




































Ecology, Economy and Society–the INSEE Journal 3 (2): 185–190, July 2020 

 
NOTES FROM THE FIELD 
 

Why Regulations Come Up Short? Some Observations 
from a Field Study of the Kanpur Leather Industry 
 

Aparajita Singh  and Haripriya Gundimeda  
 
1. INTRODUCTION 

Poor water quality adversely impacts the environment and public health. 
The quality of river water in India has been declining drastically. The 
number of ―severely polluted‖ river stretches increased from 34 to 45 
during 2015–2017 (CPCB 2018). CPCB (2019) has identified 17 categories 
of highly polluting industries, of which the leather industry is among the 
most damaging. Effluents from leather factories contain toxic chemicals 
such as chromium, sulphates, and chlorides. Exposure to tannery pollutants 
is hazardous to human health and can cause diseases such as stomach and 
lung cancer; further, improper disposal of pollutants can adversely affect 
soil and groundwater quality (Bosnic et al. 2000; Pure Earth 2016). 

The Government of India has set an upper limit for effluent discharge from 
leather industries and provides technical support to install effluent 
treatment plants to treat wastewater before it is discharged into water 
bodies. Despite stringent regulatory standards, the quality of water bodies 
remains alarmingly low in leather clusters. Thus, this study examines why 
regulations have failed in addressing the problem of leather pollution. We 
undertook a field study of Kanpur’s leather industry, one of India's most 
polluted leather clusters and a significant contributor of pollution in the 
Ganges (CLRI 2012). Our field survey of the tanning industry in Kanpur in 

                                                           
 Department of Humanities and Social Sciences, Indian Institute of Technology Bombay, 

Powai, Mumbai – 400076, India; aparajita.anchal@gmail.com.  

 Department of Humanities and Social Sciences, Indian Institute of Technology Bombay, 
Powai, Mumbai – 400076, India; haripriya.gundimeda@iitb.ac.in. 

Copyright © Singh and Gundimeda 2020. Released under Creative Commons Attribution-
NonCommercial 4.0 International licence (CC BY-NC 4.0) by the author. 

Published by Indian Society for Ecological Economics (INSEE), c/o Institute of Economic 
Growth, University Enclave, North Campus, Delhi 110007. 

ISSN: 2581-6152 (print); 2581-6101 (web). 

DOI: https://doi.org/10.37773/ees.v3i2.107  

https://doi.org/10.37773/ees.v3i2.107


Ecology, Economy and Society–the INSEE Journal [186] 

2018 showed that asymmetric information and the lack of incentives within 
environmental regulations are responsible for the industry’s unresolved 
pollution problem. 

 

2. KANPUR LEATHER INDUSTRY 

The Kanpur leather industry was founded at the beginning of the 
nineteenth century. It developed rapidly under British rule due to the 
demand for leather boots, saddlery, and harness equipment. Easy access to 
the cantonment area that was in continual need of military equipment, such 
as leather boots, the availability of water supply from the Ganges, labour, 
raw materials, and large areas of vacant land, led to the development of the 
cluster (CLRI 2012). Kanpur has two leather clusters—Jajmau in Kanpur 
city has 250 operational tanneries and Unnao, 35 km from Kanpur, has 50 
operational tanneries. 

The responsibility of ensuring that Kanpur leather tanneries conform with 
regulatory norms lies with the Uttar Pradesh Pollution Control Board 
(UPPCB), which records data on pollution and levies penalties on 
defaulters. About 85% of the tanneries operating in Kanpur are small scale 
and have a primary effluent treatment plant (PETP) to pre-treat their 
pollutant discharge before it is treated at a common effluent treatment plant 
(CETP). The UPPCB monitors two parameters of the effluent discharge 
from the PETPs—total suspended solids (TSS) and chromium (Cr), the 
permissible limits being 600 mg/l and 2 mg/l, respectively. We analyzed the 
UPPCB pollution data for 2013–2016 and found that 80% of the tanneries 
discharge effluents that meet permissible limits (See Table 1). The official 
data seemed quite puzzling given the severity of the pollution problem in 
the cluster (Mukherjee 2013; Parthasarathy 2016; Sengupta 2017; Koshy 
2018). The discrepancy compelled us to study the regulation and 
monitoring of these industries. 

 

Table 1. Number of tanneries in non-compliance with effluent standards 

   Region  
Year 

Jajmau Unnao 

2016 20 out of 198 (10%) 8 out 42 (19%) 

2015 28 out of 173 (16%) 7 out of 47 (14%) 

2014 26 out of 129 (20%) 12 out of 43 (27%) 

2013 14 out of 105 (13%) 10 out of 43 (23%) 

Source: UPPCB Kanpur 



[187] Aparajita Singh and Haripriya Gundimeda 

3. ISSUES OF ASYMMETRIC INFORMATION AND 
INCENTIVE COMPATIBILITY WITHIN REGULATIONS 

The objectives of our field study were two-fold. Firstly, we studied the 
loopholes in the monitoring of pollutants in tanneries, and secondly, we 
examined if the regulations adequately incentivize tanneries to treat their 
industrial discharge.  

3.1. Asymmetric information 

The UPPCB monitors tanneries at random using the ―grab sampling‖ 
method, wherein the sample collected reflects the concentration of 
pollutants only at one point in time. However, the concentration of 
effluents in discharge varies for different processes in leather 
manufacturing. Thus, the results may be misleading as the pollutant 
concentration may vary across the day. Tanneries often discharge pollutants 
illegally at night. Thus, random checks are inadequate to monitor such 
practices. 

