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Govt sets leather sector modernisation fund worth Rs 290cr

Nov '05
The Centre has launched Rs 290-crore fund for modernisation of leather industry including footwear, leather goods and garments. Sidbi has been appointed as the nodal agency for the scheme.

The integrated development of leather sector (IDLS) scheme will be implemented during the Tenth Five-Year Plan ('02-'07), a government source said. The financial assistance provided under the scheme consists of 30% grant against the cost of plant and machinery for small-scale industry (SSI) and 20% for non-SSI units.

The grant is subject to a ceiling of Rs 50 lakh and can be availed for technology up-gradation, modernisation or expansion. Investment grant are also available to units investing their own resources.

Project Implementation Unit (PIU), the implementing agency of the scheme will function from two centres one at CLRI, Chennai for Tanneries and other at FDDI, Noida for footwear, footwear components, saddlery, leather goods and garments and saddlery.

The scheme has been floated to strengthen the domestic leather industry, which was reserved for the small-scale sector for a long time.

"The level of investment in the leather sector has been very low resulting in smaller production base, poor productivity. Obsolete technology, lack of standardisation and poor marketing infrastructure has been other factors associated with the sector not growing to its potential.

Given the significance of this industry to the overall health of the country's economy and its potential for employment generation, it has been decided to launch a scheme for the leather industry to have access to timely capital in order to up-grade its technology level," the source said.

According to the Council for Leather Exports, India is the largest livestock holding country with world's 21% large animals and 11% small animals. It is a source for 10% global leather requirement and has an annual production of $4bn, 50% of that is exported. It provides jobs to about 2.5m people of which 30% are women.

Economic Times

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