From the Desk of Chairman


Chairman Column

Govt. measures to boost economic growth will help in achieving significant growth levels in Leather and Footwear sector.

Being a consumer oriented sector and being predominantly concentrated in MSME segment, the leather and footwear sector has been facing challenges on the export front due to a combination of factors like recessionary trends and fierce price competition. Consequently, the exports from the sector declined in the first quarter of this year but this is only a temporary phenomenon and the sector has the potential to achieve double digit growth levels in the coming months.

The leather and footwear sector was getting additional 2% incentive under MEIS. The announcement of Honble Union Finance Minister to extend the new Scheme of Remission of Duties or Taxes on Export Product (RODTEP) to sectors which currently enjoy incentives upto 2% over MEIS with effect from 1.1.2020 and the announcement that RODTEP will more than adequately incentivize exporters than existing schemes put together is re-assuring for us and this will help in enhancing our price competitiveness

Easy and timely availability of credit with affordable interest levels is extremely important to the leather and footwear sector as this alone can help in tapping the huge opportunities available in the global market. In this context, the Hon’ble Finance Minister has announced major steps including measures to improve trade credit flows and transmission of interest rate cuts by banks, monitoring export finance through an inter-ministerial group in Dept. Of Commerce and consideration of Priority Sector Lending Norms for Export Finance. These measures will galvanize the sector particularly the MSMEs which are affected by the slowdown.

It is also crucial to provide duty free facility to the exporters so as to reduce the financial burden in importing raw materials and inputs by the exporters which are either not available  or are in short supply in the domestic market.  CLE has been requesting for enhancement of duty free limit for Leather Garment exporters from 3% to 5% of FOB value of exports as this will help in reviving exports from this segment which has been showing decline in exports of about 13% this year. We are the second largest global exporter of Leather Garments and hence enhancing the duty free limit from.3% to 5% will help in achieving the prestigious No. 1 position.

New Direct Tax Incentives will significantly boost growth, investment and innovation in leather, leather products and footwear industry

Smt. Nirmala Sitharaman, Hon’ble Union Minister of Finance announced series of Direct Tax Reductions and other measures on September 20, 2019. . I am sure that these measures will significantly boost the growth, investment and innovation in the leather and footwear industry.

As about 92% of the leather, leather products and footwear industry is concentrated in MSME segment, lower tax slabs hold the key to achieve the envisaged growth and investment levels.  In this context, reduction of Corporate Taxes to 22% w.e.f. April 1, 2019,  applying a significantly lower income tax rate of 15% for new domestic company incorporated on or after 1.10.2019 and reduction of Minimum Alternate Tax from 18.5% to 15%, will not only promote growth in production and exports, but will also help in attracting domestic and overseas investments into the sector.

The Department for Promotion of Industry and Internal Trade (DPIIT) & Invest India in co-ordination with CLE are planning major Investment Promotion events in countries like Taiwan, China, Vietnam, Korea, Japan during 2019-20.  The reduced Corporate Taxes will further add to our strength as a favourable investment destination and will be projected effectively in the Investment Promotion Road Shows”

Design and Innovation are the key areas which will bring in more value addition and help us in moving-up the value chain. The decision to expand the scope of CSR funding for incubators funded by Government/ PSU/ Govt. Agency and also for institutions under Council for Scientific and Industrial Research (CSIR) will help in achieving our objective of Making Indian leather and footwear sector a Trend Setter in Fashion, Design and Innovation

Immediately after announcing a series of measures to boost economic growth, the Hon’ble Union Finance Minister has now announced a series of Direct Tax benefits which will significantly boost the image of the Indian leather and footwear industry as a reliable supplier of high quality goods and as a favourable investment destination”

Aided by Govt. Support measures the leather and footwear sector is aiming at achieving significant growth levels in the coming months


With best wishes

P.R. Aqeel Ahmed