The leather industry is not enthused

The Union Budget presented by the finance minister P Chidambaram has not been greeted with enthusiasm by the leather sector. 'There is no indication of any thrust for the export sector, particularly on income tax relief, despite repeated appeals of the entire exporting community', said the chairman of the Council for Leather Exports, S S Kumar. According to Kumar, though the Union Budget has provided some minor relief such as extending 5% concessional import duty on machinery to the non-leather sector and treating patent leather on a par with finished leather for duty exemption, the industry is very much disappointed that some of the essential proposals of CLE have not been considered. He said with the withdrawal of the CVD exemption for items which attract central excise duty, the import of machinery, even with concessional basic duty, has become more expensive to the investors. 'This has come at a time when the modernisation of manufacturing is seriously thought of by individual companies.' The leather industry has crossed the $2 billion mark in export earnings in 2003-04. Provisional figures put the earnings between $2.005 billion and $2.030 billion. The industry is asked to aim at $2.2 billion in the current year by the commerce ministry. According to Kumar exports are expected to grow 12% and go beyond the set target. 'The council will endeavour not only to sustain the current growth but also to enhance this through appropriate comprehensive marketing strategies', he said. On the positive side, he said: 'The formation of an investment commission is a major step forward towards facilitating overseas investments.' The leather industry is expecting foreign investments in the finished leather, footwear and footwear component sectors. He said: 'Some of the thrust areas of the budget towards manufacturing activities are enhancing investments in the industry to create employment opportunities, providing further impetus to the small scale industry sector, strengthening of infrastructure which includes development and expansion of port facilities etc. The leather industry is also happy that it is recognised as one of the traditional industries having great potential for growth and export.