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Informist, Tuesday, Dec. 31, 2024

 

By Krity Ambey

 

NEW DELHI – The government has put the Production-Linked Incentive scheme for leather and footwear, and toy manufacturing sectors on hold after making token provisions for these schemes in the Budget for 2024-25 (Apr-Mar). While the relevant departments sent recommendations for the two sectors around 10 months ago, the Union Cabinet is yet to approve the same, according to a government official.

 

The proposed outlay for the two schemes is substantial, with INR 34.89 billion earmarked for the toy manufacturing sector and INR 26.00 billion for the leather and footwear sector until FY32. The finance ministry allocated a token INR 100,000 for each of them, as the Cabinet was yet to approve the schemes, the government had said in the Budget document in July.

 

The government announced the two schemes after several requests from the industries over the last two years. After the Budget was presented in July, the government had also told the leather sector that the scheme would be introduced "very soon", although no specific timeline was provided, Sanjay Leekha, managing director of leather goods manufacturer Alpine Apparels Pvt Ltd and former chairman of Council for Leather Exports, said. "We are waiting for the scheme."

 

According to the Federation of Indian Export Organisations, a PLI scheme for footwear and toys could prove to be especially beneficial in the current geopolitical situation as US President-elect Donald Trump plans to impose high tariffs on China, providing Indian companies with an additional export opportunity of around $25 billion in seven sectors, including leather and footwear and toys, to the US, FIEO said in a statement Thursday.

 

"India can use the tariff situation as a marketing advantage, promoting its products as a cost-effective, high-quality, and ethical alternative to Chinese toys," FIEO said. The US imported toys worth $44.49 billion in 2023, with China accounting for three-fourth of these imports, according to the export promotion council. Similarly, in the footwear sector, China made up a substantial 37.5% of US' imports.

 

The government's flagship PLI schemes are operational in 14 manufacturing sectors, with a total outlay of INR 1.97 trillion. The scheme has been successful in the electronics sector, with a disbursement of INR 77.38 billion till November since its inception in FY22. After the launch of the scheme, India's electronic goods manufacturing jumped 78.4%, while exports from the sector doubled in FY24 from FY20, Minister of State for Commerce Jitin Prasada said earlier this month.  End

 

US$1 = INR 85.62

 

Edited by Vandana Hingorani

 

 

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