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The Confederation of All India Traders (CAIT) and the Indian Footwear Association (IFA) on Thursday urged the Centre to keep GST tax rate on footwear at 5 per cent for products priced below ₹1,000 and 12 per cent for products priced above ₹1,000. The two industry bodies have also urged the Center to enforce compulsory BIS licensing norms only for footwear products priced above ₹1,000.
Stating that nearly 85 per cent of the Indian consumers buy footwear priced below ₹1000, the two industry bodies added that nearly 90 per cent of the production of footwear is done by small units or cottage industries for whom implementation of BIS standards will be challenging.
The industry bodies have also written to all State Finance Ministers on these issues. Effective January 1, footwear is taxed at 12 per cent GST rate, while BIS certification norms making it mandatory for footwear products to carry the Indian Standard Mark is expected to get implemented from July 1.
Impact mass consumers
Praveen Khandelwal, Secretary General, CAIT, said that nearly 7 per cent increase in tax rate has impacted the mass consumers. “ In the footwear industry many small traders have opted for a composition scheme under GST and therefore they will not be able to take input tax credit and thus a difference of 7 per cent is getting added to the cost of footwear making it costlier for a common man. The purpose of the tax rate increase in footwear was to remove inverted tax structure. However, only 15 per cent of the established large manufacturers and imported brands will be the real beneficiary. Therefore, it is urged that not more than 5 per cent GST rate should be levied on footwear priced below ₹1000 ,” he added.
The two industry bodies said that more than ten thousand manufacturing units and about 1.5 lakh footwear traders across the country are employing more than 30 lakh people in manufacturing or trading activities. They claimed that more than 60 per cent of footwear products are priced below ₹500 per pair.
IFA National Chairman Ravindra Goyal said, “ Nearly 85 per cent of the manufacturers are very small scale in nature and it will be impossible for them to comply with BIS standards. How can a khadaun worn by saints, low quality slippers used by pandits, rubber and plastic lower quality footwear worn by labourers and like other classes be able to comply with BIS standards. Therefore, BIS standards should be applicable on footwear more than ₹1,000.”
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