Thursday, 20 July 2017

Bata India eyes 35% revenue contribution from women's footwear

Bata India, which has been lagging behind the unorganised shoemakers in terms of women's footwear, is eying to achieve a 35 per cent revenue contribution from its women's footwear segment from the current contribution of 26 per cent.

"In the organised footwear segment globally, women's category dominates the portfolio of any company, but it's not the same for us in India. Revenue contribution from sales of women's footwear is just 26 per cent and we are trying to increase it to 35 per cent", the company's chairman, Uday Khanna said in Kolkata on the sidelines of the company's annual general meeting (AGM).

The men's footwear category contributed 50 per cent of the company's Rs 2,544 crore topline, while children's footwear contributed 15 per cent and accessories accounted for an estimated Rs 127 crore revenue at five per cent.

The company, besides introducing more designs and in-shop experience to attract sales of women's footwear, is also betting on an aggressive advertising campaign to push up sales in this category and will be allocating more funds on advertising and promotions of women's footwear. However, company officials declined to comment on the amount allotted to advertising.

The company's last promotional campaign targeted at the women audience had met with sharp criticism from a section of the society. Khanna, however, has taken the criticism with optimism. "It implies that we are getting noticed," he said.

Apart from the focus on increasing revenue contribution from women's footwear, Bata India is also betting on premiumisation of products and has come up with a design and research & development centre in Gurgaon to roll-out trendy as well as comfortable footwear.

Although Khanna, while responding to a shareholders' query stated that it is unable to match the competition from China in this process, the company will keep on focussing on local sourcing of premium products from India. However, for the premium range, which is mostly leather-centric, Bata India will be using imported leather from Brazil apart from other sources.

While shoes within the Rs 500 bracket accounts for 35 per cent of the company's revenue and 50 per cent of volume sales, the Rs 500-1,500 price bracket accounts for 25 per cent of sales and the rest of the annual topline comes from the bracket starting from Rs 1,500 a pair.

Besides, although the company will continue to invest Rs 200-250 crore each year to add 100 company-owned stores per annum, it is also keen on expanding its business in the upcountry by adding 50 stores with franchise partners. Typically, setting up a direct company-owned outlet costs between Rs 2-2.5 crore, while the same through a franchise partner in tier-2 and tier-3 towns costs Rs 50 lakhs. On the contrary, revenue from the franchise stores accounts between Rs 0.7-1 crore every year.

Managing Director Rajeev Gopalakrishnan said that Bata India will also be strengthening its institutional sales and is building a separate team to increase its exposure under this category. Currently, institutional sales account for 3-5 per cent of the consolidated sales.

Tuesday, 18 July 2017

India International Footwear Fair to be held next month

Footwear brands from across the country will showcase their offerings at the three-day India International Footwear Fair 2017 here, organiser ITPO said.

The three-day exhibition to be held from August 4-6 will witness participation from 150 Indian companies and 100 foreign participants from China, Taiwan and Italy.

India is the second largest producer of footwear after China, accounting for 9.57 per cent of global footwear production of 23 billion pairs.

India produces 2,200 million pairs of different categories of footwear, out of which 95 per cent is being sold in the domestic market.

The major production centres are Chennai, Ranipet and Ambur in Tamil Nadu, Mangolpuri and Narela in New Delhi, Kanpur, Agra, Noida and Saharanpur in Uttar Pradesh, Jalandhar and Ludhiana in Punjab, Pune and Mumbai in Maharashtra, Calicut and Ernakulam in Kerala, among others.

About 1.1 million workers are engaged in the footwear manufacturing industry.
The fair is being organised by India Trade Promotion organisation (ITPO) at a time when Pragati Maidan is being revamped as the world class Integrated Exhibition-cum- Convention Centre.

"This year, the fair has tremendous significance especially when a unified Goods and Services Tax has been brought into effect in the country to re-shape India?s business landscape by making the country an easier place to do business.
"Apart from unveiling the export potential of India, IIFF aims to project India as a favorite investment destination," ITPO said. PTI RSN NKD MKJ

Monday, 17 July 2017

Rs 30 billion domestic shoe industry under siege-Katmandu

Nepal-made footwear products are on the cusp of losing a big chunk of share in the growing domestic footwear market, as smuggled products, under-invoicing of imported products and lack of incentives for manufacturers have started eroding their competitive edge.

