The Council for Leather Exports (CLE) has urged the Government to provide several financial incentives in the forthcoming Budget, to be presented by Finance Minister Nirmala Sitharaman on the 1^st of February. These include extending the Production Linked Incentive (PLI) scheme to the leather and footwear sector to encourage domestic production and the reinstatement of import duty exemptions on certain goods to boost manufacturing and exports. It was also suggested that the government should consider allowing all value-added leathers, including crust leather, to be exported freely without any export duty, norms, inspection, testing or certification.

The Council’s Chairman, Sanjay Leekha, recalled that the industry had been exempt from import duties for the past 30 years, but this was withdrawn two years ago, making it difficult for the industry to source international leather. If reinstated, “it could ensure that our products manufacturing sectors would have access to international leather and hence make us more competitive and more up-to-date with our product offerings”, he said.

He added that export duty should only be levied on raw hides and skins and wet blue leather. Anything beyond that should be considered a finished product and could be freely exported. “This has actually become a necessity because, in the last few years, our sector has lost almost 1 billion US dollars in exports. We can bring back 1 billion US dollars in exports if the norms are changed”, he emphasised.

The council has also sought an extension of the PLI scheme to the leather and footwear sector. This incentive was introduced in 2021 in 14 sectors (including telecommunications, white goods, textiles, manufacturing of medical devices, automobiles, speciality steel, food products, high-efficiency solar PV modules, advanced chemistry cell batteries, drones, and pharma) to help Indian companies and manufacturers compete globally by attracting investment in key sectors and cutting-edge technologies, and ensuring efficiency and economies of scale in the manufacturing sector.

But Deloitte India Partner Rajat Wahi has argued, for example, that “a lot of these sectors do not generate massive employment. Leather, garment, handicraft, jewellery, many of these sectors need PLI scheme to come in because they are the ones which are the highest employment generators. That will help lower-income households as well as urban”.

Concerning exports, the CLE Chairman also acknowledged that there is currently a downward trend as a result of the global economic slowdown. However, he expressed confidence that the slowdown is temporary and that exports will bounce back. “We have set some very aggressive export targets for our industry. In fact, from the current level of about 5 billion US dollars or little over that, we expect our industry to reach 12.5 billion US dollars by 2030”, he asserted.