Dharavi Leather Craft

Yogesh Kumar, B.F.Tech (Apparel Production), BFT/16/L4

Mentored By : Professor Dr. A.K. Khare
National Institute of Fashion Technology, Mumbai
Abstract: Leather industry is a traditional industry. Dharavi is regarded as, 'Asia's largest slum area,
Dharavi is well-known for its flourishing leather industry. In fact, leather goods made in Dharavi are
exported worldwide. From leather shoes to bags to belts, you name it and they are all available here. This
report is based on the study done on Dharavi Leather Craft. It describes the evolution of Dharavi Leather
craft, Current scenario, Supply chain and its potential in export market.

Introduction_______________________________________________________

Dharavi is a locality in Mumbai, Maharashtra, India. It houses one of the largest slums in the world.
Dharavi slum was founded in 1882 during the British colonial era. It is currently a multi-religious, multiethnic, diverse settlement. Estimates of Dharavi's total population vary between 700,000 to about 1
million. It exports goods around the world. Leather, textiles and pottery products are among the goods
made inside Dharavi by the slum residents. The total annual turnover has been estimated at over US$1
billion.1
Brief Description of Dharavi Leather Cluster
Most persons involved with the leather industry are UP Muslims or Muslims/ Hindus from Tamilnadu.
There are a number of Maharashtrians also making bags and wallets. Dharavis main leather business
today is of finished goods, there being about 30 large leather goods manufacturers and about 5,000 persons
doing job work.2

Mumbai, Maharashtra

Dharavi, Mumbai

Leather Goods Shops Lining the streets of Dharavi

1

Life in a Slum". BBC News. Retrieved 5 March 2010.

 The Leather Value Chain____________________________________________

The leather industry utilizes the by-products of slaughterhouses and transforms the raw material into
various types of leather and manufactured end products. The leather production consumption chain has
three processing stages, each requiring different combinations of materials, inputs, labour and capital.
The first stage is the recovery of raw materials that has direct links with animal production activities.
Hides and skins are recovered from dairy, draught animals or animals from slaughter houses.
The second stage is leather tanning and finishing, which involves capital intensive operations. The third
stage is the production of leather products, which is a labour intensive activity. These three processing
stages are linked to key commercial components of the chain, such as the marketing of intermediate
inputs, components and end products, trade and consumption. The various inputs to the chain without
which the chain cannot operate competitively are qualified labour, design and art centres, components
production, access to chemicals, technical and administrative support institutions, research and
development, training and a set of adequate policies.

Sources of Raw Material_____________________________________________

In the sixties there were about 55 to 60 tanneries. Presently, there are about 10-12 tanneries which are
operational. Over the years these have also shrunk in size. The existing tanneries do not treat the leather
completely They source vegetable tanned hides or semi tanned leather from within Maharashtra
(Baramati, Meeraj) or from Chennai, Kanpur and Kolkata and then carry out only the finishing work.
Some manufactures also use cheap, imported synthetic leather from China.

Manufacturers_____________________________________________________
Currently, Dharavi houses over 5000 leather goods manufacturers (each unit employs between5 to 20
employees). While on the one hand the Government has ordered closure of tanneries, on the other hand
the leather goods manufacturers have been given tenements to facilitate and promote manufacturing
activities. Thus, in spite of closure of tanneries the demand for leather has been increasing over the years.
Under the circumstances, the manufacturers have three options of sourcing inputs
i.
ii.
iii.

Use the cheap, low quality leather processed at Dharavi,

Use high quality, expensive leather processed at Chennai, Kolkata or Kanpur.
Use the cheap, imported synthetic leather from China

Manufacturers using i. and iii. Sources to meet the requirements of local market and use ii. Source to meet
the requirements of export market.

Major Leather Products of Dharavi___________________________________

Major Leather Products of Dharavi are
1. Leather Bags
a. Briefcase
b. Handbags
c. Wallets/Purses/Potlis
d. Suitcases
3.

