What's Happening?
The Indian government is preparing a $1 billion package aimed at enhancing the country's footwear manufacturing sector. This initiative comes in response to the 50% tariff imposed by the United States
on Indian exports, which has significantly impacted the industry. The Department for Promotion of Industry and Internal Trade had previously suggested a production-linked incentive for the sector, but it was not implemented due to changes in government policy. The new package is designed to support the entire value chain, from raw materials to finished products, and is expected to provide benefits to investors in this labor-intensive industry. India, the second-largest footwear producer globally, has seen its position challenged by countries like China and Vietnam, which have become leaders in the sports and athleisure footwear segments. The package is still under discussion but is anticipated to be announced soon.
Why It's Important?
This development is crucial as it aims to revitalize India's footwear industry, which has been struggling due to high tariffs and competition from other countries. By addressing the entire value chain, the package could enhance domestic production capabilities and reduce reliance on imports, particularly from China. The initiative also aligns with India's broader strategy to increase domestic consumption and exports, potentially integrating Indian companies more deeply into the global value chain. Additionally, the package could help India leverage upcoming free trade agreements with the European Union and the UK, which may offer duty concessions for Indian goods. This could lead to increased capacity and competitiveness in the international market.
What's Next?
The Indian government is expected to finalize and announce the package soon. Once implemented, it could lead to increased investment in the sector and potentially attract foreign manufacturers to set up operations in India. The package may also prompt domestic manufacturers to expand their production capabilities and explore new markets. As India continues its aggressive pursuit of free trade agreements, the footwear industry could benefit from reduced tariffs and increased access to international markets. The domestic market is also projected to grow, with average footwear consumption expected to rise, further boosting the sector.
