The department of industrial policy and promotion (DIPP) has sought Rs 4,000 crore from the Union Budget for an incentive scheme for the leather and footwear segment designed to boost manufacturing, exports and job creation.
The scheme, on the lines of the special package for the garment industry announced in June last year, will be implemented over a period of three years to FY20-end. “We have floated a revised policy for the leather industry. The Indian Leather Development Programme (ILDP) ended with 12th Five Year Plan (2012-2017). Since such schemes are now being conceived for three years, we have projected the expenses up to 2020, which works out to around Rs 4,000 crore,” a senior official said.
The package for the labour-intensive garment sector gave garment factories the flexibility to hire contractual workers for a fixed period with ease so that they can meet seasonal supply commitments. The government also raised the overtime work limits to 8 hours per week (which will translate into roughly 100 hours a quarter) against the current 50 hours per quarter and said the employees’ provident fund contribution will be optional for employees earning less than Rs 15,000 per month.
Besides, under the scheme, the government bears the entire 12% of the employers’ contribution to the Employees’ Provident Fund Scheme for new employees in the garment industry, earning less than Rs 15,000 per month for three years. Job creation under the scheme has been at a slow pace so far, due to administrative glitches and lack of enthusiasm in sections of the industry.
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The sources said the package for the leather industry has similar components, although they refused to comment on the specifics. The DIPP is now awaiting comments from the ministries concerned such as the ministry of skill development and entrepreneurship, ministry of environment, forest and climate change and ministry of water resources, on the leather scheme.
“Once we get to know their views, then EFC (Expenditure Finance Committee) and Niti Aayog will examine the proposal… And once EFC approves the proposed amount, then the policy will take shape. It will then be taken up by Cabinet in July-September,” the official quoted above said.
The ILDP is aimed at augmenting the raw material base through modernisation and technology upgradation of leather units, addressing environmental concerns, human resource development, supporting traditional leather artisans, addressing infrastructure constraints and establishing institutional facilities.