Cheap imports hit indigenous footwear component makers
25 Jan '07
2 min read
Cheap import of footwear components, with zero customs duty - up to 3 percent of FOB value of their exports have put about 14 domestic footwear component manufacturers in a bind.
Footwear components which include poly-eutherine & thermo-plastic rubber soles, in-sole sheets, toe and counter sheets, linings, inter-linings and adhesives among others are imported under duty-free import scheme (DFIS). Countervailing duty too is waived on imports of these components.
Domestic producers on the other hand have to pay 16 percent excise duty and a 4 percent central sales tax (CST) which makes imported components 35 percent cheaper than domestic products.
This has pushed up footwear component imports to Rs200 crore during April-December 2006 period up from Rs100 crore in 2002-03, a rise of 40 percent.
Domestic output suffered a downward slide of below 30 percent inspite of investments of around Rs100 crore to improve quality during past five years, said Mani Almal, President, Indian Footwear Components Manufacturers' Association (Ifcoma).
Uneven competition has forced component producers to switch over to other areas, he added.
Ifcoma has put up a proposal to Finance Ministry to treat such component sales to exporters as deemed exports and in turn waive off local taxes in 2007-08 fiscal. This proposal has been cleared by Council for Leather Exports.
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