R. Balaji

Chennai , Jan. 15

THE leather industry, which is on a growth path, is hoping for excise exemption on shoes and shoe components and exemption from excise and countervailing duty levied on imported equipment to sustain the growth.

According to the Chairman for the Council for Leather Exports (CLE), Mr Rafeeque Ahmed, the industry has sought these exemptions in a representation to the Centre. The levies were a bottleneck to the expansion plans. Leather industries' expansion, apart from increased revenues, carries with it the benefit of increased employment generation.

Mr Ahmed said the international markets are looking to India for supply of leather products. The demand from the western markets, particularly that of the US, is on the increase. This is reflected in the 16 per cent growth in dollar terms between April and September in 2004-05.

The industry expects this rate of growth to sustain, and probably increase in 2005-06.

The two major segments that have contributed to the growth, footwear and leather goods, are labour intensive.

Production has moved out of the developed countries and the focus is on Asia and the Far East. India, with its strong base in leather production, is a natural choice. Earlier, leather garments had been a major driver of growth, but competition from China has had an effect. India is strong in footwear and leather goods, he said.

The Government's assistance is needed to help enhance competitiveness and bring down costs, according to Mr Ahmed.

With Countervailing Duty levied on all excisable equipment, the leather industry, which depends on imported equipment, finds it an expensive proposition. With 5 per cent customs duty and 16 per cent countervailing duty, the levy component goes up to about 23 per cent. Therefore, the Government needs to do away with the excise, he said.

Excise exemption on shoes and shoe components could be given to production clusters to boost capacities.

With excise at 16 per cent and a Value Added Tax component expected at about 10 per cent, the product cost would go up by about 26 - 30 per cent. Excise exemption would help to increase sales in the domestic market, which is needed to sustain the growth.

International markets by themselves are subject to ups and downs, and a strong domestic market offers stability, he said.

Leather industry is among the focus areas identified by the UPA Government to generate employment and boost rural economy. The industry is ideally suited to create job opportunities in the rural and semi-urban areas even at low levels of investment. It has demonstrated this capability in areas such as Vellore, Tamil Nadu; Kanpur, Agra, Uttar Pradesh; and Kolkata.

The industry itself has not only taken steps to improve availability of trained manpower but is also looking at upgrading skill levels in the existing workers.

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