Finance Minister Arun Jaitley may consider reducing excise duty on leather shoes from 12 per cent to 6 per cent in the forthcoming Budget to give a boost to manufacturing.
In its Budget proposals, the Commerce Ministry has also suggested the Finance Minister to raise the limit of excise duty exemption on leather shoes from Rs 500 to Rs 1,000, sources said.
“The move would help in pushing the ‘Make in India’ campaign of the Prime Minister as leather is one of the 25 major sectors identified in the campaign,” they said.
Industry too has demanded the duty reduction and exemption as it would enhance competitiveness of the Indian goods in the international market.
“Leather shoes are manufactured mainly by the micro and small industries. 12 per cent excise duty is very high. Our products are not competitive,” said Council of Leather Exports Chairman Rafeeq Ahemed, a major manufacturer of leather shoes in the country.
He added that due to high duties, domestic players are not increasing their capacity and production.
“The sector is highly labour intensive. About 2.4 million people are already employed directly and indirectly. Another 3 million will join the workforce in the next five years. Given this situation, the government should announce these incentives in the Budget,” he added.
The overall market size of the leather industry in India is about USD 6 billion. Out of this, the shoes market is around USD 4 billion.