High cost, shortage of hide hit leather export in Kanpur.

KANPUR: The Indian leather industry is facing a lot of challenges in its growth. The major factors are the high cost and shortage of hide, skin and leather, which are the essential raw material required for manufacture of leather products and footwear.

Chairman, Council For Leather Exports RK Jalan said that in line with the WTO regulations, the government had imposed regulations on export of hide, skin and leather from India in 2000. There is 60% export duty on raw hide & skin and semi-processed leather like wet blue, crust leather, while there is 15% export duty on EI (vegetable) tanned leather.

There is no export duty on finished leather conforming to the norms notified by Directorate General of Foreign Trade (DGFT) as finished leather by itself is a value added product. Though these regulations are in place for the past 13 years, identification of finished leather export consignments by customs was a major problem. It is impossible to determine whether a leather is finished or not through mere physical examination as this can be determined only through tests.

Jalan said that taking advantage of this lacuna, some exporters were illegally exporting semi-processed leather in the guise of finished leather, thereby evading 60% export duty and also getting other benefits like duty drawback and focus product scheme scrip. "The illegal export causes significant revenue losses to the Government lead to shortage of raw material in the country, resulting in significant increase in prices of the leather to the extent of 25% in the recent years. This has affected the price competitiveness of the Indian leather industry," he added.

The Council for Leather Export made a request to commerce and industries minister to check clandestine export of semi-finished leather under the garb of finished leather last year.

The CLE is co-ordinating with customs to ensure smooth and quicker implementation of the system. A total of 887 consignments of leather have so far been tested by CLRI at the notified ports (except Mumbai, where the system is yet to be implemented by the customs) under the inspection system between April 15 and July 5 this year, which reveals the smooth implementation of the system.

Commerce and industries minister Anand Sharma forwarded the request made by CLE for inspection and certification of finished leather shipments leaving from five sea port by Central Leather Research Institute (CLRI) scientists to ministry of finance. Finance Minister P Chidambaram had issued a circular dated April 15, stipulating that all the finished leather export consignments be routed through five sea ports and samples drawn from such consignment by CLRI scientist in presence of custom officials, had started bearing fruits. The export of leather & leather products has gone up by almost 10% in April and May 2013 over the same period of 2012.

"We are confident that if the current system, which has become effective from April 15, is strictly implemented at the designated ports, it would result in growth of almost 20% over last year despite recessionary trends in the European market which contribute almost 65% exports from the country," Jalan added.

The GOI has already started collecting export duty since April 2013 on unfinished leather and wet blues at Chennai, New Delhi and some consignments at Mumbai.

Source : timesofindia.indiatimes.com