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Footwear companies to benefit from Rs2,600cr package for the industry

The special package will help the sector in releasing the pricing pressure.

Government has announced a Rs2,600cr special package for the leather and footwear industry. The special package will help the sector in releasing the pricing pressure.

The special package includes the implementation of the central sector scheme ‘Indian Footwear, Leather & Accessories Development Programme (IFLADP)’. The expenditure is for the three financial years from 2017-18 to 2019-20, as per the media reports.

However, the industry was expecting a package of Rs4,000cr. The amount has been brought down along with the with duration.

The major challenge of shortage of human resources to be addressed in the scheme. As per the scheme, ~3,00,000 people will be trained. The package also includes 20-30% subsidy/grant to MSMEs on the capital expenditure made by them on plant and machineries.

The scheme will release pricing pressure from all the organized players of the Indian leather and footwear companies. Reduction in the pricing pressure will be beneficial for the companies like Mirza intenational Ltd, as ~70% of company’s revenue is generated from exports.

Bata India Ltd and Relaxo Footwears Ltd are also expected to benefit from pricing pressure release as this may help these companies to penetrate more opportunities in the export market.

Bata India Ltd is currently trading at Rs772 up by Rs5.55 or 0.72% from its previous closing of Rs766.45 on the BSE. Relaxo Footwears Ltd is currently trading at Rs682.55 up by Rs5 or 0.74% from its previous closing of Rs677.55 on the BSE. Mirza International Ltd is currently trading at Rs129.25 down by Rs0.7 or 0.54% from its previous closing of Rs129.95 on the BSE.