GST: Footwear industry feels the heat

Fashion Footwear

Footwear business has come to a standstill in the city of Taj where one-third of the population is directly or indirectly connected to the industry.

Workers are waiting for orders but as there is no activity, the demand has fallen drastically. Agra caters to 65% of the country’s requirement of footwear.

“Business has stopped since the imposition of the goods and services tax (GST) on July 1. Shoes manufactured in Agra are mostly handmade. It is more of a cottage industry with families operating from their houses or rented accommodations,” said Gagan Das Ramani, president of Agra Shoe Factors Association.

As per new norms under GST, manufacturers are required to mention maximum retail price (MRP) on the footwear.

“There are about 3 lakh workers involved in footwear manufacturing and 50,000 shopkeepers and their staff who sell the products. Many of them are illiterate and are expected to comply with the idea of mentioning MRP on the products,” said Ramani.

“In machine production, MRP can easily be mentioned on the product but for small scale manufacturer it is tough to do so, especially when it has to be indelible,” said Ramani.

“Earlier, footwear below Rs 300 was exempted from VAT in Agra. Footwear up to Rs 500 should get exemption under GST but the government has imposed 5% tax on footwear below Rs 500 and 18% on the higher range of products,” he said.

Chairman of Northern region unit of the Council for Leather Exports Pooran Dawar said GST on footwear would bring down export which was already under pressure.

“Footwear is a basic necessity and tax rates should have been fixed at par with clothing which has 5% GST till Rs 1,000. Footwear coming in the range of Rs 500-1,000 has been placed in 18% tax category which seems to be irrational,” said Dawar.

“Agra caters to 65% of footwear requirement in India and has over 25% share in footwear export from India. The new tax regime will hit the industry hard,” he said.

“The footwear market was sluggish since demonetisation was introduced. GST has come as another blow. We are receiving fewer customers and sales are low,” said Prakash Berry who owns a shop on bypass road.

Haresh Kumar, who works at a small shoe manufacturing unit in Ratanpura area, is clueless about the new tax regime but knows that because of GST the owner of his unit is not getting any orders. “I used to get Rs 200 per day but I have no work these days,” he said.

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