Govt may provide incentives to leather sector to boost exports

The government may provide incentives to the leather sector with a view to boost exports from this labour intensive segment, an official said.

As part of a proposal which is under consideration, the government is likely to increase entitlement rate for leather garment sector for duty-free import of raw material from 3 per cent to 5 per cent, the official said.

The move would help in increasing availability of raw material at affordable rates and boosting exports.

Currently, they get entitlement of three per cent under the duty free import scheme. The scheme allows all members of Council for Leather Exports (CLE) to import duty free raw material used for export purposes.

The government is also considering the demand of exporters to reduce rates of Goods and Services tax (GST) on footwear priced above Rs 1,000.

CLE Chairman P R Aqeel Ahmed said that reduction in the rate of goods and services tax on footwear would help enhance competitiveness of products in the global markets.

There is a demand for reduction of GST rate to 12 per on footwear priced above Rs 1,000 from the current 18 per cent.

Similarly, there is a demand for cut in GST rate to 12 per on raw material for the leather sector from 18 per cent.

Currently, export of leather and its products stands at about USD 6 billion. Major export destinations include Europe and the US. The sector employs about 42 lakh people.

Leather and leather products exports dipped by about 4 per cent to USD 473 million in July.