Indian Footwear and Leather Development Programme (IFLDP) approved for continuation with financial outlay of Rs 1700 crore - Business Guardian
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Policy&Politics

Indian Footwear and Leather Development Programme (IFLDP) approved for continuation with financial outlay of Rs 1700 crore

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Indian Footwear and Leather Development Programme (IFLDP) (erstwhile IFLADP) has been approved for continuation from 2021-22 with an approved financial outlay of Rs. 1700 crore. IFLDP has been approved by the Union Cabinet on 19.01.2022 as continuation of the erstwhile IFLADP till 31.03.2026 or till further review, whichever is earlier.

Indian Footwear and Leather Development Programme(IFLDP) aims at development of infrastructure for the leather sector, address environmental concerns specific to the leather sector, facilitate additional investments, employment generation and increase in production.

1. The following sub-schemes have been approved under IFLDP during 2021-26:-

(i) Sustainable Technology and Environmental Promotion (proposed outlay Rs.500 crore):- Special Purpose Vehicle constituted for each CETP would be provided assistance @ 80% of the total project cost for Northeastern Areas with industry’s/beneficiary share to be 20% of the project cost and @ 70% of the total project cost for other areas with industry’s/beneficiary share to be 30% of the project cost with a limit of Rs.200 crore.

(ii) Integrated Development of Leather Sector (IDLS) sub-scheme (proposed outlay Rs.500 crore):- Assistance would be provided to the sectoral units for their modernization/capacity expansion/technology up-gradation on or after 01.01.2020 @30% to MSME units and 20% to other units. Financial assistance is being proposed to North Eastern Areas also @40% of cost of plant & machinery to MSME units and 30% of the same to other units with additional 5% financial assistance for the domestically manufactured plant and machinery. Maximum assistance will be provided upto Rs.15 crore per product line keeping in view 5 times increase in upper limit of investment in Plant and Machinery by MSME

(iii) Establishment of Institutional Facilities (proposed outlay Rs.200 crore):- Setting up of International Testing Centre, Sports Complex, replacement of conventional light fixtures with LED lights and construction of girls hostel in FDDI campuses are planned.

(iv) Mega Leather Footwear and Accessories Cluster Development (MLFACD) sub-scheme (proposed outlay Rs.300 crore):- The sub-scheme aims at world-class infrastructure and to integrate the production chain in a manner that caters to the business needs of the leather and footwear industry so as to cater to the domestic market and exports.

Graded assistance is proposed to be provided @50% of the project cost or @70% of the project cost in Northeastern areas, for land development, core infrastructure, HRD and social infrastructure, production facilities including ready to use sheds with plug and play facility, R&D support and export services excluding cost of land with maximum Government assistance being limited to Rs. 125 crore.

(v) Brand Promotion of Indian Brands in Leather and Footwear Sector (proposed outlay Rs.100 crore):- The GoI assistance is proposed to be 50% of total project cost subject to limit of Rs 10 crore for each brand in next three year to promote 10 Indian brands in the International Market in 3 years. The designated agency to implement the sub-scheme is being proposed to be selected amongst institutes like NID, NIFT, IBEF, IIFT or Institutes of similar standing.

(vi) Development of Design Studios (proposed outlay Rs.100 crore):- This is a new sub-scheme. Assistance would be provided to develop 10 Indian design studio. The studios will promote marketing/export linkages, facilitates buyer- seller meets, display designs to international buyers and work as interface for the trade fairs. Design Studios will be kind of ‘one-stop- shop’ providing a wide range of services: design, technical support, quality control etc. Institutes like FDDI, CLRI, NID, NIFT, IBEF, IIFT or institutes of similar standing or any large units of the industry or group of industry would be the implementing agencies.

4. Achievements of erstwhile IFLADP 2017-21

The sub-scheme wise details of activities undertaken under erstwhile IFLADP (as on date) is summarized as below:-

(a) Human Resource Development sub-scheme-During the period 2017-18 to 2019-20, primary skill development training has been provided to 3,24,722 unemployed persons and 2,60,880 trainees provided placement in leather & footwear sector. 12947 workers were provided skill upgradation training in 2019-20.No training could be conducted during 2020-21 due to COVID-19 Pandemic.

