The Footwear Industry welcomed the small concession offered in the union budget. However, the industry is disappointed that the concessional excise duty has been limited to footwear up to Rs. 1000 only. It believes that this small concession will not lead to new investments in new factories.
Footwear is currently subject to among the highest excise duty slabs across any product category (26-28% of ex-factory price). Such high taxes have led to the closure of factories in vantage areas that were traditionally close to raw material and skilled labour source. Even though some factories have opened in Excise free zones, these factories are plagued by inefficiency due to lack of raw material and skilled labour.
Ideally a lower rate of excise duty leading to the introduction of GST would have attracted investments closer to the raw material and skilled labour availability. Such efficient factories coupled with lower excise duty rates would lead to increase in domestic consumption and also new export markets. With increasing costs across the rest of the world, India has the potential to grab a large share of the global footwear export market. In fact the access to domestic market is a key to increasing exports also.
AIFMRA will once again request the Finance Ministry to review the excise duty levy on Footwear. Footwear should be granted same status as Apparel, as both have tremendous potential for job creation.