Rs 2,600 crore package unlikely to help leather exports this year

Despite a $26 billion (Rs 2,600 crore) package sanctioned by the government, industry expects leather and leather products exports to grow only marginally by three to four per cent in the current financial year. Double-digit growth is not expected to return even next year.

Leather exports have registered a flat growth in FY18.

Leather and leather products exports were clocking a double-digit growth till 2014-15. After peaking at $6.5 billion in 2014-15, leather exports have been on a gradual decline. In 2015-16, exports were down by 9.8 per cent and in 2016-17 by 3 per cent. At $5.74 billion, leather exports witnessed a flat growth last financial year.

Leather manufacturing and exports were hit by the restrictions on cattle trade when the current government came into power. Availability of raw material had become scarce for a certain period. However, exports could not get back to shape even after supply normalised as the demand scenario had become sluggish.

“The US is the largest market and it has not yet revived. Hong Kong off-take of finished leather too was slow as Chinese exports were also hit by the sluggishness in the US market. This year exports should grow by three to four per cent.

“In the ongoing quarter we are seeing some demand coming from the US and European markets like Germany, Britain and Italy,” said Rafeeq Ahmed, president of All India Skin & Hide Tanners & Merchants Association (AISHTMA).

However, the industry does not expect that the $26 billion package announced by the government will boost export this year or next year.

As per the package, $26 billion will be spent over two years till 2019-20. It involves grant/subsidy of 30 per cent of the cost of new plant and machinery for micro, small and medium enterprises and 20 per cent for other companies towards modernisation/technology upgradation in existing units and also for setting up of new units.

It also includes assistance of 70 per cent of the project cost for upgradation/installation of common effluent treatment plants.

But the industry feels that two years will not be enough for the funding to yield results on the export front. “It takes more than two years to set up a plant. Then the production and sales has to be taken care of to boost exports. We won’t see the impact of the exports this year or next year. We hope that government will extend the duration of the package,” said Ahmed.

Further, the sector has not yet received Rs 500 crore from the previous scheme, which was due last year.

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