Cheap, illegal footwear imports strangle local leather product sector
View(s):Illegal footwear imports are hurtin g Sri Lanka footwear and leather products manufactures,, the association of the sector has said, urging the government to protect local industrialists.
The Sri Lanka Footwear & Leather Products Manufacturers Association has urged the Customs authorities to crack down on illegal imports of footwear and unassembled parts of shoes for assembly in Sri Lanka without much value addition and avoidance of CESS.
In a letter to the Director General of Customs Chulananda Perera, the association president P.G.D. Nimalasiri has suggested to conduct raids on counterfeit footwear to safeguard the local industry.
There is unfair competition from counterfeit products, tax avoidance, and illicit imports, which have reduced competitiveness, he pointed out.
During last few months there had been many complains that the local shoe market is flooded with many illegally imported footwear, which has become real threat to the local manufacturing Industry, Mr. Nimalasiri said.
He added that these illegal imports are mainly factory overruns, stock lots and inferior quality products and are available in the market for less than Rs. 750 which is below the minimum total custom tariff on footwear (CESS Rs. 600 +PAL + VAT and NBT).
According to surveys conducted in the country, the total Sri Lankan footwear requirement stands at around 40 million pairs.
The local manufacturers’ share stands at around 70 per cent and therefore the balance 30 per cent comes from legal and illegal imports.
The imported footwear share in pairs is 12 million and if this amount is legally imported, Sri Lanka Customs should have gained revenue of around (12,000,000 x Rs. 750, which is the minimum) Rs. 9 billion when importing 12 million pairs, he revealed.
Sri Lanka is losing over US $112.5 million annually in much needed foreign exchange as a result of cheap footwear imports from countries like China and India, he said adding that local manufacturers are on the verge of collapse as they cannot compete with cheap imports.
More than 2000 cottage type household entrepreneurs (cobblers) who provide employment for 40,000 or more are also struggling to survive, the letter disclosed.
DI, Bata and a few more companies use many sub-contractors but due to the market vulnerability the number has reduced to 200 from 500. Most of them who lost this opportunity of supplying to big brands have ventured to other fields of marketing and this led to short supply in the local market, Mr. Nimalasiri said. Â Â Â Â -(Bandula)