India has immerged its name in the list of top 10 exporters of skin and leather products in the world. India is in 6th place on the list. If we see the import export data India we will observe that India is exporting products made up of leather in around 100 countries across the world. Here, Hong Kong, Italy, China, and Vietnam are the top leather exporters participants of India. To manufacture leather-based products, India has to import leather from other countries, which have a surplus amount of leather and skins with them. They use this leather for the manufacturing of their keen goods like leather shoes, belts, purses, and wallets.
India’s leather industry has developed definitely, changing from a simple crude or infringed material provider to a worth-added item exporter. All out leather and leather-based products exported out from India remained at US$ 5.07 billion out of 2019-20. From April 2019 to March 2020, the significant business sectors for Indian leather items were the US (17.22%), Germany (11.98%), UK (10.43%), Italy (6.33%), and France (5.94%). The complete leather and leather-based products trade from April 2000 to February 2021 was US$ 2.98 billion and for the long stretch of February 2021, it was US$ 298.87 million. From April 2020 to January 2021, items traded incorporate the leather footwear segment (US$ 165.68 million), leather-based clothing (US$ 261.99 million), and leather goods ($ 765.82 million).
Role of Custom duty
Custom duty has a great impact on export and import. It is a tax being charged by the government to those who are importing and exporting goods and other services. If you are the manufacturer of leather products are exporting your products to the foreign markets also you are importing leather part from the other countries that you are further using for the manufacture of your base products. During that import and export of the leather goods, you have to pay the tax charged at custom duty to get the clearance. In India, we know the budget got revised in March and from April new budget assigns to the country for the present financial year.
Increment in Custom Duty
During this budget announcement, we have observed that the taxes or customs duties for the import and export have increased by 10%. The imposition of a sharp 10 percent customs duty on the import of finished leather products will lead to a price increase. The surprisingly increase in the tax would also make it difficult for the industrialist of footwear and other leather products to remain competitive in exports as their input cost would also get increased. They have to revise their earlier prices hence creating chances to get smashed down the international market.
Impact on leather product manufacturers due to hike in custom duty
Due to this change in customs duty, manufacturers of leather products have to revise their product prices, which will further throw them down in the race of the international market. Manufacturers mostly grab the order because of the price differences. If another country is giving the product at much higher rates than you. Then of course any customer will come to you because you have beaten the price of other vendors and also giving the better quality. But after revising the prices, they might get lose their orders from such customers who buy the products based on price prospects. This will not only affect the business of the manufacturer but also the economic rate of the country. As fewer orders will be received by the trader, hence the less leather will be imported and exported them, ultimately less tax will get deducted at the custom duty and in this way put a great impact on the economic growth of the country.
Country’s Economical Loss
India is exporting a large number of leather products worldwide. In which China, Korea, Vietnam, Italy, and Hong Kong are the top most partners all around the globe. If we look at the report of 2017, we have done 823 million US dollars with the exporting of leather products. If we calculate the taxes over this price then we can assume the growth net GDP of India. But after increasing in prices it will hurt all.
Custom duty clearance has to be done while import and export. Any manufacturer should have contact with the trading partners, who sit on the ports to complete the formalities of custom duties. For those exporters who only deal in leather products. They have to face the consequences of the same increase in custom duty taxes. They will get less business from the leather-based product manufacturers in India. As, due to less demand in the foreign country, there will be less production will take place in your Indian industries, with this effect lesser will be the shipment process.
Summary – From the above article we have understood about the total sale is being done by the country through leather products. How leather exporting is putting a great hand in the economic growth of the country. But this growth in the economy from the leather industries has just fallen due to the new budget announcement. In that, the custom duty taxes have hiked by 10% while importing and exporting the leather products. This has created a great impact on the business of the leather manufacturing companies as well as their exporting partners. Now they have to do more efforts through some sales strategies, have to tackel new market places and some other steps to enhance their business.