Footwear industry in decline

9 October 2002

The footwear industry, formerly a foreign exchange earner and prospering local industry catering to the demand of domestic customers, has gradually declined. Major producers have already closed down while other manufacturers are struggling to retain their labour force. One reason is improving living standards, with footwear becoming a fashion item, and consumers expecting frequent changes in design and styles. However, owing to financial constraints, local manufacturers were unable to comply. In addition, the introduction of lower tariff structures allowed imported footwear to be dumped by overseas manufacturers wishing to dispose of over-runs and excess stock at very low prices. Despite protests by local shoemakers, the government is unwilling to change the regulations even though imports have doubled this financial year and the industry could lose up to 25,000 jobs if the authorities do not review the issue of imports. Domestic manufacturers believe that Sri Lanka should follow India's example and introduce a minimum invoice value for imports. While maintaining the present duty structure for completed footwear of 25% on CIF value and duty surcharge, imports of shoe components should be allowed duty free. Additionally until the new Bataatha tannery project is commissioned, the duty on imported leather should be reduced.

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