The leather and footwear industry in India has called upon the government to grant duty exemptions on essential raw materials and inputs, citing a sharp increase in costs triggered by the ongoing crisis in West Asia. The industry has reported that the prices of critical inputs, including synthetic leather, metal accessories, machinery, threads, moulds, and certain chemicals, have risen by as much as 60%.
Impact of the West Asia Crisis
The escalating tensions in West Asia have disrupted global supply chains, leading to a significant spike in the cost of imported raw materials. The leather and footwear sector, which relies heavily on these imports, has been particularly affected. Industry bodies have warned that without immediate government intervention, the rising input costs could severely hamper production and exports.
Industry Demands
In a representation to the Ministry of Commerce and Industry, the Council for Leather Exports and other trade associations have sought the removal of customs duties on a range of inputs. They have also requested the inclusion of these items under the advance authorization scheme, which allows duty-free import of inputs used for export production.
The industry has emphasized that duty exemptions are crucial to maintain competitiveness in the global market. India is one of the world's leading producers and exporters of leather products, and any disruption could lead to a loss of market share to competitors like China, Vietnam, and Bangladesh.
Cost Escalation Details
The cost of synthetic leather, a key component in footwear and accessories, has risen by over 60%. Metal accessories, such as buckles and zippers, have also seen price hikes of up to 50%. Machinery and spare parts used in leather processing have become 40% more expensive, while the cost of threads, moulds, and specialty chemicals has increased by 30-40%.
Call for Government Support
Industry leaders have urged the government to treat the current situation as a crisis and provide immediate relief. They have also highlighted the need for long-term measures, such as promoting domestic production of critical inputs and diversifying import sources to reduce dependence on conflict-prone regions.
The leather and footwear industry employs over 4 million people, many of whom are from marginalized communities. A sustained increase in input costs could lead to job losses and factory closures, particularly among small and medium-sized enterprises that operate on thin margins.
Government Response
While the government has not yet announced any specific measures, officials have indicated that the matter is under consideration. The Ministry of Commerce is reportedly evaluating the industry's demands and assessing the potential impact on revenue and trade.
The industry remains hopeful that the government will act swiftly to prevent further damage to one of India's key export sectors. With the West Asia crisis showing no signs of abating, the need for timely intervention has become more critical than ever.