Nepal now sees sales of around Rs30 billion worth of footwear, including shoes, sandals and slippers, per year. This market is growing at the rate of around 20 percent per year.

As the market is growing, the contribution of locally-made footwear in the domestic shoe market is also increasing. In the fiscal year 2015-16, 1,501 shoe factories, established at a cost of around Rs20 billion, manufactured almost 44 million pairs of shoes, sandals and slippers.

With this, the contribution of Nepal-made footwear products has surged to 50 percent in the domestic footwear market, as against 20 percent seven years ago.

But the share occupied by locally-manufactured footwear products in the domestic footwear market is likely to come down as shoes smuggled from India and China are flooding the market, according to Manoj Kumar Shrestha, founder and director of Sky Shoes.

If Shrestha’s estimates are anything to go by, sales of smuggled shoes have gone up by up to 30 percent in the recent days.

“This is posing a big threat to us,” said Shrestha.

The government levies a customs duty of 20 percent and value added tax of 13 percent on imported shoes. “These taxes are evaded when foreign shoes are smuggled into the country. This automatically raises the profit margin, enabling traders engaged in smuggling to sell shoes at cheaper rates,” said Shrestha.

Another bigger threat facing the domestic footwear industry is under-invoicing of imported products. This means invoices submitted by importers at customs offices include marked-down costs of footwear products-a technique used by importers to pay less taxes.

In the fiscal year 2015-16, for instance, the average value of per pair of footwear product imported into the country stood at Rs88, a surprisingly low price. In contrast, the average value of per pair of footwear product exported from Nepal in the same year hovered around Rs283.

Because of the price difference, many retail shoe stores have started replacing Nepal-made shoes with smuggled goods or imported products to earn better profits, according to Rabin Kumar Shrestha, president of the Footwear Manufacturers Association of Nepal (FMAN).

This is creating an uneven playing field for domestic shoe manufacturers, who have made huge investment to set up factories and have provided jobs to an estimated 50,000 people.

Those selling imported shoes, however, do not buy these arguments.

“Nepali shoes are cheaper than imported ones. But they are poorly designed and finishing is not that great,” said Ramkrishna Thapaliya of RK Fancy Stores at Bagbazaar, who sells imported shoes. “These are the reasons why many prefer imported shoes.”

Although the modern history of Nepali shoe industry dates back to 1962 when Bansbari Leather Shoe Factory was set up, the sector could not grow in a proper manner for a long time as it was not fully open to the private sector. This limited competition and innovation.

The domestic shoe industry started flourishing only after the restoration of the democracy in early 1990s. New democratic governments that started steering the country then liberalised the economy, paving the way for entry of private players in the footwear business. But the growing industry faced another misfortune circa 2000, as cheap Chinese products started penetrating the market.

“Most of the Chinese shoes were cheap. But they were not made of leather like Nepal-made shoes,” FMAN President Shrestha said. “Yet Nepali consumers fell for those cheap products.”

Despite such threats, the domestic shoe industry has continued to grow. Today, the domestic industry produces all types of footwear products, ranging from school, party, official and sports shoes to various types of sandals and slippers.

And, lately, a slew of exhibitions organised by domestic footwear manufacturers-a trend which began in 2012-has started drawing interest of Nepalis towards Nepal-made shoes. Because of these reasons, per capita footwear consumption has now grown to 2.7 in the country, meaning every Nepali purchases an average of around three shoes or slippers per year.

In spite of this rosy scenario, domestic shoe manufacturers are worried by the onslaught of cheap imported products.

In the five-year period between 2011-12 and 2015-16, average footwear imports have gone up by around 13 percent per year. In the fiscal year 2015-16 alone Nepal imported around 38 million pairs of shoes, sandals and slippers worth Rs3.3 billion. But again the value of a big chunk of imported shoes is depressed because of under invoicing, which poses threat to domestic footwear industry.

This problem of under-invoicing has lately started hitting shoe sole manufacturers in the country as well.

