The Centre is likely to soon finalise a proposal to extend the Production Linked Incentive (scheme) for leather and footwear, a highly labour-intensive sector, to promote manufacturing and employment generation in both large and small cities across the country.
“The leather and footwear sectors, which have great potential for growth both in the domestic and global markets, were not included amongst the first 13 sectors which got covered under the PLI scheme. But following representations from the industry, the DPIIT is now giving finishing touches to a PLI scheme for the sector and it is likely to be sent to the Cabinet soon for approval,” a source told businessline.
The proposed scheme may also have a provision for attracting investments in smaller cities and towns, and not just in large cities. This would be achieved by keeping the threshold of minimum investment and minimum turnover required to qualify for the scheme lower for tier 2 cities like Ludhiana or Ambur compared to tier 1 cities like Chennai.
“The idea is to encourage employment at smaller places also,” the source said.
The scheme is expected to encourage large-scale investment, said Israr Ahmed, Regional Chairman-South, Council for Leather Exports.
“Some very large companies are looking to relocate production from China and Vietnam to India, so the PLI coming at this time will be a very good initiative by the government. Besides attracting investments from international brands, local manufacturers will also be encouraged to invest and increase production,” he said.
While the corpus for the proposed scheme has not yet been fixed, industry sources say that it may be around ₹2,600 crore with an incentive of up to 8 per cent on net incremental sales applicable for five years.
“The entire outlay of ₹1.97 lakh crore announced in the Union Budget 2021-22 for PLI schemes for 13 key sectors (later 14) has not been used up. The government, therefore, wants to extend the scheme to some other labor-intensive sectors, which also include toys, sports goods, and hand tools. The final outlay for the leather and footwear sector will be decided by the Cabinet depending on the availability of funds,” the source said.
The sectors already covered under the PLI scheme include mobile and component manufacturing, drug intermediaries and active pharmaceutical ingredients, medical devices, automobiles and components, pharmaceuticals, steel, telecom products, electronics, white goods, food products, textiles, solar PV modules, and Advanced Chemistry Cell Batteries.
“India has an opportunity to emerge as a key global production hub for the footwear sector since a lot of raw materials are locally available and we have a lot of expertise in making quality shoes,“ said Harkirat Singh, MD, Aero Club, known for brands Woodland and Woods. “A PLI scheme will encourage investments into the sector from local and global brands. There has been a surge in domestic consumption of footwear post pandemic and any kind of incentives will enable Indian brands to scale up,” he said.
India is the second largest consumer of footwear in the world and its leather products and footwear market is estimated to be about $ 12 billion, per industry estimates.
India’s annual export of finished leather, leather products and footwear is also growing and is expected to cross $ 5 billion in 2022-23.