Leather Industry welcomes supplement to Foreign Trade Policy

The Leather industry welcomes the first supplement of the National Foreign Trade Policy 2004-09 announced today by Shri Kamal Nath, Union Minister for Commerce & Industry, which primarily focus on procedural simplification and trade facilitation measures. 

The Government has rightly recognized the fact that India could be a major gainer from emerging global trends, particularly in the context of developed countries shifting their manufacturing to developing countries due to their high labour cost. 

The Indian leather industry is one of the potential sectors to gain from such fast changing international scenario. The leather industry with its large skilled workforce, own raw material base, growing domestic market particularly in footwear, is poised for tremendous growth. Considering this and also employment generation potential of the industry, the UPA Government recognized leather sector as a special focus sector as brought out in the CMP. Accordingly, certain sectoral focus initiatives announced in the FTP last year continue in the current supplement.

Regarding the much anticipated new scheme to replace the DEPB, there is no announcement to this effect. The existing DEPB scheme, however, would continue till a new scheme is developed. The export industry is confident that a WTO compliant scheme would be announced soon to get neutralization of all duties and levies. 

The formation of Inter-State Trade Council to facilitate an enabling coordination between the Central and State Governments in trade policy matters is a very significant step towards increasing export.

The EPCG scheme has been made further attractive to the SSI sector, as the export obligation has been brought down from 8 times of duty saved to 6 times. Also certain procedural simplifications made in the EPCG Scheme especially installation certificates etc In fact, the leather industry has been seeking zero duty import under EPCG to give impetus to the modernization and technological upgradation efforts, and also certain procedural hurdles to make the scheme simpler and really beneficial. The industry is hopeful that these would also be considered in future. 

The Advance License scheme has also been made more attractive due to various procedural simplification measures announced, more particularly, all categories of exporters having past export performance can now avail the Advance License for annual requirement, instead of the earlier practice of restricting the facility to only status holders. 

The Target Plus scheme announced in FTP to reward the incremental export would continue in the year 2005-06 with some modifications to be notified separately. Necessary application format have now been notified for availment of the scheme. Similarly, the special facility introduced to the Status Holders in the erstwhile EXIM Policy 2003-04 has also now been operationalized. The schemes would definitely incentivise the industry to aim at aggressive growth. 

The Committee earlier constituted by the Government under the Chairmanship of DGFT to suggest simplification of procedures and reduction in the documentation requirements, transaction costs etc has now submitted its report. One of the key recommendations is EDI linkage between DGFT, Customs, Banks, EPCs etc to facilitate web-based document processing. Implementation of Committee's recommendation will go a long way towards further trade facilitation and export growth. This is in fact a long felt need of the export industry, and the Council is hopeful that EDI linkages will be established at the shortest possible time to cut down many procedural hassles such as re-verification of DEPB / DFRC scrips, issue of TRA, web-based verification of shipping bills for expeditious process of various applications.

It is also heartening to note that a single common form called Aayaat Niryaat Form has been introduced which is a 50 page set of forms as against the earlier 120 page set.

With all such pro-active policy support measures announced by the Government, it is hoped that the avowed objective of doubling India's share in the world trade within the next five years, and also significant employment generation, would be achieved. Accordingly, the leather industry is also hopeful of increasing its share in the global leather trade from the present 2.32% to 4.2% by 2010, thereby enhancing export from the present Rs.10000 to Rs.20000 crore, and in the process providing overall additional employment to about one million people. 


Issued by : M Rafeeque Ahmed, Chairman, Council for Leather Exports
Date :          April 8, 2005