Government of India is considering a package of tax incentives for the labour-intensive leather and gems and jewellery sectors in the forthcoming Budget to provide a boost to manufacturing as well as exports.
Leather and leather goods sector is a focus area under the ‘Make in India’ initiative of the central government and the aim is to increase its exports to USD 15 billion by 2020 from the current USD 6 billion.

The Commerce and Industry Ministry in its suggestions for the Budget 2016-17, has recommended several initiatives including elimination of customs duty on imported leather machinery from about 26.5 per cent currently. It has also sought excise duty reduction for all leather and non-leather goods of up to Rs 2,000 and increase in the abatement rate to 35 per cent from 25 per cent.

These suggestions, if implemented, will help in assisting technology upgradation, capacity modernisation, expansion of manufacturing sector and achieving the USD 15 billion exports target.

For gems and jewellery, which is also the thrust sector under the ‘Make in India’ programme, the industry has asked to raise customs duty to 15 per cent from the current 10 per cent and abolish the excise duty from the current rate of 6 per cent on imitation jewellery. The suggestions assumes significance as the popularity of Indian imitation jewellery across the globe is increasing and there is a huge demand in countries including the US and Europe.