Lok Sabha Question No. 983 (UNSTARRED), answered on 2023-02-08
Subject: Footwear and Leather Sector
Ministry: COMMERCE AND INDUSTRY
Asked by: Rahul Ramesh Shewale, Girish Bhalchandra Bapat, Chandra Sekhar Sahu, Pritam Gopinath Munde

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

## LOK SABHA

## UNSTARRED QUESTION NO. 983. TO BE ANSWERED ON WEDNESDAY, THE 08 TH  FEBRUARY, 2023.

## FOOTWEAR AND LEATHER SECTOR

983.   SHRI RAHUL RAMESH SHEWALE: SHRI GIRISH BHALCHANDRA BAPAT: SHRI CHANDRA SEKHAR SAHU: DR. PRITAM GOPINATHRAO MUNDE:

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

## वाणिज्य एवं उद्योग मंत्री

- (a) whether the Government has the potential to become a world leader in footwear and leather sector with the efforts of both Government and industry;
- (b) if so, the details thereof;
- (c) the details of the contribution of footwear and leather sector in the country's export during each of the last three years;
- (d) whether footwear and leather sector has so far been benefited from the FTAs being signed by the Government with various countries;
- (e) if so, the details thereof; and
- (f) the details of the steps taken by the Government and industry to boost footwear and leather sector of the country?

## ANSWER

## वाणिज्य एवं उद्योग मंत्रालय में राज्य मंत्री ( श्री सोम प्रकाश ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI SOM PARKASH)

- (a)  &  (b): Leather  and  Footwear  sector  occupies  a  very  important  place  in  the Indian economy  on  account  of  potential  for  creation  of  employment opportunities  and  favorable production and exports. This sector is known for  its  consistency  in  high  export  earnings. Indian  footwear  and  leather sector  is  a  major  supplier  of  value  added  products  in  the global market. The sector aims to ensure optimum utilization of the  emerging business opportunities and substantially enhance its exports in the coming years.
- (c): The Leather and Footwear Sector has achieved export growth of 17.7% during April- December 2022 (USD 4252 Mn) compared to April-December 2021 (USD 3632 Mn). The export of leather and footwear sector product wise during the last three years is  given  below (in Million USD):-
- (d) & (e): The  footwear  and  leather  sector  has  been  benefited  from  the  FTAs  and its  export during 2021-22, particularly in emerging markets like UAE, Australia, Japan, ASEAN and Chile. Export of leather, leather products and footwear  to many  FTA countries have shown significant revival during 2021-22 and this growth  trend  is continuing in the current year also.
- (f): Some  of  the  key  policy  measures  taken  so  far  to  promote  Leather  and Footwear Manufacturing in India are at Annexure.

| PRODUCT              |   2019-20 |   2020-21 |   2021-22 | %Change 2021-22   |
|----------------------|-----------|-----------|-----------|-------------------|
| Finished Leather     |    525.16 |    378.23 |    456.1  | 20.59%            |
| Leather Footwear     |   2085.46 |   1485.64 |   2047.08 | 37.80%            |
| Footwear Components  |    262.16 |    197.59 |    249.87 | 26.46%            |
| Leather Garments     |    430.1  |    295.59 |    342.38 | 15.84%            |
| Leather Goods        |   1355.6  |    944.27 |   1287.06 | 36.30%            |
| Saddlery & Harness   |    151.61 |    186.18 |    276.1  | 48.30%            |
| Non-Leather Footwear |    283    |    194.18 |    214.11 | 10.28%            |
| Total                |   5093.09 |   3681.68 |   4872.7  | 32.35%            |

Source : DGCI &S

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## Annexure  referred  to  in  Part  (f)  of  the  reply  to  the  Lok  Sabha  Unstarred Question no. 983 to be answered on 08.02.2023

