Representational image
Representational image
Photo: Pexels

The micro, small and medium enterprises (MSME) sector has been the worst-affected by the lockdown. Hoping to get a careful handholding from the government, the informal sector in Mumbai does not seem to be very impressed with the Union Budget 2021.

Worst hit by the economic slowdown, the famous leather manufacturers of Dharavi said that the budget yet again has nothing much to help them revive their shrinking businesses.

Along with the number of measures announced by Union finance minister Nirmala Sitharaman on Monday, to boost the MSME, a provision of ₹15,700 crore for the MSME sector has been made in the Union Budget 2021-22. To incentivise exporters of garments, leather, and handicraft items that are primarily made by MSMEs the budget has announced the withdrawal of exemptions on imports of some types of leathers as they are manufactured domestically in quality and quantity.

The leather business is one of the biggest contributors to Dharavi slum’s informal economy with an estimated turnover of $300 to $500 million each year. For instance, 1.5 lakh people in Dharavi work in the leather industry.

However, the once flourishing trade is now losing its edge due to factors like the influx of cheap Chinese goods and the rising cost of raw materials in recent years.

The leather manufacturers have been seeking a blanket ban on Chinese items, however the fake leather products and cheap alternatives are still available in the market cutting into their businesses they have alleged.
Manohar Raibage, president of Leather Goods Manufacturing Association said, “The businesses were hit due to demonetisation, and implementation of Goods and Services Tax (GST) added to our misery. Above all this, the influx of cheaper Chinese goods has led to our sales declining by each day. The original leather bag that we sell for Rs. 3000 to Rs 5000, Chinese fake leather products are sold at Rs 500. Customers prefer buying cheaper options. Businesses are not picking up even during festive seasons, it is getting unsustainable, hundreds have shut shop in the last three years. Pandemic has worsened our situation and many shops had to shut permanently.”

"The margin between raw material that we buy and the final product has shrunk after GST. We were hoping for a little relief on that front. Withdrawal of exemptions on imports of some types of leathers will be a minuscule relief on a heap of problems that are lying on us." said another manufacturer and a senior member of Leather Goods Manufacturing Association, Mumbai.

“ Since last many years, we have been seeking a ban on fake and Chinese products. I feel the government should have hiked taxes on Chinese products or just ban them not just on paper but restrict their entry to Indian markets,” said S Alim owner of Dayatar/ Image shoes and handbags in Dharavi.

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