Bata India, Relaxo Footwears shares jump after FM Sitharaman makes imported shoes costlier

Shares of footwear companies such as Bata India and Relaxo Footwears were trading higher today after Finance Minister Nirmala Nitharaman proposed to raise customs duty on imported footwear. Bata India shares rose as much as 1.5 per cent to hit an intraday high of Rs 1825.70 a piece on BSE. While Relaxo Footwears shares touched an intraday high of Rs 740.25, up 1 per cent in the noon session.

In the Budget presentation, the customs duty on footwears has been increased from 25 per cent to 35 per cent. Along with this, the customs duty on the raw materials has been raised to 20 per cent from 15 per cent earlier, in order to protect labour-intensive MSME sectors. “There is a significant increase in imports of undervalued and cheap footwear. Hike in the duty will help address the issue of price competition. It would benefit companies like Bata India,” HDFC Securities in a research note said.

“The Union Budget has channelized its efforts to boost make in India initiative, through various customs duty rationalization proposals, such as review of unwarranted customs duty exemptions and concessions, introduction of health cess on medical devices, safeguard and anti-dumping duty measures to restrict poor quality import and dumping, providing level playing field to MSME sectors. The most impacted sectors are dairy, agriculture, electronic goods, medical devices, furniture, footwear, toys etc,” Sachin Menon, Partner and Head, Indirect Tax, KPMG in India said.

However, the shares of Liberty Shoes were trading lower in the trade today. At 3 PM, Liberty Shoes was trading 2.5 per cent lower at Rs 133 on BSE. “Labour intensive sectors in MSME are critical for employment generation. Cheap and low-quality imports are an impediment to their growth. Special attention has been taken to put measured restraint on the import of those items which are being produced by our MSMEs with better quality. Keeping in view the need of this sector, customs duty is being raised on items like footwear and furniture,” Nirmala Sitharaman informed in her Budget speech.