Govt giving final touches to special package for leather and footwear industry

The government is giving final touches to a special package for the leather and footwear industry that is expected to boost exports, generate employment and make the sector competitive globally.

"The package will be finalised in about a week's time. It will be sent for inter-ministerial consultation thereafter, and finally to the Cabinet for its approval," a senior government official told Moneycontrol.

"This (getting Cabinet's approval) would take about two months time," the official said.

In the Budget 2017-18, Finance Minister Arun Jaitley had said that a special scheme for creating employment in the leather and footwear industries will be launched and will be on lines of the Rs 6,000 crore package that was announced for the textile sector last year.

The Department of Industrial Policy and Promotion (DIPP) is the nodal agency for the central sector scheme -- Indian Leather Development Programme (ILDP) -- which was approved with an outlay of Rs 990.36 crore, during 12th Plan period (2012-17).

"As compared with the allocated amount of Rs 990 crore, Rs 1,145 crore has already been spent during 2012-17. We want to increase the funding by nearly four times (for next three years)," the official said.

ILDP 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 artisan, leather technology innovation and mega leather cluster under ILDP,  DIPP wants more  incentives to scale up the programme.

The department is looking at liberalising labour laws by incentivising employers to bring labours under the formal sector.

"We will also be giving employer's portion of the EPF (Employees Providend Fund). Out of 12 percent, the government will be paying 8.33 percent towards Employee Pension Scheme (EPS) (under Pradhan Mantri Rojgar Protsahan Yojna). The government will also be paying 3.67 percent EPF contribution of the employer for the leather sector," the official said, adding that the incentive will also be a part of the will be a part of the package.

DIPP has also sought 5 percent or lower tax rate for the leather industry under Goods and Services Tax (GST), as it is a labour-incentive sector. Currently, leather items attract zero excise duty from the Centre.

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