Friday, 6 February 2015

Footwear industry seeks pruning of excise duty

MUMBAI, FEBRUARY 5:
With the footwear industry growing, manufacturers and retailers say that high taxes are marring the growth of domestic manufacturing and giving an undue advantage to cheap Chinese imports.

“Footwear industry is a low-hanging fruit with a huge potential to grow. Globally, footwear follows textile in terms of growth and we are asking the Centre to provide us with sops equivalent to the textile industry,” Rafique Malik, Chairman, Metro Shoes said.

Malik said that footwear is currently subject to among the highest excise duty slabs across any product category (26-28 per cent of ex-factory price).

He added that the high excise duty is hurting industries, particularly those in the SME space.

Ill fitting
Rakesh Biyani, Joint Managing Director, Future Retail, said, “In the recent past, high taxes have led to the closure of footwear factories in vantage areas.

“These factories were traditionally close to raw material and skilled labour source. Even though some factories have opened in excise-free zones, these are reportedly plagued by inefficiency due to lack of raw material and skilled labour.”

The All India Footwear Retailers and Manufacturers Association (AIFRA) also pointed out that in last year’s Union Budget, the Finance Minister had reduced excise duty from 12 per cent to 6 per cent on footwear priced at ₹500-₹1,000.

However, the larger issue of rationalisng the excise duty on footwear had remained unaddressed.

India’s per capita consumption of footwear stands at one pair against the global average of four, industry experts say.

Harkirat Singh, MD, Woodland’s Shoes, said, “Footwear consumption is rising with the growth of e-ommerce and brick-and-mortar channels.

Manufacturing in India is still a problem as the cost is prohibitive. Hence, growth in domestic manufacturing is flat and imports are on the rise.” He added that the marginal concession has failed to attract any new investments in setting-up of new factories

Made in China
According to the industry body, “A large portion of demand for footwear is being met from imported products and the domestic footwear industry is unable to meet the demand, especially for high quality footwear.

“China has 200 factories producing 20,000 pairs a day and constitutes about 60 per cent of the world’s production of footwear.

“In stark contrast, India has only three such factories and the exports are negligible — less than 1 per cent of the world trade. This is in contrast to the very tenets of the ‘Make in India’ campaign which focuses on making India a manufacturing hub.”
http://www.thehindubusinessline.com/news/footwear-industry-seeks-pruning-of-excise-duty/article6861499.ece

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