Dear Members_ by chenboying


									Dear Members,
Foreign Trade Policy 2009-14
I have had the privilege to present the adverse impact of the current global economic slowdown on the Indian leather industry and the measures
required for the industry in the upcoming Foreign Trade Policy 2009-14 to the Hon’ble Union Minister for Commerce and Industry Shri Anand
Sharma, during the various meetings held in the past 2-3 months. Subsequent to these meetings, a leather industry delegation led by me had the
opportunity of presenting the views of the leather sector to the Hon’ble Minister in a meeting held in New Delhi on August 17, 2009.
The current scenario is that on one hand, the price competitiveness of the Indian leather sector has been severely affected by the crisis, while on the
other hand, our competitors particularly China, buoyed by massive aid package, are threatening to capture our market share. Thus, we are not only
facing decline in export growth rate from 15% to 20% in the current year, but also substantial loss of market share and apparent job losses in the
long run. However, the current gloomy scenario can definitely turned into an “Opportunity in Crisis” situation, if adequate relief package is
provided to the industry in the upcoming Foreign Trade Policy 2009-14, taking into account the export performance of the industry which is about
Rs.15,000 crore per annum and has the potential to double this performance in the next 4-5 years. Also, as leather industry is a labour intensive
sector, this sector definitely has the capability to generate additional 1 million employment opportunity in the next 4-5 years.
The Industry is keenly looking forward to receive a suitable package in the Foreign Trade Policy, commensurate with its export performance and
potential for growth and generating employment.
Considering the above, we have asked for notifying the major relief measures pronounced by our Council earlier in the Foreign Trade Policy 2009-
14, which includes Enhancement of duty credit scrip under Focus Product Scheme (FPS) from 1.25% to 2.50% of FOB value of export ;
Implementation Market Linked Focus Product Scheme (MLFPS) during entire policy period 2009-14 and enhancement of duty credit scrip from 2%
to 5% ; Withdrawal of case relating to levy of income tax on sale of DEPB licenses ; Extending 2% duty credit scrips for incremental exports ;
Enhancement of duty free limit under Duty Free Import Scheme (DFIS) from 3% to 5% of FOB value of export realization ; Implementation of 3%
DFIS for finished leather manufacturer exporters ; Establishment of bonded warehouses for tanning sector & allowing re-export of unsold raw
hides & skins and semi-processed leathers from bonded warehouses without levy of export duty and Notification of the Revised Norms for
identification of finished leather for export as per recommendation of CLRI.
I am very much hopeful that the Government of India will handhold us in the critical period and help in the recovery of the sector.

Export Performance April – June 2009
The latest available export statistics for the period April – June 2009 clearly portray the severity of the adverse impact of the crisis on the leather
sector, with the exports dropping by 7.06% in Rupee terms and a whopping 20.73% in dollar terms. All segments other than leather garments and
non-leather footwear have shown negative growth. As I have all along been saying, though our sector showed a marginal positive performance in
exports during 2008-09, we are experiencing the real adverse impact during this year. Unless a suitable relief package is provided to the industry,
this year again we will witness a drop in exports in the range of 15% to 20%, thereby not only diminishing our market share in the global leather
market to a significant extent but also resulting in a huge job losses.

Review of All Industry Rates of Duty Drawback 2009-10
You are all aware that the Directorate of Drawback, Department of Revenue reviews the All Industry Rate of Duty Drawback every year. The DBK
Directorate has already commenced the review process for the year 2009-10. For this purpose, the Council is required to submit the necessary data
indicating the incidence of duty and service tax involved in manufacture and exports various product segments. A detailed circular has already
been sent to the members requesting data in the prescribed format.
As in the past, the Council has engaged the services of M/s A. Raghunathan & Co., Chartered Accountant for collecting and compiling data in
Southern & Eastern regions, for verifying the data collected in other regions and for preparing a comprehensive proposal for submission to the
DBK Directorate.
In order to help the members to correctly provide the data as per the prescribed format, the Council has organized meetings in Chennai and
Kolkata which Mr. Raghunathan of M/s A. Raghunathan & Co made detailed presentation on how to fill-up the proforma. Similar meetings will be
organized in Delhi, Agra, Kanpur and Mumbai as well.
You will appreciate the fact that the All Industry Rates of Duty Drawback are fixed on the basis of data submitted. Hence, submission of
comprehensive and representative data is very much necessary to get the correct DBK rates for our products. Also, the DBK Directorate is
particular that a verification mechanism must be in place for all data submitted. Hence, I would urge all member-exporters to extend their co-
operation by providing the accurate data within the deadline of September 5, 2009, so that the Council can submit the required data to the DBK
Like the previous year, the government has constituted a three-member committee consisting of Shri Saumitra Chaudhuri, Member, Planning
Commission of India, Shri S. B. Mohapatra, Secretary to the Government of India (retired) and Shri T. R. Rustagi, Chief Commissioner of Customs
& Central Excise (retired) for the formulation of All Industry Rates of Duty Drawback, 2009-2010. The Council will be making a presentation to the
three-member Committee also, once the process of collection and verification of DBK data is completed.

Largest CLE Pavilion in Mipel 2009
The September 2009 edition of the Mipel fair scheduled to be held in Milan from September 16-19, 2009 will witness the largest ever CLE Pavilion,
ever since the Council’s maiden participation in the fair in 2002. 50 member-exporters will be participating in the CLE Pavilion as compared to 24
member-exporters in the March 2009 edition.
This large scale participation of members in the September 2009 edition has been facilitated by the enhanced financial assistance offered by the
Department of Commerce under the Market Access Initiative Scheme (MAIS).
As Mipel is one of the major fairs for the leather goods sector, I am sure that our large scale participation will help in showcasing our wide product
range to the overseas buyers. I wish the participants of Mipel fair and also other forthcoming fairs all success in their endeavours.

Sourcing Delegation to Sudan and Egypt
It may be recalled here that, after the successful visit of a delegation to Iran and Turkey during this month to explore the possibility of sourcing
hides, skins and leathers, the Council is planning to organise the visit of another such sourcing delegation to Sudan and Egypt during October 27-
30, 2009. The Indian Missions in these countries have extended full co-operation and support for making the event a success. I would request
members to participate in a big way in this delegation to explore the sourcing options from Sudan and Egypt.

With Best Wishes,

Habib Hussain
Chairman, CLE

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