New Delhi, July 12, 2014 – The Leather Industry holds a prominent place in the Indian economy. This sector is known for its consistency in high export earnings and it is among the top ten foreign exchange earners for the country. The overall size of India’s leather sector is estimated to be Rs.25, 000 crore. With an annual turnover of over US$ 10 billion, the export of leather and leather products increased manifold over the past decades and touched US$ 5.91 billion in 2013-14, recording a cumulative annual growth rate of about 14.77 % (5 years).
Domestic market for leather, leather products and footwear has also increased from US $ 2.2 billion to US $ 5 billion in 2013-14. The per capita consumption of footwear which was less than 1 pair a decade ago, has increased to 1.8 pairs per annum in 2011 and about 2 pairs at present.
The Government of India has identified the Leather Sector as a Focus Sector in the Foreign Trade Policy in view of its immense potential for export growth prospects and employment generation. Planning Commission has also identified the Leather Sector as Employment incentive sector for 12th Plan period. National Manufacturing Policy has further identified leather and footwear as special focus sector. Accordingly, the Government is providing various incentives to the Leather Industry in Foreign Trade Policy and allowing concessional Duty for import of Machinery. Department of Industrial Policy and Promotion (DIPP) is implementing ‘Indian Leather Development Programme (ILDP)’ consisting of six sub-schemes viz. (Human Resource Development, Support to Artisan, Mega Leather Cluster, Integrated Development of Leather Sector, Leather Technology-Innovation and Environmental Issues and Establishment of Institutional Facilities) for the overall development of leather sector. Financial assistance is being provided to organize overseas marketing activities to promote exports from the country under Marketing Development Assistance (MDA) scheme and for enhancement of export through accessing new markets or through increasing the share in existing markets under Market Access Initiatives Scheme (MAIS).
India holds a share of 3.05% in global leather trade of US$ 159.89 billion as per information available for the year 2011.
The incentives and facilities to leather based industries are made available as per details in enclosed Annexure.
ANNEXURE REFERRED TO IN REPLY TO PART ( d ) OF THE LOK SABHA UNSTARRED QUESTION NO.358 FOR ANSWER ON 11TH JULY 2014.
Incentives and facilities to leather based industries
(i) Foreign Trade Policy (FTP) 2009-14
a) Under the Focus Product scheme, Duty Credit Scrip @ 4% on FOB value of exports for notified leather products & footwear under Appendix 37 D of Handbook of Procedures- Vol. 1 being provided. Also, 2% duty credit scrip is being provided for finished leather under Focus Product Scheme. These scrips are transferable.
b) Under the Focus Market Scheme, the exporters are currently given a duty credit scrip of 3% for exports to notified countries (notified in Appendix 37 C of Handbook of Procedures – Vol. 1) in Latin American, African and Commonwealth of Independent States (CIS), Eastern Europe and Asia-Oceania regions. These scrips are transferable.
c) The Special Focus Market Scheme provides 4% duty credit scrips on FOB value for exports made to Latin American, African and CIS regions. This scheme is being implemented from 1.4.2011 onwards. These scrips are transferable. The aforementioned duty credit scrips can be used for payment of import duties or for payment of Excise Duty on domestic procurement of such items as permitted to be imported under respective scheme.
d) Zero Duty Export Promotion Capital Goods Scheme (EPCG) has been notified for certain sectors including leather and leather products, which enables import of Capital Goods without any duty, subject to fulfilment of Export Obligation.
e) Kanpur, Agra and Ambur recognized as “Towns of Export Excellence” (TOEE) for leather products in FTP. For upgradation of export sector infrastructure, ‘Towns of Export Excellence’ and units located therein would be granted additional focused support and incentives.
f) Leather sector has been allowed re-export of unsold imported raw hides and skins and semi finished leather from public bonded ware houses, without payment export duty. This measure was announced in the Annual Supplement 2010-11.
g) Duty free import of notified inputs @ 3% of FOB value of export realization during previous year for manufacturer-exporters and merchant exporters tied-up with supporting manufacturers in respect of leather garments and for manufacturer-exporters in respect of other leather products. This scheme is being implemented by Council for Leather Exports (CLE).
h) Machinery and equipment for Effluent Treatment Plants are exempted from basic customs duty.
i) CVD exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC (HS).