(b) Integrated Development of Leather Sector-During the period 2017-18 to 2020-21, financial assistance amounting to Rs. 307.84 crore provided for modernization and technology up-gradation of 714 units in leather & footwear sector.

(C ) Mega Leather Footwear and Accessories Clusters sub-scheme-The Department has approved the project for setting up of MLFAC at Calcutta Leather Complex, Bantala, Kolkata with project cost of Rs. 178.84 crore and GoI assistance of Rs. 89.42 crore. ‘In-principle’ approval has been accorded for the proposal for setting up of MLFAC at Ramaipur, Kanpur Nagar, Uttar Pradesh with tentative proposed cost of Rs. 451 crore.

(d) Leather Technology Innovation and Environmental Issues sub-scheme- Approval has been accorded for upgradation of twelve Common Effluent Treatment Plants (CETPs) at Dindigul, Ranipet, Ambur, Vaniyambadi, Vellore, Pallavaram, Trichy, Erode districts of Tamil Nadu, Jalandhar (Punjab) and Bantala (Kolkata). As on date, financial assistance amounting to Rs. 132 crore has been released in respect of ten CETP projects with total GOI assistance of Rs.284 crore. Rs.152 crore is the committed liability which would be released in the coming years.

(e) Establishment of Institutional Facilities sub-scheme- Approval has been granted for up-gradation of seven Footwear Design and Development Institute (FDDI) campuses located at Noida, Chennai, Hyderabad, Jodhpur, Patna, Kolkata and Rohtak into Centres for Excellence (CoEs) with total project cost of Rs. 129.62 crore. First installment of funds amounting to Rs 38.88 crore (30% of total project cost) has been released to Footwear Design and Development Institute. Rs.90.76 crore is the committed liability which would be released in the coming years.

(f) Promotion of Indian Brands in Leather and Footwear Sector- Five applications for financial assistance were received by the Department. The ‘Designated Agency’ for evaluation of proposals could not be appointed as no specific criteria were mentioned in the guidelines and hence the scheme could not take off.

(g) Additional Employment Incentive in Leather, Footwear and Accessories sector

An online portal has been implemented for receiving applications. Total 48 applications have been received under the sub-scheme by the implementing agency i.e. Footwear Design and Development Institute (FDDI). After physical inspection and financial vetting, reimbursement of Rs. 92,27,971/- in respect of eligible 48 units/applications has been released to FDDI.

5. Impact of erstwhile IFLADP

The programme has a direct benefit towards quality employment generation especially for women, skill development, decent work, making the industry more environment friendly and prompting sustainable production system. The leather clusters located in different parts of the country have accrued benefit in terms of reduction of poverty, gender equality, sector specific skill/education, etc., thus touching many of the Sustainable Development Goals (SDGs). Most of the National Development Plans (NDP) also align with the SDGs. NDPs such as economic growth, reduction in poverty, generation of employment, quality education/skills, gender equality, good health and well-being, infrastructure development, affordable and clean energy and other environmental benefits are well-served by the IFLAD Programme.

• Sustainable Technology and Environmental Promotion to receive big boost under the Indian Footwear and Leather Development Programme(IFLDP)

• Renewed focus to be placed on integrated development of the leather sector

• IFLDP to enable the creation of world-class infrastructure to cater to the domestic market and exports

• 10 Indian footwear design studios to be developed under IFLDP

• Brand Promotion of Indian Brands in Leather and Footwear Sector to be one of the major focus areas

• From 2017-2020, IFLDP succeeds in skilling more than 3.24 lakh persons

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Policy&Politics

Govt extends date for submission of R&D proposals

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The Government has extended the deadline for submission of proposals related to R&D scheme under the National Green Hydrogen Mission. The R&D scheme seeks to make the production, storage, transportation and utilisation of green hydrogen more affordable. It also aims to improve the efficiency, safety and reliability of the relevant processes and technologies involved in the green hydrogen value chain. Subsequent to the issue of the guidelines, the Ministry of New & Renewable Energy issued a call for proposals on 16 March, 2024.

While the Call for Proposals is receiving encouraging response, some stakeholders have requested more time for submission of R&D proposals. In view of such requests and to allow sufficient time to the institutions for submitting good-quality proposals, the Ministry has extended the deadline for submission of proposals to 27th April, 2024.

