Covid takes the shine out of Dharavi’s leather industry

The leather industry of Dharavi runs the household of thousands of artisan families. (Photo Credits: Mumbai Dream Shop)

When the Covid pandemic struck India in early 2020 many public health experts expected Mumbai’s’ Dharavi to be one of the most affected areas in the country.

Spread over 2.1 square kilometres and with a population of 1 million, Dharavi is one of the most densely packed slums in the world. A majority of the residents use community toilets, while homes and factories coexist in the slum’s narrow lanes. Social distancing is an impossibility here.

To everyone’s surprise the Dharavi’s Covid record turned out to be much better than many other areas with much better infrastructure and resources. Since the beginning of the pandemic and as of late June 2021, the area had recorded only 359 deaths, a small fraction of the over 15,889 deaths registered in the city in the same period.

COVID Response Watch LogoThough the health impact has been mercifully small the economic impact of Covid on Dharavi has been devastating. One example of this is the area’s leather industry, which is today on the brink of collapse due to a drastic fall in sales as customers shy away from visiting the production units to place orders.

Dharavi  has multiple small-scale industries like garments, leather tanneries, soap makers, potteries. Pegged at nearly Rs 6,000 crore per year there are more than twenty thousand small businessmen and producers in the leather industry alone.

” Leather is the main business here and we had customers from many other states and the officials of big companies coming to the market in Dharavi to buy goods. But, now the market has gone cold,” says Shammi Shaikh, a small businessman associated with the leather industry in Dharavi.

According to him the leather business in the area was suffering even in the pre-Covid days due to the new Goods and Services Tax (GST), levied on supply of goods or services or both at each stage of the supply chain starting from manufacture or import and till the last retail level. Introduced by the central government in 2017 to merge all taxes levied by the Central or State Government, the new GST rates and paperwork requirements have raised costs of operation of small businesses across India and also resulted in loss of clientele.

As another leather trader Rajendra Bhoite says, “When the leather industry here was slowly emerging from the crisis at the time of demonetisation, the government imposed GST. Though the GST rate was reduced from 28 percent to 18 percent even this is too much for us.”

Many leather merchants of Dharavi admit that  since leather goods do not come in the category of essential items the demand for them has decreased in the current crisis period.

After demonetisation and implementation of GST, now the leather industry has suffered heavy losses due to corona epidemic. (Photo Credits: Gautam Raj KJ)

Satish Khade, a trader in this area, says, “The demand for leather goods has been declining for a few years. The reason is that leather goods are expensive. So the common customer looks for cheaper alternatives and buys them. That’s also why the number of customers coming to Dharavi to get leather goods is decreasing.

“For many months, there have been very few people coming to buy our goods. The condition is such that we have been selling goods even after taking a little loss, just to keep the business going,” . says small leather trader Balasaheb Kharat who has been in this industry for thirty-two years.

The coming of the Covid pandemic has further devastated the leather producers of Dharavi with sales coming to a halt since the imposition of a national lockdown in April last year. Many leather workers, fearing spread of infection, migrated out of the slum area with their families, back to their villages in different parts of India, effectively shutting down the industry for over six months during the first wave of Covid.

Further,  the profits of the leather businessmen here depend on the agreements they get into with big companies, which are able to market or export them better. But, the business of such companies was also affected due to the Covid lockdown, resulting in a massive layoff of employees and closure of companies.

There are a few companies that are still doing business but Dharavi’s leather goods producers are finding it difficult to fulfil orders due to shortage of staff,  particularly in some of the more skilled areas of work. Many of the workers who left the area have not returned, instead finding work wherever they migrated back to.

Describing the troubles of a small leather trader from Dharavi, Rajendra Bhoite says that he has to spend up to fifty thousand rupees every month for renting his workshop and other utilities. If there is no income then it is very difficult to bear this much expenditure so they have no option except to close shop.

“The environment that is required for business is not there and it is not easy to create such an environment again. It takes a lot of time,” he says.

The lack of orders in turn has also rendered those leather artisans still living in Dharavi jobless.

Ganesh Doifone, a wholesaler of leather goods, says that he has been associated with this business since 1988, so he is able to somehow run a household with his savings even during  lockdown.

“The real problem lies with the artisans, as they usually cannot earn enough to save enough and feed their families without working for many months,” he says.

Shirish Khare has been associated with rural journalism for a long time and has been continuously reporting on the economic, social and health impacts of rural life during the Covid pandemic.

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