Proposed increase in leather customs duty causes concerns over price hike

By

Isabelle Crossley

Published
Feb 2, 2021

Leather manufacturers fear the proposed imposition of a 10% basic customs duty on leather imports will lead to an increase in prices in the Indian market, which could harm domestic footwear and leather goods businesses. 

 
The Union Minister of Finance Nirmala Sitharaman has proposed raising the duty rate on a number of categories of leather from nil to 10%, which caused a number of leather industry players to speak out on Monday, ET Bureau reported. The categories proposed for a duty hike include wet blue chrome tanned leather, crust leather, and finished leather of all kinds, including splits and sides.
 
“The 10% customs duty hike on the leather is in line with its intention to promote local sourcing and might lead to an increase in costs till we manage to find alternate sourcing hubs without compromising our quality standards though we do welcome the intention of being self-reliant,” said Woodland owner Aero Club’s managing director, Harkirat Singh, the Press Trust of India reported. 

As an increase in customs duty would drive up costs for leather goods manufacturing businesses, which source their leather outside India, this could necessitate a price increase, at least in the short term.

Higher prices would make Indian products less competitive in the global market, which could lead Indian businesses to lose out to manufacturers based in other countries, which do not incur the same costs. However, in the long term, the proposed policy could benefit workers in the domestic tanning industry.