India’s Finance Minister, Ms Nirmala Sitharaman presented the Union Budget for the Financial Year 2021-22 on Feb 01, 2021. This was one of the most awaited Budgets in recent Indian history in view of the COVID crisis which has affected the entire economy.
Like always, this year’s budget has brought good news for some and not so good for others. The Finance Minister has announced changes in import duties to boost local manufacturing as per India’s Atmanirbhar Bharat strategy.
Along with other products, the government has proposed to impose a basic import duty of 10% on import of Wet Blue Chrome Tanned Leather, Crust Leather, Finished Leather of all kinds, including splits and sides. There was no customs duty on finished or raw leather earlier.
While announcing the import duty on leather, Finance Minister Mrs Sitharaman explained “Almost all these items are made domestically by our MSMEs. We are withdrawing exemption on imports of certain kinds of leathers as they are domestically produced in good quantity and quality, mostly by MSMEs.” India imports raw and finished leather worth US$0.5 billion and exports leather products worth approximately US$6 billion each year.
While people involved in the leather industry welcomed the announcement as it would increase sale and quality of products produced in the local market, experts are of the opinion that the prices of premium and branded leather products like shoes and bags may go up by as much as 10%.
Woodland MD, Harkirat Singh welcomed the intention of being self-reliant and said that it might lead to an increase in costs till they manage to find alternate sourcing hubs without compromising on quality standards.
Similarly, N Mohan, CEO, Clarks India assumed, “this new duty might lead to an increase in costs especially for high-end brands that import semi-finished and finished leathers. However, it will also put pressure on local manufacturers to improve productivity and other efficiencies.”
Well, what does all this mean for you - the consumer? In the short term, prices of leather products may go up, especially if you had been eyeing that made in Italy handbag. In the long term, as demand for homegrown leather increases, so will the supply and efficiency leading to a stabilisation in the prices.
For now you may head to one of the homegrown brands like Nappa Dori, Outback, Chiaroscuro, Kompanero, Hidesign, Damilano and many others. These brands source their materials locally and make high-quality leather products. You won’t just get great quality products, but also after-sales service and support.