The scheme also aims to foster partnerships among industry, academia and government in order to establish an innovation ecosystem for green hydrogen technologies. The scheme will also help the scaling up and commercialisation of green hydrogen technologies by providing the necessary policy and regulatory support.

The R&D scheme will be implemented with a total budgetary outlay of Rs 400 crore till the financial year 2025-26. The support under the R&D programme includes all components of the green hydrogen value chain, namely, production, storage, compression, transportation, and utilisation.

The R&D projects supported under the mission will be goal-oriented, time bound, and suitable to be scaled up. In addition to industrial and institutional research, innovative MSMEs and start-ups working on indigenous technology development will also be encouraged under the Scheme.

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Policy&Politics

India, Brazil, South Africa to press for labour & social issues, sustainability

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The Indian delegation also comprises Rupesh Kumar Thakur, Joint Secretary, and Rakesh Gaur, Deputy Director from the Ministry of Labour & Employment.

India, on Thursday, joined the G20’s two-day 2nd Employment Working Group (EWG) meeting under the Brazilian Presidency which is all set to address labour, employment and social issues for strong, sustainable, balanced and job-rich growth for all. India is co-chairing the 2nd EWG meeting, along with Brazil and South Africa, and is represented by Sumita Dawra, Secretary, Labour & Employment.

The Indian delegation also comprises Rupesh Kumar Thakur, Joint Secretary, and Rakesh Gaur, Deputy Director from the Ministry of Labour & Employment. India has pointed out that the priority areas of the 2nd EWG at Brasilia align with the priority areas and outcomes of previous G20 presidencies including Indian presidency, and commended the continuity in the multi-year agenda to create lasting positive change in the world of work. This not only sustains but also elevates the work initiated by the EWG during the Indian Presidency.

The focus areas for the 2nd EWG meeting are — creating quality employment and promoting decent labour, addressing a just transition amidst digital and energy transformations, leveraging technologies to enhance the quality of life for al and the emphasis on gender equity and promoting diversity in the world of employment for inclusivity, driving innovation and growth. On the first day of the meeting, deliberations were held on the over-arching theme of promotion of gender equality and promoting diversity in the workplace.

The Indian delegation emphasized the need for creating inclusive environments by ensuring equal representation and empowerment for all, irrespective of race, gender, ethnicity, or socio-economic background. To increase female labour force participation, India has enacted occupational safety health and working conditions code, 2020 which entitles women to be employed in all establishments for all types of work with their consent at night time. This provision has already been implemented in underground mines.

In 2017, the Government amended the Maternity Benefit Act of 1961, which increased the ‘maternity leave with pay protection’ from 12 weeks to 26 weeks for all women working in establishments employing 10 or more workers. This is expected to reduce the motherhood pay gap among the working mothers. To aid migrant workers, India’s innovative policy ‘One Nation, One Ration Card’ allows migrants to access their entitled food grains from anywhere in the Public Distribution System network in the country.

A landmark step in fostering inclusion in the workforce is the e-Shram portal, launched to create a national database of unorganized workers, especially migrant and construction workers. This initiative, providing the e-Shram card, enables access to benefits under various social security schemes.

The portal allows an unorganized worker to register himself or herself on the portal on self-declaration basis, under 400 occupations in 30 broad occupation sectors. More than 290 million unorganized workers have been registered on this portal so far.

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Policy&Politics

India to spend USD 3.7 billion to fence Myanmar border

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India plans to spend nearly $3.7 billion to fence its 1,610-km (1,000-mile) porous border with Myanmar within about a decade, said a source with direct knowledge of the matter, to prevent smuggling and other illegal activities. New Delhi said earlier this year it would fence the border and end a decades-old visa-free movement policy with coup-hit Myanmar for border citizens for reasons of national security and to maintain the demographic structure of its northeastern region.

A government committee earlier this month approved the cost for the fencing, which needs to be approved by Prime Minister Narendra Modi’s cabinet, said the source who declined to be named as they were not authorised to talk to the media. The prime minister’s office and the ministries of home, finance, foreign affairs and information and broadcasting did not immediately respond to an email seeking comment.

