Cabinet approves Rs2,600-cr special package for leather and footwear sector

The union cabinet has approved a special package for the leather and footwear sector involving an expenditure of Rs2,600 crore over the three financial years 2017-18, 2018-19 and 2019-20.

The union cabinet chaired by Prime Minister Narendra Modi approved the special package for employment generation in leather and footwear sector under the "Indian Footwear, Leather & Accessories Development Programme."

The scheme aims at development of infrastructure for the leather sector, addressing environment concerns specific to the leather sector, facilitating additional investments, employment generation and increasing production. Enhanced tax incentive would attract large scale investments in the sector and reform in labour law in view of seasonal nature of the sector will support economies of scale, says an official release.

The special package has the potential to generate 3.24 lakh new jobs in 3 years and assist in formalisation of 2 lakh jobs across the entire footwear, leather and accessories sector.

The Human Resource Development (HRD) sub-scheme it is proposed to provide assistance for placement-linked skill development training to unemployed persons at Rs15,000 per person, for skill upgradation training to employed workers at Rs5,000 per employee and for training of trainers at Rs2 lakh per person.

The placement of 75 per cent of trained persons is proposed to be mandatory for availing assistance related to skill development training component. The proposal under this sub-scheme is to train / skill 4.32 lakh unemployed persons, upgrade the skills of 75,000 existing employees and train 150 master trainers during the three years with proposed outlay of Rs696 crore.

Under the Integrated Development of Leather Sector (IDLS) sub-scheme, it is proposed to to incentivise investment and manufacturing, including job creation by providing backend investment grant / subsidy at 30 per cent of the cost of new plant and machinery to micro, small and medium enterprises (MSMEs) and at 20 per cent of the cost of plant and machinery to other units for modernisation / technology upgradation in existing units and also for setting up of new units.

The proposal under this sub-scheme is to incentivise 1,000 units in leather, footwear and accessories and components sector during the three years with proposed outlay of Rs425 crore.

The scheme provides for establishment of institutional facilities to provide assistance to Footwear Design and Development Institute (FDDI) for upgradation of some of the existing campuses of FDDI into "centres of excellence" and establishing three new fully equipped skill centres alongside the upcoming Mega Leather Clusters, based on project proposals, with proposed outlay of Rs147 crore for the three years.

Under the Mega Leather, Footwear and Accessories Cluster (MLFAC) sub-scheme, it is proposed to provide infrastructure support to the leather, footwear and accessories sector by establishment of Mega Leather, Footwear and Accessories Cluster. Graded assistance is proposed to be provided up to 50 per cent of the eligible project cost, excluding cost of land with maximum government assistance being limited to Rs125 crore. The outlay of Rs360 crore has been proposed to support 3-4 new MLFACs, for the three years.

Under the `Leather Technology, Innovation and Environmental Issues' sub-scheme, assistance is proposed to be provided for upgradation/installation of common effluent treatment plants (CETPs) at 70 percent of the project cost. The sub-scheme will also provide support to national level sectoral industry council/ association and support for preparation of vision document for Leather Footwear and Accessories sector. The proposed outlay for this sub-scheme is Rs782 crore for the three years.

The scheme provides for promotion of Indian brands in leather, footwear and accessories sector. Under this sub-scheme, eligible units approved for brand promotion are proposed to be assisted. The government assistance is proposed to be 50 per cent of total project cost subject to a limit of Rs.3 crore for each brand, each year for 3 years. The proposal under this sub-scheme is to promote 10 Indian brands in the international market in three years with proposed outlay of Rs. 90 crore.

Under the Additional Employment Incentive for Leather, Footwear and Accessories Sector sub-scheme, it is proposed to provide the employers' contribution of 3.67 per cent to Employees' Provident Fund for all new employees in Leather, Footwear and Accessories sector, enrolling in EPFO for first 3 years of their employment. The sub-scheme would be applicable to employees with salary up to Rs15,000. The proposed outlay is Rs100 crore to assist in formalisation of approximately 2,00,000 jobs in the sectors.

The special package also includes measures for simplification of labour laws and incentives for employment generation, as under:
The scheme provides for enhancing scope of Section 80JJAA of Income Tax Act for providing deduction to Indian company engaged in manufacture of goods in a factory towards additional wages paid for three years to new workman, the provisions of minimum 240 days employment in a year to a workman under Section 80JJAA of Income Tax Act would be further relaxed to 150 days for Footwear, Leather & Accessories Sector considering the seasonal nature of this sector.

In order to attract large scale investments at global scale, the regulatory framework for labour related issues is proposed to be addressed by introduction of Fixed Term Employment under Sub Section (1) of section 15 of Industrial Employment (Standing Order) Act, 1946 looking at the seasonal nature of Leather, Footwear and Accessories industry.