Leather industry has suggested the government to provide IGST exemption on imports of raw materials and capital goods used in making products for exports, CLE today said.
Council for Leather Exports (CLE) said levy of IGST (integrated Goods and Services Tax) is affecting the liquidity of exporters and blunting their competitive edge.
It also demanded reduction of GST on finished and composition leather from 12 per cent to 5 per cent as these are an essential material for the sector.
Further, the council asked for cut in GST rates on leather gloves and garments from 28 per cent to 12 per cent, so as to attract foreign investments in this sector.
"The government may positively consider these requests, as the current situation is threatening to take away the business of Indian leather industry to competitors like Bangladesh, Vietnam and Indonesia," CLE said in a statement.
It said the industry is facing worldwide recession and fresh challenge in the form of emergence of strong production centres in Eastern Europe.
"Loss of competitiveness due to GST issues will be a huge loss to the industry which currently has an annual export turnover of USD 5.6 billion and employment of about 4.5 million, with predominant women employment," it added.
There is an urgent need for immediate government intervention to protect the interests of the sector, it said.
"The industry is facing financial burden and significant outflow of capital on account of levy of higher GST rates on major segments of the manufacturing chain and requirement of upfront payment of GST and then claim refund," the council said.
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