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A Relief Package For India’s Ailing Leather And Footwear Industry

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The Union Cabinet today approved a Rs 2,600 crore package for three years to boost job creation in India’s ailing leather and footwear sector.

The plan, which will be implemented through financial years 2018 to 2020 will involve developing infrastructure for the sector while addressing environmental concerns stemming from the leather industry, according to statement by the Press Information Bureau. It will also "facilitate additional investments, job creation and production", the statement added.

The package has the potential to generate 3.24 lakh new jobs in three years, PIB’s statement said.

The cumulative impact of the package would also assist in the formalisation of 2 lakh jobs in the footwear, leather and accessories sector, PIB said in its release.

Finance Minister Arun Jaitley, in the Union Budget 2016-17, had said the government would launch a scheme for the labour-intensive leather and footwear industry on the lines of a package announced for the textiles sector in June last year. The commerce ministry had called for incentives for the sector given its importance to Prime Minister Narendra Modi’s Make in India initiative.

India’s leather industry has been left reeling after last year's demonetisation left them strapped for cash. Then came the Goods and Services Tax in July this year which left the $17 billion industry - comprising of largely small business - with a shortage of working capital because they had to pay taxes upfront and receive refund later.

Exports from the country's leather industry have been tumbling too. Shipments from India are expected to decline over 10 percent to $5 billion in the current fiscal, compared to nearly than $7 billion just three years ago, according to data from the Council for Leather Exports.

The Kanpur-Unnao industrial cluster, which contributes a third of India's leather exports, has seen around 200 of its 402 registered businesses shut shop, BloombergQuint had highlighted in a ground report.

The break-up of the package is as follows:

Skill Development: Rs 696 Crore

A human resource development sub-scheme will be put in place to provide assistance for skill development training to unemployed persons at Rs 15,000 per person. It will also include skill up graduation training to employed workers at Rs 5,000 per employee and for training of trainers aat Rs 2 lakh per person. Of the total package, the proposed outlay for this sub-scheme is Rs 696 crore.

Incentivising Investment: Rs 425 Crore

The sub-scheme proposes to inventivise investment and manufacturing by providing a 30 percent subsidiy in setting up new plants and machinery for small and medium enterprises. It also proposed a 20 percent grant for modernisation of existing plant and machinery.

Establishing Institutional Facilities: Rs 147 Crore

The scheme also proposes upgrading existing campuses of the Footwear Design and Development Institute into centres of excellence and establishing three new skill centres alongside the upcoming mega leather clusters for Rs 147 crore in three years.

Infrastructure Support: Rs 360 Crore

The scheme will look to support three to four new mega leather, footwear and accessories clusters. Graded assistance will be provided for up to 50 percent of the eligible project costs, excluding the cost of land. The maximum assistance is limited at Rs 125 crore.

Innovation And Environment Issues: Rs 782 Crore

The sub-scheme will provide assistance up to 70 percent of the cost for upgrading or installing of common effluent treatment plants for the sector.

Brand Promotion: Rs 90 Crore

Eligible units will get 50 percent of the total project costs upto Rs 3 crore to promote Indian brands in international markets.

Employment Incentive: Rs 100 Crore

The scheme also proposes to provide the employer's contribution of 3.67 percent to the Employees' Provident Fund for all new employees with salary up to Rs 15,000.

Also Read: Why Kanpur’s Tanneries Are At The Centre Of A Fight To Save The Ganga

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