The apparel, leather and footwear sectors could be in line for fresh sops with the Survey laying stress on their employment-generating potential and need for being hand-held.

“The space vacated by China is fast being taken over by Bangladesh and Vietnam in case of apparels and Vietnam and Indonesia in case of leather and footwear, while Indian companies struggle in face of a set of common challenges related to logistics, labour regulations, tax and tariff policy and disadvantages emanating from the international trading environment compared to competitor countries,” it pointed out.

Exporters are hopeful that the stress on the two labour-intensive sectors would translate into tangible benefits. “There is need to bring a comprehensive package for leather and footwear sectors on the lines of the apparel and made-ups sectors, which was announced by the government few months back,” said SC Ralhan from the Federation of Indian Export Organisations.

The package already announced for the textiles and apparel sector in June last year would play an important role to boost exports, the Survey said, but there was need for more. “These need to be complemented by further actions. The government is taking very seriously the impact of Indian exporters being disadvantaged in foreign markets,” it said. While weighing the pros and cons of the potential free trade agreements with the UK and the EU, the impact on export-and job-creating sectors such as apparels and maybe also leather products compared to other sectors should receive high priority, the Survey suggested.

“Based on recent in-house analysis in 2016, it is estimated that an FTA with the EU and UK can lead to 1,08,029, 23,156, and 14,347 additional direct jobs per annum in the apparel, leather and footwear sectors respectively,” it said.

The Survey also made a case for labour law reforms, especially those related to contribution to provident fund and pension, to overcome “obstacles to employment creation” in these sectors.

Elaborating on the existing tax anomalies, the Survey said that high tariffs on yarn and fibre increase the cost of producing clothing. India imposes a 10 percent tariff on man-made fibres vis-a-vis 6 per cent on cotton fibres. Duty drawbacks are not provided for purchases of domestically produced yarn that reflect the high tariffs, adding to clothing costs, it said. Domestic sales of clothing also do not benefit from duty drawback which could also affect overall export competitiveness.

It added that a similar problem also afflicts footwear production with taxes of 20.5 per cent on leather and 27 per cent on non-leather footwear.

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