Lower GST imperative to providing affordable leather goods to masses

In a statement, Council for Leather Exports (CLE) Chairman M Rafeeque Ahmed and Vice-Chairman Mukhtarul Amin said the Government should consider fixing the five per cent GST rate for footwear by considering it as a common consumer item, so as to encourage Make in India efforts and to attract more investments, both domestic and overseas. Besides, the existing Central Excise exemption for footwear with MRP up to Rs 500 should also continue. They said lower GST rate would facilitate at least 20 per cent annual growth of the leather and footwear sector on the domestic front, besides helping in generation of employment to at least 0.5 million people in the next five years. 

“This will also help in successful implementation of flagship programmes of the Government like Make in India, Skill India etc,” they said, adding, the leather and footwear sectors should be treated on par with textile items as essential lifestyle items and a lower GST rate should be considered for these sectors. “As the thrust of the Government now is to reduce inflation and remove poverty through employment generation, the leather and footwear industry sincerely hopes that its requests concerning GST will be favourably considered”, they added. 

Pointing out that the leather and footwear industry has been recognised as one of the focus sector under Make in India, Rafeeque Ahmed said the sector has an estimated annual turnover of over US$ 12.35 bn (exports US$ 5.85 bn and domestic market US$ 6.5 bn) and provides employment to about 3.09 million people, 30 per cent of whom were women. He said value added products, including finished leather, constitute almost 100 per cent of exports from the sector. 

The sector has many distinctions – contributor of 12.93 per cent of the world’s leather production of hides/skins, second largest producer of footwear and leather garments in the world and was the fourth largest exporter of Leather Goods. The industry has placed before the Centre 3 demands including continuation of the duty exemption schemes including Duty Free Import Scheme, which allows duty free import of notified inputs up to three per cent of FOB value of export realisation in the previous year and Central Excise Duty exemption for footwear with MRP up to Rs 500 and existing duty exemptions for hides, skins and leathers, fix a lower slab (of 5%) for all other footwear (with MRP over Rs.500/-) and to continue refund of GST and Customs Duty through Duty Drawback Scheme.