- i. The Central Sector Scheme 'Indian Footwear and Leather Development Programme (IFLDP)'  is  being  implemented  for  overall  development  of  Leather  and  Footwear Industry with  an  allocation  of  Rs.1700  crore  (2021-26).  The  scheme  aims  at development of infrastructure for the leather and footwear sector, address environment concerns specific  to the leather and footwear sector, facilitate additional investments,  employment generation and increase in production. Indian Footwear and Leather Development Programme is being implemented with six sub-schemes as under:
- a. Sustainable Technology and Environmental Promotion (outlay ₹ 500 crore) :-Assistance for each Common Effluent Treatment Plant (CETP) is provided @80% of the total project cost for Northeastern Areas with industry/beneficiary share to be 20% of the project cost and @ 70% of the total project cost for other areas with industry/beneficiary share to be 30% of the project cost with a limit of ₹ 200 crore.
- b. Integrated  Development  of  Leather  Sector  (IDLS)  (outlay  ₹  500  crore) :-Assistance  is  provided  to  the  sectoral  units  for  their  modernization/capacity expansion/technology up-gradation @30% to Micro, Small and Medium Enterprise (MSME)  units  and  20%  to  other  units.  Financial  assistance  is  provided  for Northeastern Areas @40% of cost of plant & machinery to MSME units and 30% to  other  units.  5%  additional  grant  is    provided  for  domestic  manufactured machinery.
- c. Establishment of Institutional  Facilities  (outlay  ₹  200  crore) :-  Assistance  is provided  for  setting  up  of  new  infrastructure  and  upgradation  of  requisite infrastructure of existing campuses of Footwear Design and Development Institute (FDDI). This inter-alia includes  setting up of International Testing Centre, Sports Complex, construction of girls' hostel etc. within the existing campuses of FDDI.
- d. Mega  Leather  Footwear  and  Accessories  Cluster  Development  (MLFACD) (outlay ₹ 300 crore):The sub-scheme aims at world-class infrastructure and to integrate the production chain in a manner that it caters to the business needs of the leather and domestic footwear industry and export market. Graded assistance is provided @50% of the project cost (@70% of the project cost in Northeastern areas), for land development, core infrastructure, social infrastructure, production facilities including ready to use sheds  with plug and play facility, R&D support and export services excluding cost of land with maximum Government assistance being limited to ₹ 125 crore.
- e. Brand Promotion of Indian Brands in Leather and Footwear Sector (outlay ₹ 100 crore) :-  The Government of India assistance will be provided for 50% total project cost subject to limit of ₹ 3 crore for each brand each year during the next three years to promote at least 10 Indian brands in the International Market. All Indian Manufacturers in  the Footwear and Leather Sector including finished leather, leather  goods,  leather  garments,  saddlery,  footwear  and  footwear  components industries having cash profit for last 3 years and having minimum exports/domestic sales of Rs.50 crore per year are eligible under the sub-scheme.
- f. Development  of  Design  Studios  (outlay  ₹  100  crore) :-  This  is  a  new  subscheme introduced to catalyze the technological and design transformation of the sector. Assistance is provided to develop 10 Indian design studios. The studios will spur design innovation, promote market and export linkages, facilitate buyer-seller meets, display designs to international buyers and work as interface for the trade fairs.  Design  Studios  will  be  kind  of  'one-stop-  shop'  providing  a  wide  range  of services: design, technical support, quality control etc.
- ii. To incentivize domestic value addition under Make in India and Atma Nirbhar Bharat initiative, basic custom duty has been increased on the following:
- a. Zero  to  Ten  Per  cent  on  "wet  blue  chrome  tanned  leather,  crust  leather  and finished leather of all kinds, including splits and sides" as they are domestically produced in good quantity and mostly by MSMEs.
- b. 25  per  cent  to  35  per  cent on  footwear vide  notification  dated  02.02.2020 for 2020-21  (for 4 digit HSN code of 6401 to 6405)
- c. 15  per  cent  to  20  per  cent on  footwear  component vide  notification  dated 02.02.2020 for 2020-21 (for 4-digit HSN code of 6401 to 6405)\
- iii. DPIIT has issued Quality Control Orders (QCOs) for footwear and leather sector to curb cheaper imports and to boost Atma Nirbhar Bharat initiative, for certain categories of footwear:
- a. Footwear made from Leather and other materials (Quality Control) Order, 2022 dated: 03rd June, 2022 - 11 items to be implemented w.e.f. 1.7.2023.
- b. Personal Protective  Equipment  Footwear  (Quality  Control)  Order,  2020  dated: 04  th  December, 2020 - 3 items - implemented w.e.f. 1 st  January 2022.
- c. Footwear made from all Rubber & all Polymeric material and its components (Quality Control)  Order,  2022  dated:  03 rd June,  2022  -  13  items  to  be implemented w.e.f. 1.7.2023.
- iv. Micro and small units have been exempted from the purview of QCO on Footwear made  from Leather and other materials and Footwear made from all Rubber & all Polymeric material and its components.
- v. The Government of India has notified Anti-dumping duty of PU (Poly Urethane) material vide notification 20.05.2022 in order to protectvthe domestic industry.
- vi. Under  Export  Promotion  Capital  Goods  Scheme  (EPCG)  of  Foreign  Trade  Policy, Customs duty exemption is provided for import of capital goods for pre-production, production  and  post-production,  subject  to  fulfillment  of  export  obligation.  Capital goods imported  under  EPCG  Authorisation  for  physical  exports  are  also  exempted from Integrated Goods & Services Tax(IGST) and Compensation Cess.
- vii. Under Advance Authorization scheme, notified inputs are allowed duty free subject to quantity restrictions as per Standard Input Output Norms and fulfillment of specified export obligation.
- viii. Financial support is provided under Market Access Initiative Scheme for undertaking various export promotion activities both in the traditional markets of Europe and USA and also potential markets.
- ix. Financial  support  has  been  provided  under  Assistance  to  States  for  Infrastructure
22. Development  of  Exports  (ASIDE)/  Trade  Infrastructure  for  Export  Scheme (TIES) scheme  for  undertaking  various  infrastructure  and  common  utility  facilities  for  the

leather sector. The interest equalization on rupee export credit is being implemented for the period October 1, 2021 and ends on March 31, 2024 including certain tariff lines concerning

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- x. footwear and leather sector.