GST hike on leather will harm export performance: ILPA

By

Isabelle Crossley

Published
Jul 4, 2022

The recent goods and services tax increase on finished leather goods from 5% to 12% has been poorly received by the industry and the Indian Leather Products Association fears the move will harm exports. 

“It’s not a good decision when the country aims to triple exports,” said the Indian Leather Products Association’s president Ajay Tarway, the Press Trust of India reported. “Our costs have already gone up by 25-30% due to inflation in input materials. When we were just reviving from our losses during the Covid period, this is another obstacle.” 

If India’s leather exports perform poorly, the entire chain will be affected as the demand for hides and finished leather will decrease which will mean tanners have less work and income, according to Tarway. This, according to the industry, comes into conflict with the government’s ‘Make in India’ campaign. 

One of India’s main export markets for finished leather goods is the US, a country which is currently facing the threat of a recession. This means that price will be an even more sensitive issue for exporters wishing to remain competitive, according to the association. 

One or India’s main finished leather export hubs is West Bengal which accounts for close to 25% of India’s total leather exports. Any significant problems in the state’s leather industry will thus affect the entire state and entire Indian leather industry.