Global Crisis, Environmental Volatility and Expansion of the Indian Leather Industry

Indian leather industry has massive potential for generating employment and achieving high export-led growth. However, the on-going global economic peculiarities pose both threat (of market loss) and opportunity (to gain some unanticipated demand in the market) before it. On the other hand, its economic performance has not been assessed much till date. The present paper makes some policy prescriptions regarding the expansion of the industry by examining technical efficiency (TE) as well as scale efficiency of individual leather producing firms for some selected years since the early-1980s. Analysing the data through the Data Envelopment Analysis the paper observes a significant positive association between a firm’s size and its TE. On the other hand, our analysis does not show any conclusive evidence for the majority of the firms whether they are either too small or too large relative to the most productive scale size (MPSS) of the respective years. Considering the possible demand side effects on the industry to be exogenous, analysing the relevant supply side factors the paper suggests the policy makers to go forward in expanding the industry, particularly keeping India’s severe unemployment problem, of both skilled as well as unskilled labour forces, in mind.