-ups industry plays a significant role in the economy
of Pakistan and its share in GDP is 4%3. The leather finishing and made ups industries
represent an important sector in Pakistan, contributing almost more than half a billion US

dollars4 in foreign exchange earnings to the national exchequer. Export of leather and leather
items was $1.22 billion in 2007-08, $959 million in 2008-09 and $867 million in 2009-105.
These figures show that in the year 2009-10 exports have declined to 30 per cent of what
Pakistan was exporting in the year 2007-08 which is an alarming situation. Exports of 2010-11
have shown an upward trend but this was mainly due to higher prices leather in the
international market while in quantitative terms the increase was negligible. 1.5 million
animals were perished in 2010 floods and 95,523 animals were exported from July 2010 to
March 2011. This resulted in an acute shortage and increased prices of mutton from Rs270 to
Rs450 and beef from Rs154 to Rs350 per kg from 2008-09 to 2010-11.
The Ministry of Commerce has always been in favor of exporting value added products like
meat, its products and finished leather goods. The export of live animals affects local meat and
leather industry negatively. Therefore, the government is in the process of establishing Halal
Food Certification System in Pakistan. This will help Pakistan to enter in the $600 billion6
international market.
LEATHER INDUSTRY PROFILE:
INTRODUCTION
At the time of independence there were only a few tanneries producing sole leather at a small
scale. In the early days of independence some tanneries were established in Karachi. In 1950's
some were established in Lahore and adjoining areas. The industry has flourished rapidly since
then. During 1950s well-equipped tanneries were set up at Karachi and Lahore, while during
60s and 70s more units were established at Hyderabad , Kasur, Sialkot, Multan, Sahiwal and
Gujranwala. Starting with the production of picked and vegetable tanned hides and skins, the
tanneries, today are producing not only wet blue and crust but also fully finished leather.
PRODUCTION CAPACITY:
TOTAL PRODUCTION CAPACITY OF OVERALL TANNERIES IN
PAKISTAN
Particulars Estimated Production
Capacity
Actual Production Utilization Rate
Tanned leather 90 Million Sqr meter 60 Million Sqr meter 67%
Leather
Garments/Apparels
7 Million Pieces 5 Million Pieces 71%
Leather Gloves 10 Million pairs 5 Million pairs 50%
Leather Footwear 200 Million Pairs 100 Million Pairs 50%

Source: Pakistan Tanneries Association

NOTE: Against a capacity of producing 90 million square feet of tanned leather, the tanneries
are presently producing only 60 million square feet tanned leather per year8.
Presently, there are some 461 leather garments/apparels making units, which annually produce
some 5.0 million pieces against a capacity of producing 7.0 million pieces. The 524 footwear
units in the country are currently producing 100 million pairs against a capacity for producing
200 million pairs, while 348 leather gloves units are producing 5.0 million pairs against a
capacity of making 10 million pairs annually9. These statistics clearly show that the capacity
of this sector remains highly under-utilized.
7 Pakistan Tanneries Association Website (www.pakistantanners.org)

LOCATIONS OF TANNERIES AND MANUFACTURING UNITS IN
PAKISTAN
In Pakistan there are more than 2500 tanneries (registered& Un registered) and footwear
manufacturing units running in Pakistan. Over the years, the number of registered tanneries in
the country has increased from 529 in 1999 to 600 in 2003 and to 725 at present.These are
located in Karachi, Hyderabad, Lahore, Multan, Kasur, Faisalabad, Gujranwala, Sialkot,
Sahiwal, Sheikhupura and Peshawar10.The increase in the number of tanneries and increased
export can be attributed to increase in demand of tanned leather in the foreign market.

CATAGORIES OF LEATHER:

Leather Sector is divided into the following categories.

SOURCES OF RAW MATERIAL
Pakistan is fortunate that the raw material required by the industry is available in the country in
abundance. Local availability of raw materials and low wage cost gives the country a
competitive edge in the world market. In the leather industry the raw materials are by-products
of the meat industry, with the meat having higher value than the skin. Taxidermy also makes
use of the skin of animals, but generally the head and part of the back are used. Hides and
skins are also used in the manufacture of glue and gelatin. The primary sources of raw material
for the tanning industry are hides and skins from animals slaughtered for human consumption.
The following are the types of basic raw materials which are being used by this industry: -
Cow hides - Buffalo hides - Goat skins - Sheep skins.

1. Buffalo:
Buffalo is considered as the specialty of Pakistan in World, because of its ample availability in
Pakistan

2. Cow:
The cow material is considered a superior raw material upon buffalo because of its fine, tight
and comparatively uniform structure.

3. Goat:
It is good for making shoe upper leathers, garment and goods leather.

4. Sheep:
Leather made from sheep raw materials has a very good and softer touch and is considered best
for leather garments.
The industry meets 75% of its needs of raw hides from local sources while rest of the 25-30
per cent is met through imports11.Pakistan imports raw hides from Saudi Arabia, Iran, and
China, Dubai, Sudan, Kenya, Australia and Italy.

STAGES OF LEATHER FORMATION:

1. Warehousing and sorting
In the raw material area the skins are preserved in salt, stored in controlled cool rooms and
before processing, presorted for quality and weight.

