Bahadurgarh footwear industry feels GST pinch

Bahadurgarh, an industrial town located in Jhajjar district on the Haryana-Delhi border, is a significant hub for non-leather footwear manufacturing in India. According to local industrialists, with around 2,500 units directly and indirectly linked to the industry, Bahadurgarh produces about one crore pairs of footwear daily, contributing to 60% of the country’s non-leather footwear output. The industry manufactures a wide variety of footwear, including casual and formal shoes, sandals, slippers, and sports footwear.

However, the industry has faced a decline in sales over the past three years, largely due to a hike in the GST on footwear priced up to Rs 1,000, from 5% to 12%. Local industrialists claim that footwear sales have dropped by over 30% during this period. The situation has forced many manufacturers to evade the GST by not issuing bills to keep prices low.

Subhash Jagga, president of the Bahadurgarh Chamber of Commerce and Industries, expressed concerns about the impact of the GST hike, saying that it has made footwear unaffordable for the average consumer. “The decline in sales has led to revenue losses for the state, as some manufacturers are resorting to illegal practices in neighbouring Delhi state to avoid taxes,” he added.

Jagga warned about the adverse effects on the footwear industry in the near future if the GST rate is not reduced. “We have repeatedly raised this issue with the Central Government, urging it to reduce the GST to 5% again, but our concerns have been ignored. The situation is worsening with each passing day. If our demand is not addressed soon, we could face the closure of footwear factories or see industrialists relocating to other areas. This would have a detrimental impact on employment, as the footwear industry provides jobs to a large number of people, both from within and outside Haryana,” he said.

Narendra Chhikara, senior vice-president, Bahadurgarh Footwear Park Association, also highlighted the negative impact of the GST increase, particularly since 85% of footwear products are priced below Rs 1,000 and are primarily purchased by common people.

“Despite the submission of a letter by the finance ministers of 20 states, urging the Union Government to restore the previous GST rate, no action has been taken. The high GST rate is forcing industrialists to explore alternative options, endangering the industry's future in Bahadurgarh,” he added.

Chhikara highlighted that more than 60% of the units in Bahadurgarh were engaged in manufacturing shoes, sandals, and slippers, while the remaining units produced allied material, like shoe boxes, laces and soles. The footwear produced in the region is priced between Rs 100 and Rs 1,500. Notable companies such as Action, Relaxo, Rexona, Lancer, Aqualite and Reshma had established their units in Bahadurgarh. The products were also exported to the UAE, South Africa, and other Asian countries, he added.