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India:Leather sector awaits Indian Budget
2005-06 on an optimistic note |
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2005-2-25
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This could put more shine on the leather footwear segment and units manufacturing sports goods. In a bid to boost exports from these sectors, the government is considering a package of sops including reduction in customs duty on machinery used in processing of leather and manufacture of popular products like footwear.
Expected to be part of the forthcoming Budget, the package includes removal of the countervailing duty on tanning extracts made of vegetable oil and permission for duty-free import of inputs.
The current proposal is aimed at encouraging import of latest machinery for manufacturing of footwear and other leather goods. Such machinery should be added to the list of 34 types of specified machinery which are allowed for import at a concessional duty of 5%, according to the commerce & industry ministry.
No countervailing duty is imposed on this list of specified machinery which is primarily focused on the textile sector.
The proposal to the finance ministry is to add to the list 25 types of machinery used in the manufacture of footwear, both leather as well as non-leather. The current duty of machinery used by the footwear sector is around 20%.
Duty-free import of samples without any restriction should also be allowed, according to the commerce & industry ministry. Such imports can, however, not exceed one per cent of the FOB (free-on-board) value of previous year’s exports. More items should also be added to the list of eligible inputs which are allowed at 3% concessional duty, the ministry has said.
With tanning and leather products manufacturing shifting from industrialised nations to developing countries, it is felt that there is tremendous scope for improving exports from this sector.
The current level of exports is around $2bn and the Council for Leather Exports (CLE) is looking at a target of $4bn by ’10. The Council expects investments to the tune of Rs 1,600 crore to flow into this sector in the medium term.
The leather industry has asked for a Rs 400-crore package to aid modernisation and help 20% growth in exports every year for the next five years. This is necessary to fight competition from rivals like China who are expanding production in a big way, they have said. |
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| The Economic Times |
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