Amidst protests,Veekesy India steps into Sri Lanka’s footwear industry
A leading Indian non-leather footwear manufacturing company is set to make inroads into the Sri Lankan market with Board of Investment (BOI) approval to sell 100 per cent of its products locally in spite of protests from local footwear and leather product manufacturers.
Veekesy Slippers Lanka Pvt Ltd, a subsidiary of VKC Group India, will be launching its production at its local factory at Ethukala, Negombo soon as it has received the green light of the government following the fulfilment of all BOI requirements and other approvals of local authorities, chairman of the company Abdul Razak said.
The company has invested US$269,581 on the project to manufacture non-leather footwear mainly synthetic and polyurethane (PU) slippers for the local market with some restrictions imposed by the BOI, he disclosed.
According to the BOI letter of approval dated 25-09-2017, the company should confine its working production capacity to 2.1 million pairs per annum and submit the production and local sales details quarterly to the monitoring and investments departments of the BOI.
The country’s total production capacity can be estimated to be in the range of 20 – 30 million pairs per year, he said adding that his company’s production will be very minimal and it cannot hurt the local industry.
If the company wishes to expand the production capacity then it should submit, the relevant proposal along with a substantial percentage of export plan of the company’s total proposed production capacity for the prior approval of the BOI.
It would then also have to pay the customs duty, PAL, VAT, NBT any applicable CESS and any other levies and the income generated from local sales is also taxable under the Inland Revenue Act.
Mr. Razak who was in the island on a 2-day inspection visit spoke to Business Times several hours before his departure to Kerala on Tuesday as he was eager to clear the doubts of local footwear manufacturers about his company’s entry into local market.
He noted that he is learning to do business the Sri Lankan way working along with local counterparts, rather than simply imposing their business models and practices on the local market.
The company is willing to share their technical know how and even train Sri Lankan manufacturers and workers to improve the industry, he said adding that according to their market research and its findings, the country’s footwear market is virgin and unsaturated.
He categorically stated that his company will only remit their profits to India and they will operate under the normal laws of the country.
Mr. Razak noted that he will get most of the raw material from local companies while providing 250 direct and the similar number of indirect employment for Sri Lankans.
He revealed that he met several local footwear manufactures during his stay in the island and they were pleased to welcome his company.
The local industry includes 10 large export companies, 30 medium scale companies and about 3000 small scale manufacturers and at present it employs about 40,000 people directly and indirectly.
It produces 75 per cent of all shoes sold in the island. About 95 per cent of the local shoes are made from non-leather (synthetic) materials or rubber.
The remaining 25 per cent of shoes sold in Sri Lanka are imported. This amounts to 10 million pairs per year.
Local companies should continue to try to seize some of that market, which offers low priced footwear at very competitive rates, Mr.Razak said adding that his company’s intention is to supply better quality, non-leather footwear to local consumers at reasonable prices. It has no intention of ruining other manufacturers.