Customs offices in Nepal fix the duties on soles based on quantity that is imported. For instance, the value of a kg of PVC soles, which includes two pairs, has been fixed at Rs110 by customs offices. On the other hand, the value of a kg of PU soles, which includes four pairs, is valued at Rs560.

“But importers assign the value of PVC soles while importing PU soles. This means importers are bringing in four pairs of PU soles at the cost of Rs110,” a report

prepared by the FMAN says. “This kind of undue advantage is pushing around 50 sole manufacturing companies in Nepal to the verge of collapse.”

These instances imply that the problem of under-invoicing, on the one hand, is

raising the spectre of foreign footwear products gradually displacing Nepali products, while on the other hitting the government’s revenue collection.

“To arrest this situation the difference between taxes levied on imported products and raw materials imported by domestic footwear manufacturers should be at least

15 percent,” said Ram Krishna Prasain, managing director of Shikhar Shoe, one of the largest shoe manufacturers in Nepal.

Footwear facts

Domestic production in 2015-16 - 43.96m pairs
Per capita footwear consumption - 2.7
Share of Nepal-made footwear in domestic market - 50.2pc
No of footwear manufacturers in Nepal - 1,501
No of large and medium footwear enterprises - 221
Production capacity of Nepali footwear industry - 111.97 pairs
Estimated investment in footwear industry - Rs19.94b
Estimated job creation - 50,000
Source: Footwear Manufacturers Association of Nepal

Sunday, 16 July 2017

EDII to set up shoe making cluster in Janbazar, Kolkatta

Entrepreneurship Development Institute of India (EDII), an Ahmedabad-based national resource institute for entrepreneurship education, research, training and institution building, will establish a 'common facility centre' (CFC) in the Janbazar shoe making cluster in Kolkata.

The Janbazar common facility centre has received a sum of Rs 5 crore (approximately) from the state directorate of small, micro and medium industries, government of West Bengal. The amount includes funds for setting up the building, installation of plant & machinery, and establishment of a raw material bank. The project is likely to materialise in the next two years.

In its final phase, the common facility centre will contribute towards holistic development and sustainability of cobblers and also help manufacture shoes under the special purpose vehicle through a common brand name.

Commenting on the benefits of CFC, EDII senior faculty Sanjay Pal said, "The purpose of establishing CFC is to ensure that cobblers can scale up their business through improved productivity and easy procurement of raw material."

"CFC will try and facilitate the beneficiaries by supplying them raw materials at lower price; by establishing marketing linkages and in many other ways," added Kaushik Mukherjee, regional head, EDII-Kolkata.

Saturday, 15 July 2017

Install chromium recovery plants in Unnao: NGT to tanneries

The National Green Tribunal on Wednesday directed the tannery clusters located at Banther and Unnao in Uttar Pradesh on the banks of Ganga to install chromium recovery plants within four weeks so that they do not discharge any effluent in the drains pouring into the river. Chromium recovery plant helps in removing trivalent chromium from tannery waste water which is produced during the processing of animal hides. A bench headed by NGT Chairperson Justice Swatanter Kumar asked the leather units which have not set up these anti-pollution devices to do so within the stipulated time and warned that failure to do so would result in their closure.

The green panel said it would pronounce its judgement on the second phase of the Ganga cleaning project between Haridwar to Unnao in Uttar Pradesh on Thursday. The Centre had earlier said that out of the 456 tanneries identified to be polluting the Ganga when it flows through UP, only 14 have been dismantled. Among the 442 functional tanneries, 437 units are divided in three clusters — Kanpur (400), Banther (23) and Unnao (14) — which are connected to Common Effluent Treatment Plants that are non-compliant of Central Pollution Control Board norms, the Centre had said.

In April, the Yogi Adityanath-led UP government had favoured the shifting of British-era tanneries releasing toxic wastes into the river Ganga at Kanpur. The UP government had told the NGT that the hunt for a new site for these leather units, which are the “major source of pollution” in Ganga, was under consideration and would be identified soon.

Last year, the then Akhilesh Yadav government had opposed the idea of shifting of over 400 tanneries giving employment to over two million people, saying moving the tannery hubs to some other place was almost “next to impossible” due to paucity of land.

