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Our Bureau

Chennai , Jan. 20

THE leather industry has expressed shock and concern over the reduction in duty drawback rates for major items of export and has urged the Centre to reconsider the change.

According to a press release from the Council for Leather Exports (CLE), the announcement by the Finance Ministry, under which the new rates take effect from Wednesday, is sudden and comes without any consultation with the industry.

Under the new rates, there has been a 20 per cent reduction for many items such as footwear, footwear uppers, industrial leather gloves and leather sandals. For leather bags and other leather gloves, the reduction is 10 per cent.

There have not been any changes in the rates for finished leather, leather garments and small leather goods.

There has been a marginal increase in rates for a few items like lining leather, leather sandal uppers and rubber canvas footwear, which are not major items of export, according to the release.

Terming the change as `drastic and unjustified,' the CLE has said that it would have a serious impact on exports.

The reduction has no rationale, as the budget did not offer duty relief. The timing is puzzling as there have been no changes in the Customs and Central Excise duties announced in the budget in July 2004 and the next budget is just about a month away.

The industry was actually hoping for a hike in rates considering the levy of education cess and service tax. The cost data that CLE submitted to the Revenue Department justified higher rates and ceilings, the release said.

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