GST reforms raise hopes of revival in footwear market

The footwear industry in Bahadurgarh town, located on the border of Delhi and Haryana, is optimistic about the proposed reforms in Goods and Services Tax (GST) by the Centre, especially their demand to reduce GST on footwear from 12 per cent to 5 per cent

Industrialists believe the change will significantly boost sales and curb tax evasion. The demand for reduction in the GST rate was flagged prominently by representatives of the Bahadurgarh Footwear Association before the Union Budget. They met the Union Finance Minister and others urging them to bring the GST rate down. “In January 2022, the GST on footwear priced at Rs 1,000 or below was raised from 5 per cent to 12 per cent, which adversely impacted the sector’s growth and increased the cost burden on consumers. Following the hike, around 25 per cent dip in the sales of footwear was witnessed,” said Narendra Chhikara, senior vice-president of the Bahadurgarh Footwear Park Association.

He maintained that Bahadurgarh is the largest non-leather footwear hub in the country, with over 2,500 units associated directly and indirectly with it. It contributes to 60 per cent of the nation’s non-leather footwear production. “Since 90 per cent of the footwear products are priced below Rs 1,000. These affordable products are primarily purchased by common people, particularly those from economically weaker sections. The 12 per cent GST rate led to a considerable rise in footwear prices, making them unaffordable for many. Now, the footwear industrialists are enthused by the proposed GST reforms as it is likely to restore the previous tax rate,” Chhikara added.

Subhash Jagga, president of the Bahadurgarh Chamber of Commerce and Industries, said the proposed GST reform would not only help revive the market demand but also curb tax evasion. “All eyes are now on the September 3 meeting in Delhi, where the GST reforms will be discussed,” he added