The green panel, however, said the decision to shift tannery cluster rested entirely with the state government. However, the existing industrial clusters at Jajmau and Unnao required establishment of an entirely new Common Effluent Treatment Plant with a separate chromium recovery plant and separate pipelines.

In a detailed report covering various aspects of contamination in the river, CPCB had informed the NGT that the Ganga, spanning a distance of 543 km between Haridwar and Kanpur, was affected by 1,072 seriously polluting industries which were releasing heavy metals and pesticides. Currently, 823.1 million litres per day (MLD) of untreated sewage and 212.42 MLD of industrial effluent flows into the river, while three of the four monitored Sewage Treatment Plants were non-compliant with the set standards, it said.

Thursday, 13 July 2017

Campaign to promote footwear use by barefooted children

Berhampur: A special awareness drive has been launched in Odisha's Ganjam district to ensure that poor school children build a habit of using footwear and stop moving around barefoot. The special drive - "Khalipada Ku Na" (No to barefoot) - is a part the ongoing programme in which school children are playing a major role by encouraging the people to use toilets, said District Education Officer (DEO), Sanatan Panda.

He said it was noticed that several poor students go to school barefoot either due to lack of awareness of parents or financial constraints. "School headmasters have been asked to hold awareness meetings of parents to ensure that their wards use footwear while going to school for hygiene and safety of their feet," Panda said.

The administration has also requested donors to come forward to adopt school/gram panchayat/ block to provide footwear to the poor students. "Since it is not a government programme, we have urged the donors, including government officials, organisations, political leaders and individuals to raise funds to provide footwear to the students," he said.

Wednesday, 12 July 2017

Puma Plans Huge Investment In Technology; Eyes 35 New Stores

The German sports apparel brand Puma has completed more than a decade in India. The clothing and sportswear brand was one of the late entrants in the Indian market in comparison to their competitors Nike, Adidas, Reebok and others.

Abhishek Ganguly, MD, Puma India feels that the journey has been phenomenal so far. "We had to do a lot of catch up but we grew up from an unknown brand to gain market leadership in flat eight years." He said.

Puma believes they have not done different things but did things differently in terms of brand engagement, communication and marketing. "We didn't come here and copy pasted somebody's else's model we created our own."

In pursuit of profitability 
In the last three years, the sportswear brand witnessed a decline in the profit. In 2014 the brand registered Rs 29 Cr of Profit which becomes Rs 12 Crore in 2015 and going forward in the latest data available Puma registered a loss of around Rs 3 crore. Reacting to this, Ganguly stressed that if compared to the competition their brand has maximum profit against any other competing brands. He assured things are on track for the next year.

"We are on a growth curve, we are making huge investments and you will see this in growth and sales this year everything is on track better than planned," he added.

Puma does not believe in over expanding and that is the reason they have shut down only eight stores so far. Currently, the company has 353 stores across 120 cities. In last one year, Puma has added 60 new stores and plans to add 35 new stores in coming one year. All these stores will be in Tier I, II& III cities.

Currently, 293 Puma stores are operated by the franchise and 60 stores are owned and operated by the company. The upcoming stores will also be mixed bag between company and franchise.

Major Investment Ahead
The German brand is making a huge investment in technology to change their approach towards the market. Primarily the investments are on the front of e-commerce and consumers. "Going forward e-commerce is the future and brands who don't do this will suffer." Said Ganguly

The brand is trying to get into multi-channel and Omni-channel environment. The idea is to deal with the customers directly with their flagship platform The brand will also be present on all the leading e-commerce platform. For this, Puma is changing their entire mindset. Earlier it was doing product management, offline retailing and merchandising.

We are set to wear another cap to become hardcore e-commerce player, which requires re-engineering the entire organisation. And technology is the starting point. Said, Puma's MD

The brand is listing their products from their warehouse to different e-commerce platform including And integrating the warehouse with real-time across all the e-commerce platforms.

"We are doing things as an organisation which we have never done before. Why we are doing it because if we will not do it, we will not have a direct handle on the consumer."

Currently, Puma's 25 per cent sales come from Online and Abhishek Ganguly is expecting it to increase it to 38 per cent in the coming two years. The C and D towns are pushing sales for Puma India and in 2015-16 12 per cent of orders came from these towns. Every year the demand is increasing since e-commerce makes small towns viable.

