Leather sector to get Rs 290 cr makeover fund

The government today notified a Rs 290-crore modernisation and technology upgrade scheme for all segments of the leather industry including tanneries, footwear, footwear components, saddlery, leather goods and garments.

The scheme, Integrated Development of Leather Sector, is to be implemented during the 10th Five-Year Plan period (2002-07) and will be applicable with immediate effect, that is November 3, 2005.

Following this, all existing units in the tanneries, leather product, leather footwear and footwear components sector undertaking viable and bankable programmes on technology upgrade are eligible for assistance.

The financial assistance envisaged under the scheme will consist of grant up to 30 per cent of the cost of plant and machinery for small-scale industries and 20 per cent of cost of plant and machinery for other units (i.e., non-small scale units), subject to a ceiling of Rs 50 lakh for both categories for technology upgrade/modernisation and/or expansion.

The scheme will be implemented through two PIUs (programme implementation units) "� one at Central Leather Research Institute, Chennai, for tannery and the other at Footwear Design Development Institute, Noida, for leather goods and garments, saddlery, leather footwear and footwear components. Small Industries Development Bank of India would be the nodal agency for the scheme.

The domestic leather industry occupies a unique position in the Indian economy in terms of its contribution to employment and export potential.

In spite of a strong raw material base, India's share in the global leather trade is meagre. As the domestic leather industry was reserved for small-scale sector for a long time, the level of investment in the sector is meagre, which has resulted in smaller production base and poor productivity.

Obsolete technology, lack of standardisation and poor marketing infrastructure have been other factors behind the sector not growing to its potential.

Given the industry's employment potential and historical backlog of technology upgrades, it has been emphasised by experts that to assist and improve its competitiveness in the global market, it is essential for the leather industry to have access to timely and adequate capital in order to upgrade its technology level.

Therefore, the present scheme is aimed at enabling existing tanneries, footwear, footwear components and leather products units to upgrade, which will productivity gains, right-sizing of capacity, cost-cutting, design and development.