Lok Sabha Question No. 2746 (UNSTARRED), answered on 2019-12-04
Subject: Status of Leather Industry
Ministry: COMMERCE AND INDUSTRY
Asked by: Prataprao Govindrao  Patil Chikhalikar

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

UNSTARRED QUESTION NO. 2746.

TO BE ANSWERED ON WEDNESDAY, THE 04 TH  DECEMBER, 2019.

## STATUS OF LEATHER INDUSTRY

## 2746.  SHRI PRATAPRAO PATIL CHIKHLIKAR:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

वाणिज्य

## एवं उद्योग मंत्री

- (a) whether the business turn-over of leather industry in the country is drastically declining and several leather industries are on the verge of closure;
- (b) if so, the details thereof;
- (c) if not, the reasons therefor; and
- (d) the details of the steps taken by the Government to promote leather industry during the last three years?

## ANSWER वाणिज ् य एवं उद्योग मंत्री श्री पीयूष गोयल

## ( ) THE MINISTER OF COMMERCE & INDUSTRY (SHRI  PIYUSH GOYAL)

- (a) to (c): There is no drastic decline in business turnover of leather industry in the country.
- (d): The  following  measures  have  been  taken  by  the  Government  for promotion of leather industry in the past three years:-
1.  Central  sector  scheme  'Indian  Footwear,  Leather  &  Accessories Development  Programme'  is  under  implementation  for  the  period 2017-18 to 2019-20. The scheme aims at development of infrastructure for the leather sector, address environment concerns specific  to  the  leather  sector,  facilitate  additional  investments, employment generation and increase in production.  Details of the Indian Footwear, Leather & Accessories Development Programme are enclosed as Annexure.
2.  As  per  inputs  received  from  Department  of  Commerce,  following steps have been taken for export promotion during last three years:
- i. Merchandise  Exports  from  India  Scheme  (MEIS):  2%  across the board enhancement of duty credit scrip under Merchandise Exports  from  India  Scheme  (MEIS)  for  shipments  made  from 1.11.2017. Accordingly, notified leather products and footwear are now getting 5% MEIS scrip while finished leather is getting 4% (some categories of finished leather are getting 5%).
- ii. Goods  and  Service  Tax  (GST)  Rates  for  following  leather industry related items have been reduced:-
- a)  Reduction  of  GST  rate  from  28%  to  18%  for  leather products, leather garments, leather chemicals w.e.f. November 15, 2017
- b)  Reduction of GST rate from 12% to 5% for finished leather and composition leather w.e.f. November 15, 2017
- c)  Reduction  of  GST  on  job  work  for  manufacturing  leather goods  and  footwear  from  18%  to  5%  w.e.f.  January  25, 2018
- d)  Reduction  of  GST  on  Common  Effluent  Treatment  Plants services from 18% to 12% w.e.f. January 25, 2018
- e)  5% concessional GST extended to footwear having a retail sale  price  up  to  Rs.  1000  per  pair  w.e.f.  27 th July  2018, which  was  earlier  available  for  footwear  with  retail  sale price upto Rs.500/-.
- f) GST  reduction  on  Slide  Fasteners  and  Parts  of  Slide Fasteners  (used  as  inputs)  from  18%  to  12%  w.e.f.  27 th July 2018.
- iii. Duty  Free  Import  of  Inputs:  Enhancement  of  duty  free  limit (Basic Customs duty exemption) for import of critical import by manufacturer exporters of footwear and other leather products from 3% to 5% of Free on Board (FOB) value of exports in the previous year, as announced in Union Budget 2017-18.
- iv. Interest  equalization  rate  was  enhanced  from  3%  to  5%  for Micro Small and Medium Enterprises units w.e.f. November 2, 2018 on pre-shipment and post-shipment rupee export credit.
- v. Removal  of  Animal  Quarantine  clearance  for  most  of  the categories of finished and crust leathers imported into India as notified  vide  Gazette  Notification  No.  5758  (E)  dated  16 th November 2018 issued by  Department of  Animal  Husbandry, Dairying and Fisheries (DAHD&F).
- vi. In order to promote Green Tanning, the Union Budget 2017-18 announced the reduction of  Basic Customs Duty on Vegetable Tanning  Extracts  namely  Wattle  extract  [3201  20  00]  and Myrobalan fruit extract [3201 90 20] from 7.5% to 2.5%,.

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## ANNEXURE

## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PART  (d)  OF  THE  LOK  SABHA UNSTARRED QUESTION NO. 2746 FOR ANSWER ON 04.12.2019.

## Indian Footwear, Leather & Accessories Development Programme

- a)  Human Resource Development (HRD) sub-scheme: HRD  sub-scheme provides  assistance  for  Placement  Linked  Skill  Development  training  to unemployed persons @ Rs. 15,000 per person, for skill up-gradation training to employed workers @ Rs. 5,000 per employee and for training of trainers @ Rs. 2 lakh per person.
- b)  Integrated  Development  of  Leather  Sector  (IDLS)  sub-scheme:  IDLS  subscheme incentivizes investment and manufacturing including job creation by providing backend investment grant/subsidy @ 30% of the cost of new Plant and Machinery to Micro, Small & Medium Enterprises (MSMEs) and @ 20% of the cost of Plant and Machinery to other units for Modernization /technology upgradation in existing units and also for setting up of new units.
- c)  Establishment of Institutional Facilities sub-scheme: The sub-scheme provides assistance to Footwear Design & Development Institute (FDDI) for upgradation  of  some  of  the  existing  campuses  of  FDDI  into  "Centres  of Excellence" and establishing 3 new fully equipped skill centres alongside the upcoming Mega Leather Cluster.
- d)  Mega Leather, Footwear and Accessories Cluster (MLFAC) sub-scheme: The MLFAC sub-scheme provides infrastructure support to the Leather, Footwear and  Accessories  Sector  by  establishment  of  Mega  Leather,  Footwear  and Accessories Cluster. Graded assistance is provided upto 50% of the eligible project  cost,  excluding  cost  of  land  with  maximum  Government  assistance being limited to Rs. 125 crore.
- e)  Leather Technology, Innovation and Environmental Issues subscheme: Under this sub-scheme, assistance is provided for upgradation/installation  of  Common  Effluent  Treatment  Plants  (CETPs)  @ 70% of the project cost. The sub-scheme also provides for support to national level  sectoral  industry  council/  association  and  support  for  preparation  of vision document for Leather Footwear and Accessories Sector.
- f) Promotion of Indian Brands in Leather, Footwear and Accessories Sector subscheme:  Under  this  sub-scheme,  the  eligible  units  approved  for  Brand Promotion are assisted. The Government assistance is limited to 50% of total project  cost  subject  to  a  limit  of  Rs.3  crore  for  each  brand,  each  year  for  3 years.
- g)  Additional  Employment  Incentive  for  Leather,  Footwear  and  Accessories Sector sub-scheme: Under this sub-scheme, employers' contribution of 3.67% to  Employees'  Provident  Fund  for  all  new  employees  in  Leather,  Footwear and Accessories sector, are provided for enrolling in EPFO for first 3 years of their employment.

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