GST impact
Ganguly feels that GST will have a very positive impact on the economy and it will bring lots of transparency. He said, "We had to do lots of changes in our IT systems and so does our e-commerce and franchise partners. And that was a difficult period for all of us. The business had downtime for five to seven days as you cannot ship."

He sees GST more of an operational problem than demand problem. While Puma has taken the decision not to increase the price. We are in the growth phase of the business and we would like to create more demand."

Puma is also known for their unconventional marketing strategy. The brand doesn't believe in traditional marketing as they feel there is a better way to reach consumers. Sharing more, Ganguly said we only associate with someone who we think our consumer can relate to and Usain Bolt is a true example.

Ganguly feels that the eight-year deal with Virat Kohli will be a game changer for the company.

Tuesday, 11 July 2017

Relief for meat, leather traders as Supreme Court stays Centre’s ban on cattle slaughter

The Supreme Court, today, ordered a three-month stay on the Union Government’s orders on banning sale and purchase of cattle for slaughter. The court extended the Madras High Court’s stay order to the entire country. On May 30, the Madurai bench of the Madras High Court had put a stay on the Centre’s decision of banning cattle trade.

The Centre informed the apex court that some state governments have refused to implement new cattle trade rules. West Bengal and Kerala had fiercely opposed the decision. It is important to note that regulating cattle trade is a state subject. The apex court was told that the Centre will revise the rules by August after getting inputs from states.

Besides small farmers, whose livelihood depends on the sale of unproductive cattle, the decision also comes as a relief for multi-billion-dollar meat and leather industries.

On May 25, Narendra Modi-led National Democratic Alliance (NDA) government had banned sale of cattle, which include cows, bulls, bullocks, buffaloes, steers, heifers, calves and camel, for slaughter.

The decision had pinched beef exporters and leather manufacturers alike. Contribution of India’s beef export to international trade started shrinking. The total value of India’s beef export is more than Rs 26,000 crore.

In world market, India has been the top beef exporter till 2016. Increased cases of mob lynching in the name of saving cattle and subsequent government ban on cattle trade hurt this industry.

As the fifth largest meat producer, India produces 6.3 million tonnes of meat, which is about three per cent of world’s total meat production—220 million tonnes.

Buffalo meat contributes 31 per cent of total meat production. Cattle, sheep, goats, pigs, and poultry contribute 31 per cent, 5 per cent, 10 per cent, 10 per cent, and 11 per cent respectively. Therefore, the share of bovine meat is about 62 per cent.

Monday, 10 July 2017

The last original Kolhapuris

Behind a large bungalow in the Jawahar Nagar area in Kolhapur town in eastern Maharashtra lies a small plot of land, measuring 85x160 yards. A small hut adjoins it and it is one of many equally-sized plots along the road that runs through this neighbourhood. Like the other plots, this piece of land is covered with overgrown grass that hides a collection of grey stone structures. It has the feel of a cemetery now but used to be a bag tanning unit, employing a unique method of tanning and preparing leather out of buffalo or bullock hide.

Till about 20 years ago, people say, the entire road used to bustle with the sound of numerous tanning units operating all at once. Most supplied the raw material that goes into making the handcrafted Kolhapuri chappals that this town is famous for.

Bag tanning is a process that can take as long as 30 to 35 days, says Arun Vathkar who ran this unit. In two stone tanks in the erstwhile tannery, hides were kept in a mixture of salt and limestone to soften the skin and remove hair. The skin would then be stitched into a bag using leaves from a locally found cactus called sisal. Between two stone beams, these bags would be suspended and filled with hot water infused with myrobalan seeds (hirda) and pieces of babul wood.

After soaking for about eight days, the skin would be turned inside out and the process repeated before it was washed again and dried in the sun, once again on a bed of hirda and babul. The infusion of these herbs is what gave the leather in Kolhapuri chappals its particular look and feel.

