Budget brings duty sops, new scheme to promote leather sector

The government today extended certain duty benefits and announced a new scheme to the labour intensive leather and footwear sector with a view to boosting domestic manufacturing, exports and creating more jobs.

The scheme for the sector will be on the lines of the package announced for the textiles sector in June last year.

"A special scheme for creating employment in the textiles sector has already been launched. A similar scheme will be implemented for the leather and footwear sector," Finance Minister Arun Jaitley said.

In June 2016, the government approved a Rs 6,000-crore special package for the textiles and apparel sector. It included a set of reforms, including simplified labour laws and technology upgradation.
 

As part of duty benefits, the government reduces basic customs duty on certain extracts used in the leather industry besides increasing the limit of duty free import of inputs.

The customs duty on vegetable tanning extracts is reduced to 2.5 per cent from 7.5 per cent.

Further, limit of duty free import of eligible items for manufacture of leather or synthetic footwear for use in the manufacture of such goods for export is increased to 5 per cent from 3 per cent earlier.

Former chairman of Council for Leather Exports Rafeeq Ahmed said that these benefits will help in promoting domestic manufacturing and exports.

About the proposed scheme, Ahmed expressed hope that it could contain provisions related to skill development, relaxation on labour laws and incentives for setting up of leather parks.

These announcements assumes significance as the commerce and industry ministry has suggested incentives for the leather and footwear sector, given its importance as a thrust segment under the Make in India initiative.

According to experts, Rs 1 crore investment in the sector results in creation of jobs for close to 250 people.

Currently, about 30 lakh people are directly employed in the sector.

China is giving tough competition to Indian leather manufacturers in terms of pricing. The government aims to increase the sectoral exports to USD 15 billion by 2020 from current USD 7 billion.