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Government mulls incentive package for leather sector

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The is working on a package of both fiscal and non-fiscal measures for leather and non-leather footwear sector, with a view to boost investments and job creation.

Leather is a focus area under the 'Make in India' initiative
Leather is a focus area under the 'Make in India' initiative

As reported by PTI: The incentives will be broadly on the lines of recently announced package for the textiles sector. Leather is a focus area under the ‘Make in India’ initiative.

“This is an important sector which is highly labour intensive. The Commerce and Industry Ministry is working on an incentive package for leather and non-leather footwear sector on the lines of the package recently announced for the textiles sector,” an official was quoted as saying by PTI.

The package may include reduction in excise duty, labour law relaxations and skill training for the sector. The ministry has already given a presentation to the Finance Ministry about the benefits.

An industry expert said that the sectors hold huge employment potential as a Rs 1 crore investment creates jobs for about 300 people.

Currently excise duty on leather footwears worth over Rs 1,000 is 6 per cent, whereas for non-leather it is 12.5 per cent. In the total footwear industry, 90-95 per cent is non-leather.

High excise duty on non-leather is impacting the manufacturing and if you want to create jobs and boost exports, there is a need to reduce this duty, the official added.

As the sector provides employment to about 30 lakh people, the government should give special focus to this segment, Chairman of Council for Leather Exports Rafeeq Ahmed was quoted as saying by PTI.

China is giving tough competition to Indian leather manufacturers in terms of pricing, and support is required to compete with them.

Leather exports have recorded negative growth in May.

The government last month approved a Rs 6,000 crore special package for textiles & apparel sector to create one crore new jobs in three years and attract investments of USD 11 billion.
The measures approved include additional incentives for duty drawback scheme for garments, flexibility in labour laws to increase productivity as well as tax and production incentives for job creation in garment manufacturing.