Crackdown and ban

“The tanning units used to be in the centre of town but during the reign of Shahu Maharaj (Maharaja of Kolhapur till 1922) and his successor Maharaja Rajaram, they were moved to this area and allotted equal sized plots,” says Vathkar’s nephew Shashikant, who owns another tanning unit that is no longer in use. About 50 tanning units used to operate here but from the late 90s onwards, many were shut following a crackdown on effluents that caused water pollution. And over the past two years, the few remaining units were forced to down shutters due to a lack of raw material. Suppliers had stopped sending them hide following the ban on slaughter of cow, bulls, and oxen that came into effect in Maharashtra in 2015.

When business was good, Vathkar says his tanning units employed about 30 people and produced over a hundred pieces of leather a week. Raw material, buffalo or bullock hide, would come from Bhiwandi, Thane, Dharavi, and as far as Gujarat and Palampur (in Himachal Pradesh). Hide would also be brought in by the Mahar-Maang community that collected carcasses from the surrounding villages. The Mahar-Maangs are one of three Scheduled Caste communities traditionally involved in the process of making Kolhapuri chappals. The Dhors, to which Vathkar belongs, run the tanneries, and the Chambhars make the chappals by hand.

Since the ban on cattle slaughter, much has changed. “Farmers are unable to sell or even transport aged cattle for fear of being stopped by cow vigilantes. Most just abandon these animals by the roadside now,” Vathkar says. The Mahar-Maangs no longer bring hide for fear of being stopped and accused of killing the animals. “To some extent, there was the sale of buffaloes and buffalo hide but that too has stopped over the past few months.”

Since the closing of his tanneries, Vathkar operates as a wholesaler of Kohlapuri chappals and leather material that he procures from other States such as Karnataka and most predominantly now, Tamil Nadu. “There are many tanneries that now operate in places like Ambur and Ranipet (in T.N.) from where we procure leather but they use chemicals to treat the hide,” he says. In his shop, it is easy to tell them apart: the distinctive light brown colour and irregular texture of the last few organically-treated leather as against the pinkish colour and rubbery smooth texture of the chemically-treated ones. It’s far from ideal but Vathkar says a majority of the chappals in Kolhapur are now made with the latter.

About five minutes away from Jawahar Nagar, in an area called Subash Nagar, Arun Satpute runs one of the bigger workshops where Kolhapuri chappals are hand made. The unit is run out of a house, with workers sitting outside as well as in two rooms inside, with another room used to store bags of leather. There is a 12 or 13-step process involved in making the chappals, from sticking together the layers that make up the sole, creating the collar or upper belt and inlaying the braiding to giving the distinctive design touches and finally stitching the parts together. There are 12 workers in the unit but the work is not consistent, they say. “These days, there is work for just two weeks every month, so we have to look out for other jobs as well.”

Slow death

Satpute, who is also founder of the Kolhapur Chappal Audyogik Samuh (Kolhapur Footwear Industry Group), pulls out two notebooks that he has maintained as visitor logs. In them are a series of entries from students of design institutes like the National Institute of Fashion Technology, International Institute of Fashion Design, even Kolhapur’s Shivaji University, as well as visitors from Denmark, Italy, Portugal and the U.K. who came to study the process that goes into making the Kolhapuri chappal. Many write that they are documenting the process to publish in international magazines and journals.

As proud as Satpute is of these entries, he admits the Kolhapuri chappal industry has been dying a slow death. “This industry used to provide employment to more than a lakh people in this town but now barely employs about 10,000. The majority of them work part time as agricultural labourers,” he says. His family was in the business for generations but his son and daughter have no interest in pursuing the trade, and several other families share the sentiment.

“The decline began with the closing of the tanneries. These were small scale operations that used to be totally dependant on locally-sourced material,” he explains. Working with leather from outside now keeps the business going but he says it will slowly lead to a dilution of identity. “With the reduced availability of hide, there is already an increase in the price of leather from other States that is jacking up prices here. On the other hand, neighbouring districts such as Nipani and Belgaum in Karnataka that have picked up the technique of bag tanning and are able to procure raw material cheaply have started making the chappals at a cheaper rate locally.” The reality, he says, is that in a few years, over 80% of what is recognised as the real Kolhapuri chappal may no longer even be produced in Kolhapur.

