The Department for Promotion of Industry and Internal Trade (DPIIT) has sent proposals for reducing goods and services tax (GST) rates on certain segments of the leather sector, Rajeev Singh Thakur, additional secretary at DPIIT, said on Tuesday.
“The DPIIT is aware of GST problems in the leather sector, and has sent proposals in the past for rate reduction to the Finance Ministry. However, the rates on leather goods are subject to approval by the GST Council,” he added.
The leather industry has been demanding that GST be reduced to 5 per cent from the current rate of 12 per cent. Leather products exporters have also expressed resentment over the hike in GST from 5 per cent to 12 per cent on finished leather.
Thakur said about Rs 350 crore had been disbursed under the Indian Footwear and Leather Development Programme (IFLDP) out of the Rs 1,700-crore allocation till FY26.
IFLDP is being implemented with six sub-schemes, that is Integrated Development of Leather Sector (IDLS), Sustainable Technology and Environmental Promotion (STEP), Establishment of Institutional Facilities (EIF), Mega Leather Footwear and Accessories Cluster Development (MLFAC), Brand Promotion and Development of Design Studios.
Six proposals from Bihar, Madhya Pradesh, Uttar Pradesh, Maharashtra, Tamil Nadu, and Manipur have been received under MLFAC. Singh said the proposals are scrutinised by NPC (National Productivity Council) and are likely to be considered soon. “Land acquisition clearances from the state government is the main problem in building such clusters,” he added.
The sector provides employment close to 4.42 million people — mainly women and weaker sections of society. The sector is dominated by family-oriented business enterprises of small and medium nature. India footwear market witnessed a growth of 13 per cent on an average from 2015 to 2019 but reduced sharply in 2020-21 due to Covid. It regained a growth of 20 per cent in FY22 in comparison to FY21, according to the DPIIT.