Cabinet approves Rs 2,600 cr package for leather sector, says may create 3.24 lakh jobs

Representative Image Photographer: Dhiraj Singh/Bloomberg via Getty Images

The Union Cabinet has approved a Rs 2,600 crore special package for the leather and footwear sector, which the government believes has the potential to generate 3.24 lakh jobs in three years.

In October, the appreciation in the value of the rupee against major currencies, weak consumer sentiment in the European Union (EU) and a significant drop in the value of the British pound (GBP) had hit footwear exporters hard, according to an ICRA report.

On the domestic front, while the Indian footwear industry has historically recorded a healthy growth driven by increasing footwear demand and average selling price (ASP), growth slowed down in FY16 and FY17 due to a moderation in consumer sentiments, the report said.

Earlier, the Department of Industrial Policy and Promotion (DIPP) had sought a package of Rs 4,000 crore from the Finance Ministry to support the leather and footwear industry.

"We have floated a revised policy. ILDP (Indian Leather Development Programme) ended with 12th Five Year Plan (2012-2017). Now every plan is being continued for three years. We have projected some expenses up to 2020. At this stage, we are projecting an amount of Rs 4000 crore," a senior government official had told Moneycontrol in May.

In his Union Budget speech earlier this year, Finance Minister Arun Jaitley had said that a special scheme for creating employment in the leather and footwear industries will be launched, along the lines of the Rs 6,000 crore package that was announced for the textile sector last year.

The scheme is expected to boost exports, generate employment and make the leather and footwear industry competitive globally.