Near the Shivaji statue in the centre of Kolhapur, an entire lane called ‘chappal gali’ forms the commercial heart of the Kohlapuri chappal business, selling to tourists and exporting to other centres. Vinay Kadam, proprietor of one of the most prominent retail and export centres here, offers a pragmatic view of the raw material situation. “As long as there is leather still coming in from other States, there will be business for the producers,” he says.

The big change over the past two years, he concedes, has been the rising price of leather. And that has led to an increase in the rate of even the most basic chappal models. “Chappals that used to cost ₹300 are now sold for ₹500, those that sold for ₹600 now go for ₹900.” There is uncertainty in the leather market, he says, especially after the sale of buffalo for slaughter was also banned, but the rise in prices is along expected lines.

Ask Kadam more closely about the quality though, and what is referred to as “asal Kolhapuri”, and his face falls. From a corner of his shop, he pulls out a bench with attached drawers and takes out two pairs of chappals from within. They seem more distinctive in terms of colour than the hundreds of pairs hanging on the walls.

The natural touch

“If you feel the soles of these chappals, you’ll notice they’re cool to the touch,” he says. “It’s sunny outside and there’s only one fan inside the shop but this leather will always be cool. That can only happen with bag tanning.” He is referring to the traditional process whereby hide fresh from the carcass is placed immediately in salt for treatment before being sewn into bags—no storage in warehouses or chemical treatments here; nothing that can take away from the leather’s natural feel.

There is much to lament of course, and Kadam freely admits that such chappals may not find their way to his shop after a few years. For now though, like many other traders in this area, he is confused about the various mixed signals the government seems to be sending out. “Under the new GST norm, there is now a 28% tax on leather goods even though chappals like these are handicrafts and meant to be exempted from tax,” he says.

And while the leather industry was supposed to form a key part of the ‘Make in India’ programme, the new rules on cattle sale for slaughter are damaging for the industry as is the inconsistency between the laws in each State. For an industry already in decline, that uncertainty is surely the death knell.

Sunday, 9 July 2017

Effect of cattle ban, GST in Jalandhar; leather, cricket balls to get costlier

The Union government’s ban on cattle slaughter and the decision of imposing 5% Goods and Services Tax (GST) on raw hides is adding to the worries of the leather and sports industry.

The leather business is already facing a hike of 15% to 20% in the cost of raw material after the government recently banned slaughterhouses in Uttar Pradesh and later the sale of cows and buffaloes for slaughter across the country.

After imposition of GST on the raw material in the leather industry and other goods used for manufacturing cricket balls, the price of the cricket balls is expected to double in the next two months, traders claimed.

“Currently, traders have leather stock for one month. So, prices of cricket balls may be stable or may only witness a marginal hike of 5% to 10% in prices. But, if the cattle ban remains intact for over one month, the cost of cricket balls will see a hike of over 40%,” said Ravinder Dhir, president, Sports Forum,


He said volleyballs, cricket balls and baseballs are all made of leather, imported from western UP, but most slaughterhouses there have already been shut down. “A sheet of leather which earlier cost us Rs 1300 in March is now available for over Rs 1,700,” Dhir said.

Rajinder Prasad, a leading sports trader here, said that superior quality cricket ball price has gone up to Rs 600 now against Rs 350 to Rs 400 six months ago.

There are at least 60 tanneries (factories) in the district. Five years ago, the figure was more than 100.


“Generally, traders prefer to buy the skin from slaughterhouses as it produces high-quality leather products as compared to the skin of dead animals for a cricket ball and sports goods,” said Col Jagjit Singh Paul, president of the Punjab Leather Federation.

He said jobs of over 10,000 employees in the leather industry here are at stake after the ban of slaughter of animals and GST on raw hides.

“There was no tax on the purchase of raw material within the state and only 2% Central Sales Tax (CST) was imposed on the imported material. “But after implementation of the GST, the government has imposed 5% tax on the purchase of material within the state and 5% IGST on import of raw material,” Col Jagjit said.

Similarly, the government is charging 12% GST on the import of finished leather against the current 6.05% VAT charged by the state government, which would increase the cost of all leather goods.

Meanwhile, leather traders are on strike for the past one week against the government’s decision of 5% GST on raw material.

Saturday, 8 July 2017

GST: Footwear industry feels the heat

Footwear business has come to a standstill in the city of Taj where one-third of the population is directly or indirectly connected to the industry.

