Re­quests on For­eign Trade Pol­icy Schemes

Shoes & Accessories - - The Month That Was -

Mer­chan­dise Ex­ports from In­dia Scheme (MEIS) Ben­e­fit may kindly be en­hanced to 6% for leather, leather prod­ucts and footwear so as to achieve the en­vis­aged 15% ex­port growth in next 3 years. ▶ ▶ Duty Credit Scrips : Schemes un­der For­eign Trade Pol­icy namely Mer­chan­dise Ex­ports from In­dia Scheme (MEIS), Zero Duty Ex­port Pro­mo­tion Cap­i­tal Goods Scheme (EPCG) and Ad­vance Au­tho­ri­sa­tion have in­creased price com­pet­i­tive­ness of the leather in­dus­try. The re­quest is that, be­sides ex­emp­tion from Ba­sic Cus­toms Duty, GST ex­emp­tion may be pro­vided for th­ese scrips. Al­ter­nately, the scrips may be di­vided in to Cus­toms Por­tion and Vir­tual Credit ledger for pay­ment of GST. ▶ ▶ Govt. may con­sider en­hanc­ing in­ter­est sub­ven­tion limit from 3% to 5% atleast for 6 month pe­riod from July to De­cem­ber 2017. Also, this scheme may be ex­tended for large units in leather goods/leather gar­ments and tan­ning seg­ment and Leather Goods/gar­ments. ▶ ▶ En­hance­ment of duty free limit un­der DFIS for leather gar­ments from 3% to 5% may be con­sid­ered as Union Bud­get 2017-18 has al­ready en­hanced the limit to 5% for footwear and other leather prod­ucts. ▶ ▶ The DFIS is a value based li­cence on ac­count of which im­porters are now re­quired to pay IGST on im­ported in­puts as only Ba­sic Cus­toms Duty is ex­empted un­der GST regime. Re­quest that this li­cence may also be con­verted into a duty based li­cence as in the case of MEIS, for pay­ment of both Ba­sic Cus­toms Duty and IGST. ▶ ▶ There is a need to in­clude more items un­der Duty Free Im­port Scheme and change

of de­scrip­tion of cer­tain in­puts al­ready al­lowed for im­port.

Adesh Gupta, Chair­man - Coun­cil for Footwear Leather & Ac­ces­sories and core mem­bers of CFLA met with Hon. Fi­nance Min­is­ter, Mr. Arun Jait­ley on 18 Septem­ber and re­quested for slash­ing the GST rate on leather prod­ucts. The Fi­nance Min­is­ter was con­vivial and in­ter­acted en­gag­ingly with the CFLA mem­bers. The meet­ing was very pro­duc­tive and CFLA strongly put for­ward their points for con­sid­er­a­tion of the Hon. Fi­nance Min­is­ter. CFLA re­quested for GST on Footwear to be low­ered to 5% from 18%. “Re­tain­ing 18 per cent tax slab for footwear and 28 per cent for ac­ces­sories sec­tor is hav­ing a se­ri­ous im­pli­ca­tion on the cost es­ca­la­tion of the fi­nal goods of shoes and bags, mak­ing them un­com­pet­i­tive in the do­mes­tic and in­ter­na­tional mar­ket.” said Adesh Gupta.

The coun­cil de­manded that the Job work GST rate should be at par with tex­tile at 5%. He re­it­er­ated the coun­cil’s un­met de­mand of re­duc­ing GST on footwear to 5% per cent would have win-win sit­u­a­tion both for in­dus­try and gov­ern­ment. “If 5 per cent rate is im­posed on footwear in­dus­try then the man­u­fac­tur­ers would be able to bear the cost and gov­ern­ment would have no rev­enue loss.” He added.

The Hon. Fi­nance Min­is­ter was agree­able to fa­vor­ably con­sider the sug­ges­tions and fur­ther stated that they had iden­ti­fied three sec­tors which would be given due pri­or­ity and one of them is “Footwear”. How­ever, he stated that any in­ter­ven­tion in GST slab rates would hap­pen only once the Rev­enue Depart­ment an­a­lyzed the data and has sorted GST re­funds to the States (which would not be be­fore the next quar­ter end). Only af­ter the au­thor­i­ties have un­der­stand the pat­tern of GST flow and have built up some re­serves, would they be in a po­si­tion to re­flect on the de­mand of the trade for re­vised rates.

How­ever, CFLA re­lent­lessly is pur­su­ing for job work rate to be low­ered to 5%. The GST Coun­cil, headed by Fi­nance Min­is­ter Arun Jait­ley com­pris­ing rep­re­sen­ta­tives from all states, had ear­lier de­cided to tax all job works in the tex­tile sec­tor at 5 per cent. Harki­rat Singh, MD Wood­land Shoes had de­scribed it as a big breather to small job work man­u­fac­tur­ers in all seg­ments of tex­tile value chain, which will al­low the free flow of busi­ness across the value chain. Raj Ku­mar­gupta, Chair­man - Ac­tion Shoes stated,” In the un­or­ga­nized footwear sec­tor, al­most 75 per cent de­pends on job work, as stitch­ing, trad­ing and other as­so­ci­ated work. Ear­lier, there was no tax for th­ese works. It would be strong sup­port for the sec­tor to lower the job work rate.”

