West Bengal Leather Exports Hit By Red Tapism.

Leather exporters in West Bengal said their expansion plans are derailed by the tax office in the state which has held up over Rs 250 crore due in tax refunds preventing them from augmenting facilities and in the process employing thousands of people.

The commercial taxes office, however, trashed the allegations calling them “grossly exaggerated.”

Speaking to IBNS on Friday, Council for Leather Exporters (CLE) East India chairman Paresh Rajda said that the Industry desperately needs capital investment right now and the government holdup is costing the Rs 2,300 crore-industry dearly.

“If we were to get that kind of capital it would straightaway add Rs 1,500 crore to our sales. It would also employ over 50,000 more people,” claims Rajda.

According to him, leather exporters, who are liable to Value Added Tax (VAT) refunds, have cases waiting for years mostly due to government protocol and paperwork which could well add up to Rs 250 crores.

“That’s a lot of locked up capital,” he said.

But when called up, the West Bengal Directorate of Commercial Taxes (DOCT), which handles VAT refunds, completely denied the charge.

“It’s a grossly exaggerated figure. There are barely four to five files in my office regarding the leather exporters,” DOCT Special Commissioner Shubashis Mukhopadhyay told IBNS over telephone.

“I estimate that at most, these files could add up to Rs 1 crore worth of claims. Personally I have never seen claims worth more than Rs 10 lakhs,” he added.

The leather industry in West Bengal, considered as one of the prime hubs for the sector, has had a bumpy ride in recent years since it was asked to relocate its toxic-waste churning facilities to a special zone in Bantala in the eastern outskirts of the city.

Currently Bantala hosts over 240 tanneries and around 10 manufacturing units. If watered well, capacity in the area could swell to over 450 tanneries, said Indian Leather Products Association President Darshan Singh Sabharwal.

The remaining 89 manufacturing units around the city could also be expanded and relocated to bring their number to 99, he added.
But business doesn’t wait for anyone and with some cases pending since as long as 2005, leather exporters are currently looking for soft loans, said Rajda.

Both Small Industries Development Bank of India (SIDBI) and nationalised banks have apparently, however, turned down their requests, saying that loan terms and interest rates asked by the exporters are not feasible.

The exporters have now written to the Central government asking for help.

India’s leather exports in 2010-11 were USD 3.77 billion (Rs 17,092.85 crores) and growing at 16 percent, said Rajda. The government wants it to grow to USD 7.75 billion (Rs 35,137.83 crores) over the next three years.

Exporters in West Bengal are apprehensive that the majority of the growth chunk could go to other states if things don’t get back on track.

“States like Gujarat, Maharshtra and Tamil Nadu taken great measures to help entrepreneurs. In fact Uttar Pradesh has stopped collecting VAT altogether,” manufacturer Asian Leather Managing Director Nari Kalwani said.

Currently West Bengal contributes around 17 percent to the national exports and CLE says the amount could be pushed up to 20 percent if the industry is fed with the right capital and talent flow.

Source : calcuttatube.com