The last three years has seen the world turmoil and we look forward to the new millennium with hope and wonder at what lies in store for us in a technology dominated era. One can expect our own industry also to be technology driven with the emphasis on cost, quality and service. The crisis in the Far East followed by the South American and Russian financial crisis and the continued slowdown in the West European economies more so Germany and Italy has most definitely had an effect on our consumer driven industry. According to world market reports, consumption of leather garments have dropped between 40-50 per cent in the last two years and consumption of leather footwear has also dropped by 20-30 per cent in the same period. This does have a direct bearing on the health and success of the tanning industry. We understand, in Italy production has dropped by 25 per cent in the tanneries in the last two years and the turnover has dropped by 15.5 per cent this year alone. Along with this, the enormous use of non- leather materials in the traditional area of leather products has also to a great degree had a direct bearing on the tannery capacity utilisation all over the world. We understand the world tannery capacity (including India) utilisation, hovers around 50-55 per cent for the last two years.

The future is not entirely one of pessimism. The crisis in the Far East economies is nearing its end though Europe is yet to take off. There is definite information that the trends for the oncoming seasons show reduced use of fabric and other non-leather materials in footwear and small leather goods and the change towards an increase in use of leather has been forecast. This latest piece of information received from Italy should translate itself into business from Autumn-Winter 2000 onwards in most parts of Europe, in the Far East and USA with Germany always one season behind.

The traditional raw material available in India in the form of Goat skins and Buffalo not being in great demand and this forming nearly 70 per cent of our Finished Leather exports has affected the capacity utilisation of our tanneries. The increasing use of soft, casual and comfortable leathers have made in-roads into the demand for these materials. Traditional tanneries are specialised units, which are geared to produce articles from any one raw material. The reason for this can be due to the basic infrastructure of the tanneries, specialising in procuring a particular type of raw material and also due to the technical processes for each animal and leather type being greatly different

It is being increasingly noticed that fashions and trends currently evolve and change in a rapid manner and will continue to do so in future. So it becomes vital for the long-term survival and success of the tanneries to be more versatile, flexible and innovative and to be able to procure and manufacture two or more different leather types. It may sound strange but I am convinced that this is the way for utilisation of capacities sufficiently in tanneries to remain busy and profitable. This is a difficult road and it means the tanneries have to be armed with more information and technology and also need more investment. But it calls for an intelligent amalgam of products for a fast changing, fashionable and competitive world. Modernisation with flexibility is the way to meet with continued success.

The Indian leather and leather products industry showed a negative growth in rupee terms in the year 1996-97. The industry grew by 8 per cent in 1997-98 and by 13 per cent in 1998-99. A growth rate of 15 per cent is targeted far this year. An analysis of these exports will reveal that out of the total exports of Rs 7000 crore for the year 1998-99 the tanning industry has contributed nearly Rs.4500 crore through the combined form of exports of finished leather and leather used in the product exports. Many more hundred of crores of finished leather has been used in the products sold in the domestic market. Nearly 65-70 per cent of the value of exports has been the contribution of the tanning industry, giving us an insight into the importance of this section the growth of the leather industry. Such an important segment cannot be neglected, harnessed or hampered in anyway. Steps have to be taken to remove all impediments towards this growth.

Removal of the restrictions on import of second hand capital goods should be given top priority by the Council for Leather Exports. We understand that if a license is applied for, automatic clearance is given for import if the age of the machine is below 5 years and if valid reasons are given licenses are cleared for machinery under 10 years of age. All these are impediments need to be removed if the tanneries have to invest intelligently and prudently to meet the modem challenges in a cost-effective manner. Further, the tannery modernisation fund which we understand is now ready for disbursal should be released without any further delay in a scientific manner to be put to proper use immediately to gear the tanneries for the anticipated growth forecast in the new millennium.

The WTO agreements and its implications will be on us by the year 2002, which calls for the leather industry to be prepared to fall in line with its recommendations. We request the Council for Leather Exports to set up a separate cell to study these WTO recommendations and its ramifications. This would help the industry is prepare for the changes and be ready to evolve a mechanism to comply with the WTO agreements and to overcome our suspicion that the regulations are weighted heavily in favor of the developed countries. It also calls for a collective discussion on this issue, which we plan to hold at the time of IILF 2000 along with tanneries from other parts of the country.

One of the great successes of the Tamil Nadu tanning industries has been the rapid stride made in dealing with the environmental problems. Sincere and earnest efforts have been made by the tanners with the help of AISHTMA, CLRI, NEERI and UNIDO. Waste management systems and compliance cannot be done overnight. A great deal of work has been done under the leadership of Mr. Hashim, Chairman, Council for Leather Exports. But as Rome was not built in a day, so will a 100 per cent compliance of the norms of Tamil Nadu Pollution Control Board take its time. All efforts are being made to make it as short as possible. Reedbed technology, HRTS and the discharge of effluents into the sea through a pipeline are all technologies and proposals, which we hope, will help in finding a lasting solution to the vexed problem of total dissolved solids.

The Indian Tanning industry can be justifiably proud of its achievement at the Modeurop Congress with the development of colours and leathers. A great deal of background work and understanding of the fashion requirements has to be done before the correct leathers and colours are presented to the Congress. It is no mean achievement that every season a large number of presentation items are accepted and included in the Modeurop colours.

I wish all the new committee members and office bearers great success in the next two years.