A man­u­fac­turer may send out his goods to a job worker for ini­tial process, in­ter­me­di­ate process, assem­bly, pack­ing or any other com­ple­tion process and later sup­ply such goods to its cus­tomers or use in any other man­u­fac­tur­ing process ac­com­pa­nied by its own. The goods sent for job work maybe raw ma­te­rial, com­po­nent parts, semi-fin­ished goods and even fin­ished goods. The re­sul­tant goods could be with same char­ac­ter­is­tics or with vari­a­tion of the prod­uct send for job work “A lower rate across the chain would also avoid con­fu­sion. All job works be­ing man­u­fac­tur­ing ac­tiv­i­ties were ex­empted from ser­vice tax in pre-gst regime. But job work­ers could not avail in­put tax credit that had been in­creas­ing the cost of the prod­ucts and af­fect­ing the com­pet­i­tive­ness.

In­derdev Singh, Vice- chair­man, CFLA said the 5 per cent GST rate on job works would en­able the in­dus­try to claim full in­put credit and strengthen the global com­pet­i­tive­ness of the sec­tor apart from ben­e­fit­ing the do­mes­tic con­sumers. He claimed that im­ports are now cheaper than do­mes­tic prod­ucts as the coun­ter­vail­ing duty (CVD) and spe­cial ad­di­tional duty (SAD) on im­ports have be­come In­te­grated GST. Ear­lier the ad­di­tional du­ties were a pro­tec­tion against im­ports. Hence, in­dus­try would need some safe­guard mea­sures to en­sure the Make in In­dia ini­tia­tive does not wash away in the land­slide of im­ports.

CFLA mem­bers be­lieve that 18% GST on job work is hit­ting footwear sec­tor, es­pe­cially states like UP and Haryana that have a large num­ber of footwear units. Though some shoe unit’s work out of a sin­gle fac­tory floor in places like Agra, Ba­hadur­garh and Kar­nal, job work or out­sourc­ing of ser­vices con­sti­tute a sig­nif­i­cant part of the in­dus­try. UP & Haryana con­trib­ute 60% to the coun­try’s footwear pro­duc­tion. Al­most 90% job work peo­ple are un­e­d­u­cated and are un­able to file tax on­line. The bur­den then gets pushed to the big­ger play­ers. Amit Cho­pra says, “If gov­ern­ment ac­com­mo­dates in­dus­try’s de­mand of 5 per cent rate on Job Work, then in­dus­try can up­scale the in­vest­ment and pro­duc­tion which is de­sir­able un­der cur­rent eco­nomic en­vi­ron­ment. As ma­jor­ity of the work of footwear & ac­ces­sories man­u­fac­tur­ing is with SMES and is car­ried on through job works es­pe­cially in the up­per mak­ing, last­ing and footwear man­u­fac­tur­ing sec­tor.”

Adesh Gupta added, “As you are aware, from time to time, we have been meet­ing with pol­icy mak­ers in the gov­ern­ment and ap­pris­ing them of the dif­fi­cul­ties faced by footwear sec­tor and steps needed to be taken to pro­tect, pro­mote, de­velop the footwear sec­tor. This week, we had meet­ing with Hon. Fi­nance Min­is­ter, Mr. Arun Jait­ley and 2 senior bu­reau­crats in the Cen­tral Min­istries. Si­mul­ta­ne­ously, we had re­quested for a meet­ing with the Prin­ci­pal Sec­re­tary to the Hon. Prime Min­is­ter of In­dia. We got a prompt re­sponse, and we were ad­vised to meet with Mr. Bra­jen­dra Navnit, Joint Sec­re­tary in PMO, who is look­ing af­ter the Footwear sec­tor.” The Meet­ing was fixed and on 19 Septem­ber which was at­tended by Adesh Gupta & Sahil Ma­lik, MD Da Mi­lano. This meet­ing was con­cluded with an as­sur­ance from Mr. Bra­jen­dra to sup­port the sec­tor with the max­i­mum pos­si­ble con­cen­tra­tion. On the same evening, CFLA Chair­man met Mr. Ra­jesh Ma­ha­jan, Mem­ber (Bud­get) and dis­cussed the con­cern and is­sues re­lat­ing to GST, who was very sup­port­ive of the ideas put for­ward to de­velop the Footwear sec­tor, in­clud­ing low­er­ing of GST.

Mean­while, CFLA con­tin­ues to make ef­forts to get the merit rate of GST of 5% or max­i­mum of 12% for footwear sec­tor.

PR Aqeel Ahmed, Vice-chair­man, CLE at Press meet, North block

Fi­nance Min­is­ter, Mr. Arun Jait­ley met Adesh Gupta, Chair­man - Coun­cil for Footwear Leather & Ac­ces­sories and core mem­bers of CFLA

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.