India has the largest footwear market in the world: Adesh Gupta, CEO, Liberty Shoes

Liberty Shoes CEO, Adesh Gupta, speaks to ET Now regarding the GST structure for the footwear industry in general and how the sector would change as the market gets more organsied post GST.

What is your view on the new GST structure for footwear because most on the Street seem to be lauding rates but in case of your industry, the feeling seems to be a little otherwise considering how unorganised the industry is?

The fundamental is that GST is going to be a game changer for the entire footwear industry as well as for the industry at large. I believe the footwear industry has been recognised by the Government of India as a focus sector in the Make in India whether we do it for India or we do it for the world. And we had a target of achieving $27 billion from the base of $15 billion where there is a 20% growth targets which has been set by the government for the next five years.

One must understand that this sector is highly unorganised where 80% to 85% of the industry falls under very small micros, small and medium enterprises and hardly you can name brands which are there in the footwear space which are in the let us listed space. So there is hardly 5-6% of the space which is catering by the large scale industry.

So this is where the GST can have a better play for the industry and the whole idea of GST was to integrate the sector as one sector. When we talk about GST one nation one tax, I would also believe that it is one sector. But when you have unorganised sector and organised sector which are competing with each other, we are competing internally rather than externally. And while the government has withdrawn all the exemptions various tax slabs structure which were there in the past as legacy, but going forward the government has decided two rates of tax which is 5% for shoes marked with 500 and below and above 500 there is a huge-huge-huge 18% tax and that is again creating a divide between micro, small and other unorganised players to organised player.

And this is where industry is really shouting and crying about it that the whole idea was to grow the industry in India where the manufacturing sector needs a push from the government on Make in India and we can create two to three million new jobs at the grass root level. Unfortunately, the tax rates there is a huge divide between 5% and 18%. So there is a lure for 13% differential for unorganised sector not to pay the tax and this is where probably the industry is scared and there are lot of demonstrations happening and we are really concerned about the high rate of tax for shoes above 500.

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