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Pakistan caters to the world's demand for leather.
Leather plays a vital role in the economy of Pakistan and is the second largest foreign exchange earner for the country after textiles. The industry contributes at least five per cent to manufacturing GDP, seven per cent to total exports and provides direct employment to more than 200,000 people. There are more than 2,500 tanneries and factories, mainly located in Karachi, Lahore, Sialkot and Kasur. In the global market, Pakistan is well known for its wide range of finished leather garments such as sports jackets and gloves (working and industrial), rather than leather goods and accessories such as handbags and footwear.
Global demand
The reason behind the increase in tanneries in Pakistan is rising world demand for tanned leather. Since production of tanned leather in developed countries has decreased due to closure of tanneries or strict environment-control laws, the demand for leather from developing countries has been on the rise. At present, Pakistan produces 7.8 million hides and 38 million skins per annum. Animal skins are generally obtained from the provinces of Punjab and Sindh. Imported hides in limited quantities are also used. The large population of cattle, buffalo, sheep and goat gives Pakistan an edge in the international leather markets. Though India remains a major competitor of Pakistan, its leather does not enjoy as good a reputation in the global markets. Indian cattle have comparatively thinner skins and hides than those of their counterparts in Pakistan.
Pakistan's leather industry has been export-oriented for several decades. Until the 1970s, Pakistan exported raw hides and skins and semi-processed leather in the form of pickled, wet blue and crust leather. It was not until the early 80s that finished leather and leather products became major exports.
Pakistan's leather exports are mainly directed to the US, UK, China, Hong Kong and Korea. Says Bilal Khan Pasha, Commercial Secretary of the Consulate General: "In 2005-2006 Pakistan's total leather exports stood at $1.13 billion. In 2006-07 the figure has come down to $1.125 billion. This could be because of two reasons — low rate of livestock production and the fencing of the border between India and Pakistan. Earlier the porous border between the two countries allowed animals like cows from India to freely come inside Pakistan." Production has been particularly low in the footwear section, which many observers feel is due to the non-availability of quality tanned leather. The problem is further complicated by the fact that the footwear industry has not developed in the organised sector primarily due to the high capital investment it requires in terms of plant, machinery, labour and marketing.
Leather tanneries in Pakistan produce all three categories of waste: wastewater, solid waste and air emissions. However, wastewater is by far the most important environmental challenge being faced by Pakistan's tanneries. According to Pasha: "The government has set up cleaner production centres in Sialkot, Kasur and Karachi, which are the leather hubs. We have also installed combined effluent treatment plant in several areas, which helps in controlling environment degradation. Tannery wastewater is highly polluted and in many places the practice has been to discharge the water into the local environment without any treatment. The effluent treatment plant will help tackle this problem, and it has already started operations in Karachi. In Sialkot and Kasur the plant will be installed with help from the United National Industries Development Organisation. Buyers today have also become very conscious of environment safety. They will not purchase leather from those companies which are not certified."
Foreign investment
Pakistan's leather industry is very responsive to foreign direct investment especially by branded companies and to the growth of tourism. Development of the leather industries in Thailand (the largest exporters of hand bags) and Vietnam (second-largest exporter of footwear after China) is primarily due to these two factors. Failure to attract foreign investment and promote tourism will have a negative effect on the leather industry.
According to Pasha: "Other measures that should be adopted immediately by the exporters should include employment of skilled work force, especially for product design. Development and introduction of new products such as furniture and upholstery leather, fashion garments, fancy gloves, belts, handbags, suitcases, key chains and even leather jewellery will result in considerable boost to exports."
— Information Courtesy: Consulate General of Pakistan
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