Workers are waiting for orders but as there is no activity, the demand has fallen drastically. Agra caters to 65% of the country’s requirement of footwear.

“Business has stopped since the imposition of the goods and services tax (GST) on July 1. Shoes manufactured in Agra are mostly handmade. It is more of a cottage industry with families operating from their houses or rented accommodations,” said Gagan Das Ramani, president of Agra Shoe Factors Association.

As per new norms under GST, manufacturers are required to mention maximum retail price (MRP) on the footwear.

“There are about 3 lakh workers involved in footwear manufacturing and 50,000 shopkeepers and their staff who sell the products. Many of them are illiterate and are expected to comply with the idea of mentioning MRP on the products,” said Ramani.

“In machine production, MRP can easily be mentioned on the product but for small scale manufacturer it is tough to do so, especially when it has to be indelible,” said Ramani.

“Earlier, footwear below Rs 300 was exempted from VAT in Agra. Footwear up to Rs 500 should get exemption under GST but the government has imposed 5% tax on footwear below Rs 500 and 18% on the higher range of products,” he said.

Chairman of Northern region unit of the Council for Leather Exports Pooran Dawar said GST on footwear would bring down export which was already under pressure.

“Footwear is a basic necessity and tax rates should have been fixed at par with clothing which has 5% GST till Rs 1,000. Footwear coming in the range of Rs 500-1,000 has been placed in 18% tax category which seems to be irrational,” said Dawar.

“Agra caters to 65% of footwear requirement in India and has over 25% share in footwear export from India. The new tax regime will hit the industry hard,” he said.

“The footwear market was sluggish since demonetisation was introduced. GST has come as another blow. We are receiving fewer customers and sales are low,” said Prakash Berry who owns a shop on bypass road.

Haresh Kumar, who works at a small shoe manufacturing unit in Ratanpura area, is clueless about the new tax regime but knows that because of GST the owner of his unit is not getting any orders. “I used to get Rs 200 per day but I have no work these days,” he said.

Friday, 7 July 2017

Govt readying Rs 2,500 crore package for leather and footwear industry

The finance ministry is likely to approve a Rs 2,500 crore package for the leather and footwear industry, a move that is expected to boost exports, generate employment and make the sector competitive globally.

"Finance Ministry's expenditure finance committee (EFC) has already examined the proposal. They may grant a package worth around Rs 2,500 crore for the leather and footwear sector," a senior government official told Moneycontrol.

EFC will finalise the amount in the next few days and will be taken up by the Cabinet by the end of the month, the official, who did not wish to be identified, said.

In May, the Department of Industrial Policy and Promotion (DIPP) had sought a package worth Rs 4,000 crore from the Finance Ministry to support the leather and footwear industry, based on the Rs 6,000 crore package announced for the textiles sector earlier by Arun Jaitley in the 2017-18 Budget.

DIPP had floated a revised Indian Leather Development Programme (ILDP) after the scheme ended with 12th Five Year Plan (2012-2017). With the end of the five-year plan model by the Narendra Modi-led government, the existing schemes are now being continued for three years.

Following this, the DIPP projected expenses of Rs 4000 crore for ILDP up to 2020. However, with an amount of Rs 500 crore allocated for the scheme in the Budget 2017-18, the finance ministry is likely to grant a package lower than what the trade and industry ministry had sought, the official explained.

DIPP is the nodal agency for the central sector scheme, ILDP, which was approved with an outlay of Rs 990.36 crore for 12th Plan period (2012-17). The Centre has already allocated Rs 500 crore towards ILDP for the current financial year.

The programme aims at “augmenting raw material base through modernisation and technology upgradation of leather units, addressing environmental concerns, human resource development, supporting traditional leather artisans, addressing infrastructure constraints and establishing institutional facilities.”

With six sub-schemes including Integrated Development of Leather Sector (IDLS), human resource development, support to the artisan, leather technology innovation and mega leather cluster under ILDP,  DIPP has also asked for more incentives to scale up the programme.

The department is looking at liberalising labour laws by incentivising employers to bring labourers under the formal sector and a new sub-scheme that will take care of employment generation is also in the offing, the official said.

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