Rates cut, but at what price? Indian entrepreneurs in the leather sector are asking themselves that, doubtful after the proposal to reduce taxes from 60 to 40% on the export of raw materials and semi-finished products advanced by the government as part of the drafting of the new budget, the first of the second mandate of the executive led by Nerendra Modi.
The proposal
The document, illustrated by Finance Minister Nirmala Sitharaman on Friday, provides for “measures to support local industry by introducing customs duties on many products and easing those on exports of others”, including leather.
The volumes
Currently, the quantity of raw and semi-finished leather that India exports, in the overall context of the supply chain, does not have a particularly significant incidence as domestic demand is strong. However, now that export duties of these products will decrease, the fear of Indian leather goods and footwear operators is that availability of raw materials may be reduced, leading to an increase in costs on the national market, and consequently of their finished products, too. Moral: they fear losing competitiveness.
The perplexities
According to business-standard.com, Puran Dawar, president of the Northern section of the Council for Leather Export (CLE), expressed his doubts about the measure, stating that “cutting export duties on leather could adversely affect the chain of value of Indian leather, which goes from tanneries to finished products, especially at a time when sales of these products are already falling”.
