The Cabinet is likely to approve a scheme to boost manufacturing and job creation in the leather and footwear segment by the end of this month. “The finance ministry’s Expenditure Finance Committee (EPC) has already examined the proposal. They are likely to approve around Rs 2,500 crore package for the leather sector as against Rs 4,000 crore sought by DIPP (Department of Industrial Policy and Promotion),” a senior government official said. The Cabinet is likely to take up the proposal by the end of this month, the official said. 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. 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 who earn 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. Officials said the package for the leather industry has similar components. “This is a revised policy for the leather industry. The Indian Leather Development Programme (ILDP) ended with 12th Five Year Plan (2012-2017),” the official said.
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With the end of the five-year plan model by the current government, such schemes are now being conceived for three years. DIPP is the nodal agency for the central sector scheme and ILDP was approved with an outlay of Rs 990.36 crore for 12th Plan period (2012-17).
The Centre has already allocated Rs 500 crore towards ILDP for the current financial year. However, with an amount of Rs 500 crore allocated for the scheme in the Budget 2017-18, the finance ministry would grant a package lower than what the DIPP had sought, the official added.
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.