Furthermore, pollution data shows that most tanneries are inspected only 
four to five times a year. There is also scope for manipulation during 
sample collection. One of the officials we interviewed mentioned that once 
news of an upcoming inspection spreads among tanners, they reduce the 
concentration of pollutants by re-arranging the on-going leather 
manufacturing process. In such cases, the official sample does not reflect 
the actual toxicity of discharge (personal conversation with a UPPCB 
officer, March 25, 2018). Thus, we find that a classic example of 
information asymmetry emerges, where the polluters know more about 
their pollutant discharge than the regulators. 

Our interaction with the tanners revealed that there is rampant corruption 
during the monitoring of tanneries. UPPCB officials take bribes to 
manipulate the collected sample. For example, instances of tannery units 
providing a sample of mineral water instead of the discharge from the 
PETP were reported by one of the tanners. Another tanner revealed that 
tanneries pay UPPCB officials to continue operating illegal tanneries that 
were officially shut down by the UPPCB. Bribes are predominant even if 
firms abide by the law. Corruption discourages firms from adopting cleaner 
technologies, as tanneries prefer to pollute and bribe than to reduce 
pollution. A higher concentration of effluents is found in the inflows of 
wastewater at the CETP, indicating that norms are not strictly followed 
(personal conversation with CETP Manager, April 5, 2018). Thus, 
informational asymmetries and rent-seeking practices undermine the 
monitoring process. 



Ecology, Economy and Society–the INSEE Journal [188] 

3.2. Incentives incompatibility  

The command and control regulations impose the same standards on all 
and fail to recognize the differential ability of firms of varying sizes to meet 
effluent standards. Our conversation with a few members of the Kanpur 
Tannery Association revealed that the primary aim of tanners is to meet the 
increasing demand for their products rather than to meet environmental 
hazard reduction requirements. Big exporting houses like Mirza 
International and Super House Ltd. are more interested in ensuring the 
quality of leather exported to the European market. Europe has enforced 
the stringent REACH (Registration, Evaluation, Authorization and 
Restrictions of Chemicals) policy, which regulates the use of hazardous 
chemicals like azo dyes, formaldehyde, and chromium by the exporter in 
their leather products. One of the tanneries reported that importing 
countries often send their teams to inspect the leather manufacturing 
process and the quality of chemicals used by their exporting houses. Central 
Leather Research Institute (CLRI) certifies exporting firms to ensure the 
quality and fulfilment of chemical limits. CLRI undertakes a thorough 
examination of the leather samples from tanneries, and samples are kept 
with them in case of re-evaluation/falsification later. The exported leather is 
checked at the ports of the importing European countries to examine 
whether they meet the standards of the REACH policy, wherein non-
compliance will lead to the rejection of the shipment. Therefore, big 
exporting tanneries have adequate incentives to voluntarily comply with 
strict environmental standards to maintain the reputation of, and demand 
for, their products. 

On the other hand, small tanneries operate in a highly price-competitive 
domestic market with meagre profit margins. Hence, small leather firms 
prefer to use cheap chemicals over environment-friendly chemicals while 
manufacturing leather goods. Discussions with one CLRI official revealed 
that only 12 big tanneries in the cluster had adopted expensive cleaner 
technologies like waterless chrome tanning, which helps to increase the 
uptake of chemicals so that fewer chemicals are discharged in the 
wastewater. The large firms are incentivized to adopt sustainable practices 
through duty drawback to export high quality, sustainable leather goods. In 
contrast, small firms that sell in the domestic market have no such 
incentive. Furthermore, regulations require tanneries to contribute to the 
CETP’s operational costs based on their production capacity. Since the 
contribution to CETP’s operational cost is based on production capacity, 
the tanneries have no incentive to reduce pollution below effluent 
standards. Rather, the tanneries under-report their official production 
capacity to reduce monetary burden. 



[189] Aparajita Singh and Haripriya Gundimeda 

4. CONCLUSION 

Our field observations highlight that the poor quality of pollution data 
presents a flawed picture of regulatory compliance by tanneries who, in 
reality, evade pollution norms. The main driver of this problem is 
asymmetric information and lack of incentives to treat pollution. We have 
the following recommendations to address the issue. 

Firstly, a shift from the present monitoring practice of ―grab sampling‖ to 
―composite sampling‖ for evaluating the discharge from tanneries 
effectively is required. Composite sampling will require the collection of 
discrete samples at regular intervals over 24 hours and will represent the 
average performance of effluent treatment plants during the collection 
period. Random monitoring at different hours of the day, including the 
night, can also be fruitful to catch the defaulters. Involving third parties like 
research institutions and non-governmental organizations (NGOs) in 
monitoring may help reduce the probability of corruption. Secondly, 
designing policies to incentivize small tanners to reduce pollution is urgently 
needed. The incentive could be linked to a measurable outcome—in this 
case, recovery of chrome from the effluent. The subsidy amount can be 
linked to the extent of chromium recovered and reused. Where the tanners 
adopt waterless chrome tanning, the subsidy can be linked to avoided use of 
chromium. Disbursal of subsidies in the form of direct benefit transfer 
would act as an incentive for tanners and improve compliance. Loans could 
be extended to tanners for investing in technologies to treat sludge and 
wastewater. Targeted subsidies based on a measurable outcome will offer 
incentives for reducing effluent discharge and shift the burden of 
monitoring and demonstrating compliance from pollution control 
authorities to the tanneries themselves. Targeted subsidies will act as a 
premium for tanneries to reveal accurate information about their pollution 
abatement levels and reduce the cost of enforcing regulations. 

 

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