Gadkari suggests leather export industry to develop clusters in backward areas

Union Minister Nitin Gadkari on Thursday suggested the leather export industry to develop clusters in backward areas as they can get land and manpower at affordable prices, with a view to boosting shipments. The road transport and highways and MSME minister said the government can think of giving incentives to such clusters, which will have all the facilities like labs and design centers, for the leather industry.

"You plan policy for the next 50 years. Develop clusters in backward areas because there, you will get land and manpower at cheap rates. We can give power, and logistics costs will be less there. We will try our level best for low taxation because the area is backward," he said. He was speaking at the CLE National Export Excellence Awards here.

The minister suggested the industry to explore options of buying land and develop clusters around the 22 new green expressways. Citing an example of the Delhi-Mumbai highway, he said that this will pass through economically backward and tribal areas in Maharashtra, Madhya Pradesh, Rajasthan, and Haryana.

Land near Delhi and Kanpur is expensive, he said adding the industry should look at new locations now from the current hub in Kanpur, Agra, and Chennai. He also said the government would announce steps for the micro, small and medium enterprises (MSME) sector and by that, 99 percent of leather units would come under the ambit of the MSME sector from the current 92 percent.

"I will make 99 percent of the sector MSME. We have already taken up the decision and we will declare before November 18," Gadkari said. He added that a cluster will have research, skill and training centers, besides laboratories and design centers and "we will help you with that and we can make a scheme for that".

He also said leather exports stood at about Rs 42,000 crore and turnover of the industry is around Rs 83,000 crore, but the growth of the industry is not a planned growth. Further, he said three things are important for exports -- capital, power, and logistics costs -- and by reducing this, "we can make our industry more economically viable in the international market".

On the capital issue, he said the cost of capital is high in the country and it is difficult to get finance from the banking system. He suggested that the government is looking at ways to provide loans in foreign currency.

The MSME ministry said the government is trying to make a system wherein it would give credit rating to units based on their track record. Industry players that have good track record and exports will get a good credit rating and that will be beneficial to get many facilities without "any nuisance" including capital at low cost.

"We will plan this scheme for you," he said. He added that the US-China trade war provides a huge export potential to domestic exporters in America.