Kanpur’s Leather Industry Seeks Tax Relief to Boost Exports

Reduction in Import Duties on Raw Leather and Finished Leather Could Revive Sector Growth
Renowned as a hub for leather production, Kanpur’s leather industry has been a significant contributor to India’s foreign exchange earnings. However, the sector is now calling for urgent government support, including a reduction in import duties on raw and finished leather, to enhance export competitiveness.

Industry Highlights:
•    Annual Production: Kanpur produces leather goods worth ₹30,000 crore annually.
•    Export Contribution: In the last financial year, the industry exported leather products worth over ₹6,000 crore.
•    Employment: Over 2 lakh people, directly or indirectly, are employed in Kanpur's leather industry.

Challenges:
1.    High Import Duties: Import duties on raw and finished leather are making Indian leather products less competitive in global markets. Entrepreneurs argue that reducing these taxes would help cut production costs and boost exports.
2.    GST Rates: The industry also faces difficulties due to uneven GST rates across leather products. Simplifying and standardizing these rates is a pressing demand.
3.    Export Volume Decline: The export of saddlery goods, a prominent segment in Kanpur’s leather industry, fell from ₹1,700 crore in 2021-22 to ₹590 crore in the last six months, signalling the need for intervention.

Industry Demands:
•    Tax Relief: Entrepreneurs have requested a reduction in import duties on raw materials like hides and finished leather to enhance their competitiveness.
•    Increased Export Incentives: Industry leaders propose higher export benefits for leather goods to capture larger shares of the international market.
•    Streamlined GST Rates: A unified GST structure would simplify compliance and encourage production efficiency.

Expert Insights:
Akhlaq Ismail, President of the Leather Exporters Association, stated, “If import duties on raw and finished leather are reduced, it will lower production costs and help us compete in international markets. The industry also needs enhanced export incentives to recover its growth trajectory.”

Way Forward:
Kanpur’s leather industry is hopeful that the upcoming Union Budget 2025-26 will address their concerns. Entrepreneurs are urging state and central governments to prioritize tax reforms and infrastructure support to restore the city’s legacy as India’s leading leather manufacturing hub.