Shoes
- Slippers/sandals

2. Leather Accessories
a. Belts
b. Wine Box
c. Watch Box
d. Jewellery Box etc.
4. Apparels
- Leather Jackets

Finished leather goods have taken over as the main leather-based business. As you come to the end of 90
Feet Road and turn onto the Sion-Mahim link road, you see gleaming leather showrooms with names like
Jazz, Leather corner, Hide Gallery, First Choice on either side of the road.

Behind their plate glass windows are displayed the latest designs in leather handbags as well as briefcases
and suitcases. Within their air-conditioned confines you find wallets, belts, photo-frames and all manner
of leather goods.
Many of these are new products made for retail or surplus or rejects from export orders placed with
leather goods manufacturers in Dharavi. They sell these goods at half of what you would pay in similar
shops in south Mumbai. Bargaining is the norm. Everyone works on narrow margins and is willing to sell
the same product for a marginally lower price. Price of these products cant fixed it varies. Price is
depending mainly on the quality & kind of Leather is in manufacturing the product.
Leather bags: Starting Rs 900
Leather jackets: Starting Rs 4,500
Leather belts and wallets: Starting Rs 200

Export Potential____________________________________________________
The Leather Industry holds a prominent place in the Indian economy. This sector is known for its
consistency in high export earnings and it is among the top ten foreign exchange earners for the country.
With an annual turnover of over US$ 12.50 billion, the export of leather and leather products increased
manifold over the past decades and touched US$ 6.5 billion during 2014-15, recording a cumulative
annual growth rate of about 13.10% (5 years).
The Leather industry is bestowed with an affluence of raw materials as India is endowed with 21% of
world cattle & buffalo and 11% of world goat & sheep population. Added to this are the strengths of
skilled manpower, innovative technology, increasing industry compliance to international environmental
standards, and the dedicated support of the allied industries.
The leather industry is an employment intensive sector, providing job to about 2.5 million people, mostly
from the weaker sections of the society. Women employment is predominant in leather products sector
with about 30% share.

Traders___________________________________________________________
Dharavi hosts around 120 small and medium traders operating in a totally unorganized fashion. Of these
only 30-35 traders are registered. Due to non-standardisation of material and labour cost, the price of the
manufactured leather goods varies substantially. This coupled with tax evasion by non-registered traders
further widens the price disparity. Some of the traders are in an advantageous position as they have their
own manufacturing units which gives them cost benefit. A meagre number of traders are in the business
of direct export, a few others export through export houses/agents. The unorganized nature of the market
leaves a lot of scope for manipulation by a few biggies in the business.

Labour Feasibility/Source____________________________________________

Most persons involved with the leather industry are UP Muslims or Muslims/ Hindus from Tamilnadu.
There are a number of Maharashtrians also making bags and wallets. A singular exception is the Parsi,
Darab Pedar, estimates the annual turnover in the raw leather business in Dharavi to be around Rs.60
crore.

 Support Agencies___________________________________________________

i.

LEATHER INDUSTRIES DEVELOPMENT CORPORATION (LIDCOM)

ii.

LEATHER GOODS MANUFACTURERS ASSOCIATION (LIGMA)

iii.

DHARAVI ENTIRE LEATHER GOODS TRADERS ASSOCIATION (DELTA)

iv.

MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION

(MSSIDC)

v.

COUNCIL FOR LEATHER EXPORT

SWOT Analysis of Dharavi Leather

Strength
Abundant availability of skilled manpower
Cheap labour
Ability to make leather goods in small batches
Custom made leather goods
Lower conversion cost
Proximity to market closely knit social circle.

Weakness Unorganized & Tiny units

Lack of negotiating power
Inefficient supply chain most of the raw material are brought from far flung towns / cities
Illiterate man power
No formal training available to the manpower
Multiple constraints due to lack of access to finance

Opportunitieso Rising potential in the domestic market

o Growing fashion consciousness globally
o Use of information technology and decision support software to help eliminate
the length of the production cycle for different products
o Use of e-commerce in direct marketing

Threats Lack of warehousing support from the government

International price fluctuation
Huge labour force resulting in high labour charges
Lack of strong presence in the global fashion market
Unawareness of international standards by many players