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Leather industry bemused over budget proposal
04
Mar '10
The leather industry is in a fix as regards whether the export concession of two percent interest subsidy in respect of export of leather goods will continue to exist till 2010-11. The Finance Minister's proclamation with regards to the extension of export concession has led to this confusion amongst the industry circles.

FM while presenting the Budget for 2010-11, has announced further extension of interest subsidy of two percent for one more year on pre and post shipment credit for exports including handicrafts, carpets, handlooms and small and medium enterprises (SMEs), but no mention has been made as regards leather goods. Leather industry at present is availing the benefit of this subsidy.

Due to this a predicament has arisen in the minds of the industry leaders, as just like those sectors, leather is also an employment intensive and exports of leather items too were adversely affected on account of economic downturn in developed countries, owing to which since July 2008, an interest subsidy of two percent on export credit for the sector was offered.

Experts say that the budget proposal has left them bemused. Though, they are optimistic that the leather exporting sector which with all its endeavors is trying to regain its lost ground will not be kept away from the export concession in form of interest subsidy. Nevertheless, if the export subsidy is retracted from the sector then they would urge the Finance Minister to reinstate the sector with the same.

If the sector is left without interest subsidy on export credit then the leather exports will be adversely affected, experts opine.

An industry expert also stated that their reactions with regards to the budget proposal will follow once; they get the matter clarified with the Finance Minister. He also said that, not all of the leather industry exporters will be benefited by furthering interest subsidy in favour of SMEs. Anyhow, he added that, the industry will robustly demand extension of the export concession for leather goods export, which is yet to come out of the impact of the recession.

Fibre2fashion News Desk - India

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