Though time is appropriate for India to expand the apparel, leather and footwear sectors as China loses global export share in these products due to rising production costs, it has to address a host of issues, including proper tax structure, labour regulations and high logistics cost, to realise the benefits, according to the latest Economic Survey.
The mid-year survey, which was tabled in parliament recently, notes India's competitors, such as Bangladesh and Vietnam, have duty free access to the US, EU and Japanese markets for their exports.
The Rs 6,000-crore special package for textile and apparel sector approved on June 22, 2016 will boost employment creation, exports and investment. The rise in subsidy under the Amended Technology Upgradation Fund Scheme (ATUFS) from 15 to 25 per cent for the garment sector will also help, it says.
While global demand is moving towards non-leather footwear, Indian policies favour production of leather items. India also faces high tariffs in partner country markets in exports of leather goods and non-leather footwear. The survey foresees benefits from the special package for the leather sector announced in the 2016-17 budget.
Implementation of the goods and services tax (GST) is expected to rationalise discrimination against non-leather footwear, the survey notes. (DS)