2. Soaking
The skin is soaked to remove dirt and salt.

3. De-Fleshing
During this process tissue, flesh and fat remnants are removed by a roller mounted knife.

4. Liming
By adding lime and sulphur compound the hair is removed from the skin.

5. Bating, pickling, tanning
During bating and pickling the skins are treated with acid and salt in preparation for tanning.
During tanning the skin fibres absorb the tanning agents. That's when the skin becomes leather.

6. Samming
During this process water is removed.

7. Splitting
In order to achieve an even specified thickness the leather is reduced in substance. The
resulting split-leather can than be processed further as suede.

8. Skiving
The grain leather is brought to an even thickness. Irregularities are removed from the reverse
side and the leather is separated into color-batches.

9. Sorting
The leather is sorted into various quality grades.

10. Neutralizing, filling out, dyeing and greasing
The acid resulting from the tanning process is neutralized. Then the dyeing takes place, where
appropriate with anilin-dye-stuffs. The greasing procedure will finally achieve the correct
softness.


11. Drying
Two methods are used to dry leather. The vacuum process during which moisture is removed
by suction and the hanging process, when leather is hung and taken through ovens.



12. Staking
Following drying the leather is mechanically staked in order to soften it. Further processes take
place in preparation for finishing.

13. Finishing
Here the leather is given its final surface treatment and look. Through processes of base coat,
coloring, embossing, ironing the leather becomes, depending on the demands of fashion, matt
or shiny, two-tone or uni-coloured, smooth or grained. The art of finishing lies in working in
wafer-thin layers without disturbing the natural look of the leather and its characteristics such
as suppleness and breath ability.

14. Quality Control
In between every process quality is controlled. Final control checks to ensure each individual
production is to specification and sortation into various trades.

15. Dispatch
The leather is measured electronically, wrapped and dispatched.
PERCENTAGE EXPORT GROWTH OF THE WORLD

Years Leather Sector World Export (US $
Billions)
Growth
2007 89.16
2008 98.23 10.2%
2009 111.21 13.2%
2010 117.03 5.2%
2011 97.06 -17.1%
2012 116.82 20.4%
2013 139.48 19.4%

Total Export of Leather sector increased from the US $ 89.16 billion in 2006 to US $ 98.23
billion in 2006. 10.2% increase depicts the increased sales before the global economic
recession. In 2007 the world export increased by 13.2% and by 2008 the percentage increase of
the total world export started falling .This decline attributes to overall decline in sale of
Leather articles and garments due to global financial recession. In the year 2009 the export
growth declined from being positive at 5.2% to negative at 17.1%. The decrease in the leather
sector was mainly due to the Chinese Footwear and other leather articles Replica of major
brands using artificial leather instead of real leather. Their prices are less than one fourth of the
actual brands but they are true copies of the real brand. During the years 2008-09 Animal
activists were successful in campaigning to stop the use of animal skins. They argued that
animals and rare animals are being killed for the sake of their skins. A fashion show was also
held in Paris and the theme of that show was Say No to Skins . This leads to negative
export growth. Another major reason was the implementation of stringent SPS laws in the
developing countries. The law prohibits handling of agricultural goods and sea food with bare
hands. In the year 2010 Total world exports of Leather sector achieved a positive 20.4%
growth and an export volume of US $ 116.82 billion. This increase in the Leather exports was
due to fashion trend of wearing leather jackets and leather trousers. The fashion hype boosted
after the 2010 Gran Prix Moto Bike Championship in Europe and USA.
FACING PROBLEM :
Our manufacturing industry is heavily dominated by textiles and leather industries. The leather
industry is the second biggest export-oriented industry in the manufacturing sector and third in
the overall exports of Pakistan.
The current value of semi-finished leather and its byproducts sales is over Rs20 million, 65
per cent of which consists of tanning and dressing of leather only.
Unfortunately, neither any well-thought-out efforts have been made out in the past nor has the
importance of this sector ever been recognised by public and private sector.
Pakistan is losing its market share year after year, which is increasing the share of its
competitors: India, Bangladesh and China.
Fruits of the latest aesearch and sevelopment and innovations are not reaching Pakistan.
However, a few firms of this industry have increased product diversification on their own.
Pakistan faced 34 per cent decline in leather goods export last year, while India witnessed 20
per cent increase within the same period.
The Indian government has taken positive steps for its leather industry. Today, Indian leather
exporters have been able to increase 28 per cent exports.
Pakistan will only turn into a raw skin seller if the shift of technology and innovation remain
away from its leather industry for the upcoming years.
The cost of electricity in Pakistan is twice that of India, Bangladesh, China and Turkey.
Leather manufacturing is an uninterrupted process that requires a continuous supply of gas or
else valuable stocks may become rancid due to gas suspension.
The industrial sector has been facing gas supply shutdowns for the last two years. India and
Bangladesh cannot stand in leather quality to Pakistan but they are still enjoying multinational
investments due to stable law and order conditions.
According to the Beijing Times Magazine, Chinas leather industry is enhancing its
competitiveness by transforming its growth pattern.
In the next 10 to 20 years, China will change from a big leather production country into a real
brand titan.
The leather industry of Pakistan faces similar problems just like any other industry in the
country but it has massive potential for providing more employment, growth and exports than
any other industry.