j) Under the Incremental Exports Incentivisation Scheme, the exporters are eligible for 2% duty credit scrip on the FOB value of exports to USA, Europe and Asia (excluding Singapore, UAE and Hong Kong) on the incremental growth during the period 01.01.2013 to 31.3.2013 compared to the period from 01.01.2012 to 31.3.2012. This scheme was subsequently extended for the year 2013-14 on annual basis. Also, exports to 53 notified countries Latin America and Africa have also been added under this scheme during 2013-14. The 2% incremental scrip will be only for incremental exports achieved during 2013-14 as compared to the year 2012-13 for notified countries. This scrip is transferable and can be used for domestic sourcing and for payment of Service Tax. Certain Latin American and African countries have been included under Incremental Exports Incentivization Scheme.
(ii) Concessional Duty for import of Machinery
(a) As per Serial No. 300 of Customs Notification No. 12/2012 dated 17.3.2012, as amended from time to time, machinery notified under list 29 of the said Customs Notification falling under Chapter Nos. 84, 85 or 90, are allowed for import with a concessional 5% Basic Customs Duty (BCD) as against the normal BCD of 10%.
(iii) Implementation of Indian Leather Development Programme (ILDP):
Department of Industrial Policy and Promotion, Ministry of Commerce & Industry is implementing ‘Indian Leather Development Programme (ILDP)’ for the 12 th Plan period with total outlay of Rs.990.36 crore comprising of the following components:
a) Integrated Development of Leather Sector (IDLS) : This sub-scheme is aimed at enabling tanneries, footwear, footwear components, leather goods and accessories, leather garments, harness & saddlery manufacturing units to upgrade themselves leading to productive gains, right-sizing of capacity, cost cutting, design and development including simultaneously encouraging entrepreneurs to diversify and set up new units.
b) Support to Artisan (STA): There are various clusters in the India making traditional footwear and other leather goods. The aim of the component is to promote the clusters at various forums as they are an integral part of Indian economy and have potential for generating local employment and export. The artisan clusters are supported for providing Common Facility Centres, product development, marketing linkages and capacity building etc.
c) Human Resource Development (HRD): This sub-scheme targets potential work force all over India. Assistance is provided for placement linked skill development training to unemployed persons, for skill upgradation training to employed workers and training of trainers. The placement of 75% of trained persons is mandatory for availing assistance related to skill development training component.
d) Establishment of Institutional Facilities: The objective of this sub-scheme is to provide infrastructure by way of establishing two new branches of FDDI to meet the growing demand of the Leather Industry for footwear technologists, designers, supervisors and mechanics.
e) Leather Technology, Innovation and Environmental Issues: Leather industry and tanning activity in particular is linked to environmental concerns and this sub-scheme envisages measures which are required to be put in place for industries to cope with the stringent norms.
Projects for installation/upgrading Common Effluent Treatment Plants are assisted under this component. Assistance is also provided for Pilot Projects under Technology Benchmarking and environmental management for leather units, for organizing Environment Related Workshops and for Pilot projects for Solid Waste Management.
f) Mega Leather Cluster (MLC): This sub-scheme aims at providing infrastructure support to the Leather Industry by establishment of Mega Leather Clusters (MLC) which would assist the entrepreneurs to set up units with modern infrastructure, latest technology and adequate training and HRD inputs.
(iv) Assistance is also provided by Department of Commerce, Ministry of Commerce & Industry for establishment of two new branches of FDDIs at Bihar and Andhra Pradesh during 12th Plan.
(v) MDA and MAI Schemes:
(a) Under MDA scheme, financial assistance is provided to the Export Promotion Councils (EPCs) to organize overseas marketing activities to promote exports from the country, both in traditional markets as well as potential markets. Similarly, financial assistance is also provided to individual units through EPCs for their participation in overseas business events organized by the EPCs.
(b) The Government of India is also implementing the Market Access Initiative Scheme (MAIS) for enhancement of export through accessing new markets or through increasing the share in the existing markets. Under MAI Scheme, financial assistance is provided for marketing projects abroad, capacity building, Market studies/survey for evolving proper marketing strategies etc.
The information was given by the Minister of State (Independent Charge) in the Ministry of Commerce & Industry Smt. Nirmala Sitharaman in Lok Sabha today.
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