``Indian tanneries are not equipped to handle such leathers and this is an area which needs urgent investment in plant and machinery and technology,'' Zackria Sait, chairman of Indian Finished Leather Manufacturers and Exporters Association (IFLMEA) and joint managing director of Presidency Kid Leather, told The Financial Express.

Modernisation is the only way to market leadership, he said and added, ``Modernisation will not only help the Indian tanning industry make a name for itself in the world as manufacturer of all types of leathers, but will also help the Indian product sector in bridging thegap which now exists between leathers that are in fashion and demand internationally and the leathers that are available in the domestic market.''

During the last 6-7 years, tanners were in the grip of fears of export quotas and other restrictions and have made no fresh investments. ``And this has affected the quality and variety of finished leathers produced in India'', he said. The only investment made was in setting up effluent treatment plants and now all functional tanneries have facilities for treating their effluents. Indian tanneries are mostly in the small-scale sector and family-owned. This is standing in the way of modernisation.But industry sources say progressive family-owned tanneries are adopting modern management methods and converting their units into limited companies or partnership firms.

``The Association along with the Council for Leather Exports has represented to the government to establish a modernisation fund for the tanning units - small, medium and large - to face globalcompetition in terms of quality, pricing and service,'' Sait said. CLE is also looking for raw material sources for the manufacture of heavy leathers. It has been successful to an extent in this search. A recent trade mission to Latin America found that Brazil and Argentina could be economic raw material bases for heavy leathers.

Sait said there was need for a conceptual change about the leather industry for its sustainable development. It should not be categorized into finished leather and products sectors with different yardsticks to measure different segments of the industry. About 50-80 per cent of most leather products are made up of finished leather. It is the most important component of the product.

India has always been known for its huge raw material base of goat and sheep skins and cow and buffalo hides and has over the years developed a reputation for economically priced finished leathers with a few pockets of sophisticated and expensive lathers. It has 10 per cent of the cattle population inthe world and 16 per cent of world tanning capacity producing 1800 million sq ft of leather annually. The export of finished leathers has declined by 3.77 per cent in 1997-98 to $287.80 from $299.08 in 1996-97. However it is expected to increase by 5-6 per cent in the current year.

Tamil Nadu as the leader of the leather industry tans and finishes all types of leathers. West Bengal is better known for its goat and cow hide tanning. Kanpur is an established centre for the production of finished leather from buff and cow hide and goat skin and is taking the lead in the export of economically priced finished leather and export of men's footwear for formal, casual and industrial wear.