COUNCIL FOR LEATHER EXPORTS
PRESS RELEASE

LEATHER SECTOR IMPACT-INTERIM BUDGET 2009-10
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The Leather Export Sector is extremely disappointed that the Interim Budget 2009-10 offers very little for the leather or exporting sectors. The single supportive measure announced is that of extension of 2% interest subvention for pre and post shipment rupee export credit, from the prevailing validity of March 31, 2009 to September 30 2009.

The recently released Index of Industrial Production indicating Indian industry had grown year–on-year by minus 2% in December 2008, had highlighted the leather sector as being one of the industries that registered the largest production declines at Minus11.4%
 
Indeed, for some time now, tanneries in Kanpur, Kolkata and Chennai have been running at near-idle levels indicating that the supply chain is drying-up and no orders are being placed by product manufacturers for raw material. The latter are operating at well below - upto 50% - of their normal levels, for there has been a spree of cancellations and reduction of orders by overseas buyers. As per current feedback, new orders are being booked only to the extent of 30% of last year’s level. There is a serious apprehension that exports will fall significantly in the coming months, thereby causing severe problems in production and employment.  We anticipate that there could be a loss of several thousand jobs in the next 3 months.  

Our slowdown is to be contrasted with the aggressive booking of additional orders by Chinese manufacturers, who in the background of supportive intervention measures are able to give price reductions in the range of 15-20%; as informed by our buyers.

In this background the Council for Leather Exports had represented to the Government for immediate measures in the form of revision of Drawback rates to pre-revised level of 2007-08, Enhancement in the Duty free Import limit for manufacturer-exporters from the existing 3 to 5% of FOB Export Turnover ; Increased weightage for leather products from 1.25% to 2.5%  under the Focus Product Scheme,  extension of the Focus Market Scheme to EU & USA as these 2 markets account for  75% of Indian leather sector exports, and Service Tax Exemption for 19 notified services & permitting of Service Tax exemption on overseas agent’s commission at actuals instead of at a percentage of FOB Value.

The leather sector is a volume employment provider, particularly in rural /semi urban areas and a significant foreign exchange generator for the economy – it is our plea that the above requests towards reviving export prospects and business be expeditiously addressed, so that the industry and its workers are helped out of this precarious situation

Habib Hussain
Chairman
Council for Leather Exports
16-2-09