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Leather industry and union budget 2010-11
BY V.M. Khaleelur rahman

The budget presented by the hon’ble Finance Minister Mr. Pranab Mukherjee on 26th February 2010 can be considered as “ people friendly “ because he has given relief to individual taxpayers by widening the personal income tax slab as shown below:

Income For males below 65 years For females below 65 years
Old New Old New
Up to Rs. 1,60,000 Nil Nil Nil Nil
Rs. 1,60,000 to Rs. 1,90,000 10% 10% Nil Nil
For both male and female
Old New
Rs.1,90,000 to 3,00,000 10% 10%
Rs. 3,00,000 to Rs. 5,00,000 20% 10%
Rs.5,00,000 to Rs. 8,00,000 30% 20%
Above Rs. 8,00,000 30% 30%


For senior citizens the exemption limit increased from Rs.2,25,000 to Rs.2,40,000

Contributions to Central Government Health Scheme up to Rs.20,000 are exempted from tax. But gift of gold, silver, other precious metals is taxable after 1.6.2010 if it is not from relative, inherited or on marriage. There is also benefit of deduction for investments up to Rs.20,000 in long term infrastructure bonds over and above existing Rs. 1 lakh limit under Section 80C of IT Act for investing in savings like Provident Fund, Mutual Funds, Insurance schemes etc. However there is no relief for the lower income group.

VIT University Chancellor Mr. G. Viswanathan while asking the government to take measures to prevent foreign universities, if permitted in our country, from grabbing faculty from leading institutions, has suggested that incentives be given to teachers to attract talented persons to teaching profession. In his opinion one of the ways for this can be to grant exemption to teachers from paying income tax or impose a lesser tax as in Pakistan where the tax is just 5% for teachers.

A tanner pointed out that such unexpected but important suggestions are rightly made to improve the conditions of the Indian educational institutions at the present when the proposal for allowing foreign universities in our country is being debated, but there seems to be no such “think tanks” in the leather industry, which is passing through a difficult period, to suggest something necessity for its improvement.


The one-time grant of Rs.200 crore provided in the budget coupled with the Rs.120 crore grant from the Tamil Nadu government is expected to bring much relief to the Tirupur dyers. No doubt it was the urgent need of the time.

Many tanners and exporters say that we should not be carried away by the glitterings we see in the leather fairs. The fact is that the leather and leather products industry is still struggling for survival and unless there is some support in the forms of increased incentives and drawbacks from the government things cannot move well in the industry in production and export. We cannot forget that there are stiff competitions from countries like China and Pakistan in the world market. The leather and leather products manufacturers and exporters are in a dilemma, not knowing what to do and how to proceed further. The small units are the worst sufferers. Many tanners I interviewed told me that the Council for Leather Exports and other associations are not serious in representing the leather industry to the government.


Consumer items like mobile handsets, battery chargers, play stations, solar powered and electric cars are to cost less and prices of allopathic, homeopathic and ayurvedic medicines will also be somewhat lower as their excise duty was reduced.

Petrol, diesel, domestic air travel, cigarette etc. are to cost more.
It is reported that the Finance Minister Mr. Pranab Mukherjee was a pipe smoker till about 25 years ago. He is not smoking now. He has threatened smokers with more taxes in order to discourage them from smoking. Every right thinking person feels that it is perfectly in order. In the meantime he and his other ministerial colleagues would do well to think of discouraging alcoholism also by all possible ways and after sometime ban it completely. His attempts to make our country healthier and richer are welcome and praiseworthy.


Many associations hailed the budget as fine or excellent act meant for development but expressed disappointment at many disadvantages including the hike in the Minimum Alternative Tax (MAT) and excise duties. Some of them had been demanding cut in MAT from 15 to 10 percent but the government increased it to 18 percent. MAT is a tax payable by the companies which have received tax benefits or tax exception under various schemes.

Mr. Singhania, President of Federation of Indian Chamber of Commerce and Industry (FICCI), has also said that “by and large the finance minister has provided a stable tax and policy framework for the Indian economy to move forward. However the industry is disappointed that he has raised the MAT rate from 15 to 18% when the industry was demanding a cut down to 10 percent”. He has further said that “the impact of excise duty hike across the board coupled with increase in excise duty on petrol and diesel will add pressure on the price line in current circumstances”.
Mr. M. Rafeeque Ahmed, Chairman, Farida group, has also welcomed the budget for its developmental aspects, hailed the provision of one time grant of Rs.200 crore to Tirupur dyers and expressed concern over the increase in MAT from 15% to 18%.


Many tanners and merchants in the leather industry express their disappointment that the leather associations are not as active as they should be to assess its present conditions and make suitable and necessary suggestions to the government to achieve export targets and march forward in the highly competitive world market. According to reliable sources, export of leather is likely to go down in the coming days.

They also regret that in the 2188 member strong organization - Council for Leather Exports –a very few members attend its General Body Meeting every year and hence there is no opportunity at all for discussing burning issues and resolving them in a way acceptable to all.

(Indian Leather, April 2010)