We have already reported on the digitalization and robotization drive that is going on in India, as well as the elimination of smaller denominations of the Indian rupee. The Indian government is now going to introduce a new and more simplified indirect taxation system with the financial year starting in April, which will also apply to the leather and footwear sector.
Basically, the new Goods and Services Tax (GST) will replace a complex web of federal and state taxes with a single federal sales tax of 18.5 percent. Officials of India's Council for Leather Exports (CLE) told us at the Expo Riva Schuh fair that the change should benefit the Indian shoe industry in various ways.
In addition to simplifying procedures, which will be handled electronically, it will create an even playing field, and castigating some companies that haven't paid taxes. It also ensures that exporters will get refunded for taxes paid to make the shoes that they sell abroad. Some states did not make such tax refunds systematically.
However, some industry officials are complaining that the government is going too fast with the modernization of the economy, referring in particular to the recent demonetization of the Indian rupee, which has forced some of them to lay off workers who didn't have a bank account. Others feel that government officials and employees should be more concerned about their duties in order to accelerate the modernization of the Indian economy.
The CLE and the other bodies that organize the annual India International Leather Fair (IILF) in Chennai are inviting foreign companies to consider investments in the country's leather industry. The next session of the fair, scheduled for Feb. 1-3, will also highlight the theme of a greener leather sector.
IILF will also feature an enlarged Designers' Fair, hosting about 40 designers and design studios from foreign countries. The first session of the new fair one year ago featured only 29 studios, and they were elated by the response. Each of them had between 40 and 50 contacts with interested clients, many of which are making shoes in India. Some also asked them for advice on the design of their stores.