Central package to boost leather, footwear exports

The leather and footwear industry is expecting the recent central government announcement of a ~26-billion package for the sector to help currently stagnant export to see growth. However, they add the time given is short and the government is yet to release ~5 billion from the previous scheme.

The government has approved a special package for employment generation in the leather and footwear sector, C R Chaudhary, minister of state of commerce and industry, said in the Rajya Sabha on Thursday.

Dilip Kapur, president & founder of Hidesign, a premium leather goods maker, said the biggest issue was labour laws which encourage one to sub- contract (with issues of poor quality), rather than add to one's roster.

“We are glad they (government) are thinking about us but usually government schemes are too complicated and stuck in procedural headaches,” he said.

The package involves implementation of an Indian Footwear, Leather & Accessories Development Programme, with approved expenditure of ~26 billion over 2017-18 to 2019-20. It would help address two major problems, including that of raw materials, says Israr Mecca, regional chairman (south), Council for Leather Exports.

The package supports back- end investments through a grant/subsidy at 30 per cent of the cost of new plant and machinery to micro, small and medium enterprises (MSMEs) and at 20 per cent to other units for modernisation/technology upgrade and also for setting up of new units.

The other assistance is provided for upgrade/installation of common effluent treatment plants at 70 per cent of the project cost.

The package also envisages training 200,000300,000 people.

“People need to be trained at the factories,” said Farida Group Chairman M Rafeeque Ahmed. “Many MSMEs could not invest in capacities due to capital crunch because of delay in reimbursement of goods and services tax. Around ~ 5 billion has been stuck from the previous scheme.”

Ahmed and Mecca feel the package will increase leather and footwear export by four to five per cent, from the current annual one per cent growth.

“We will be more pricecompetitive, since most of the cost, including important components like raw material and labour, will be observed through this scheme,” said Mecca.

The government has approved a special package for employment generation in the leather and footwear sector