Budget 2022: Here’s what fashion and lifestyle industry is expecting from FM Nirmala Sitharaman

By Dhanraj Minawala,

As we all anticipate the Union Budget 2022, each industry has its eyes glared at the provisions of taxation, the subsidies and the reliefs for manufacturers across all segments. The Indian fashion and lifestyle market has provided a boost to the footwear industry and there is a rising focus on the non-leather footwear segment around the world. 

India stands as the 2nd largest producer and consumer of footwear in the world. The footwear industry generates employment to over 2 million people. As of FY 2021-2022, a total number of 2729 million pairs of shoes were produced and manufactured in India. India’s share was pegged at 11.7 percent out of the entire global production. Over the last three years, India has surpassed the US in terms of ‘consumption by volume’. India has also bagged to be the second-largest consumer of footwear globally. We are still expecting the country’s textile and footwear industry to grow exponentially in the years to come. According to a report by Invest India for Non-leather footwear, India is the world’s second-largest buyer and producer of footwear, with an 8-fold rise expected by 2030. 

We are expecting several headwinds in the FY22-23. We might see high inflation to newer strains of the coronavirus and therefore expect continued challenges on the consumption expenditure of households and micro, small and medium enterprises (MSMEs). 

The New Year has brought along with it a hike in footwear prices for consumers following an increase in the goods and services tax rate for products below Rs 1000. The raw material prices used in footwear making have increased by a steep rate. It is expected that textiles and footwear will attract a 12% GST up from 5% earlier. At an industry level, this increase in GST from 5% to 12% may lead to reduced demand.

Being in the MSME sector, and while we witness the third wave of Covid-19, we expect financial support from the government in the form of incentives and tax relaxations. We are hoping for a better GST rate structure in the upcoming budget to boost manufacturing. 

We anticipate that the government is likely to provide an extension of the Indian Footwear, Leather, and Accessories Development Programme (IFLADP). It would be an incentive scheme for the leather and footwear sector till 2025-26. It would have an outlay of Rs.1,700 crore to boost exports, manufacturing, and job creation. We seek a boosted sale for sustainable products and allowance of subsidies for using non-leather material and products. 

We are all eagerly looking forward to the FY22-23 and we hold a lot of expectations from the Union Budget 2022. We hope to look forward to policies that aim for the upliftment of ‘Make In India’  brands and in dire support of local craftsmen. On that note, we hope and wish the best for each sector and our country’s economy. 

(The author is Co-founder, The CAI Store. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online.