Myanmar has so far not commented on India’s fencing plans. Since a military coup in Myanmar in 2021, thousands of civilians and hundreds of troops have fled from there to Indian states where people on both sides share ethnic and familial ties. This has worried New Delhi because of risk of communal tensions spreading to India. Some members of the Indian government have also blamed the porous border for abetting the tense situation in the restive north-eastern Indian state of Manipur, abutting Myanmar.

For nearly a year, Manipur has been engulfed by a civil war-like situation between two ethnic groups, one of which shares lineage with Myanmar’s Chin tribe. The committee of senior Indian officials also agreed to build parallel roads along the fence and 1,700 km (1,050 miles) of feeder roads connecting military bases to the border, the source said.

The fence and the adjoining road will cost nearly 125 million rupees per km, more than double that of the 55 million per km cost for the border fence with Bangladesh built in 2020, the source said, because of the difficult hilly terrain and the use of technology to prevent intrusion and corrosion.

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Policy&Politics

ONLY 2-3% RECOVERED FROM $2-3 TN ANNUAL ILLEGAL TRADE THROUGH BANKING: INTERPOL

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However, Stock highlighted the enormity of the challenge, noting that between 40% and 70% of criminal profits are reinvested, perpetuating the cycle of illicit financial activity.

In a press briefing held on Wednesday, Interpol Secretary General Jurgen Stock unveiled alarming statistics regarding the extent of undetected money laundering and illegal trade transactions plaguing the global banking network. Stock revealed that over 96% of the money transacted through this network remains undetected, with only 2-3% of the estimated USD 2-3 trillion from illegal trade being tracked and returned to victims.

Interpol, working in conjunction with law enforcement agencies and private financial sectors across its 196 member countries, is committed to combating the rising tide of fraud perpetrated by illicit traders. These criminal activities encompass a wide spectrum, including drug trafficking, human trafficking, arms dealing, and the illicit movement of financial assets.

Stock emphasized the urgent need to establish mechanisms for monitoring transactions within the global banking network. Currently, efforts are underway to engage banking associations worldwide in setting up such a framework. However, Stock highlighted the enormity of the challenge, noting that between 40% and 70% of criminal profits are reinvested, perpetuating the cycle of illicit financial activity. The lack of real-time information sharing poses a significant obstacle to law enforcement agencies in their efforts to combat money laundering and illegal trade.

Stock underscored the role of Artificial Intelligence (AI) in exacerbating this problem, citing its use in voice cloning and other fraudulent activities. Criminal organizations are leveraging AI technologies to expand their operations and evade detection on a global scale. Stock emphasized the importance of enhanced cooperation between law enforcement agencies and private sector banking groups. Realtime information sharing is crucial in the fight against illegal wealth accumulation.

Drawing inspiration from initiatives such as the “Singapore Anti-Scam Centre,” Stock called for the adoption of similar models in other countries to strengthen the collective response to financial crimes. In conclusion, Stock’s revelations underscore the pressing need for concerted action to combat global financial crimes. Enhanced cooperation between public and private sectors, coupled with innovative strategies for monitoring and combating illicit transactions, is essential to safeguarding the integrity of the global financial system.

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Policy&Politics

FM defends Atal Pension Scheme, highlights guaranteed returns

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Finance Minister Nirmala Sitharaman defended the Atal Pension Yojana (APY) against Congress criticism, asserting its design based on choice architecture and a guaranteed minimum 8% return. She emphasized the scheme’s opt-out feature, facilitating automatic premium continuation unless subscribers choose otherwise, promoting retirement savings. Sitharaman countered Congress allegations of coercion, stating the APY’s guaranteed returns irrespective of market conditions, supplemented by government subsidies.

Responding to Congress’s claim of scheme misuse, Sitharaman highlighted its intended beneficiaries – the lower-income groups. She criticized Congress for its alleged elitist mindset and emphasized the scheme’s success in targeting the needy. Sitharaman accused Congress of exploiting vote bank politics and coercive tactics, contrasting it with the APY’s transparent framework. The exchange underscores the political debate surrounding social welfare schemes, with the government defending its approach while opposition parties raise concerns about implementation and efficacy.

Finance Minister Nirmala Sitharaman’s robust defense of the Atal Pension Yojana (APY) against Congress criticism highlights the ongoing debate over social welfare schemes in India. Sitharaman’s assertion of the APY’s design principles, including its opt-out feature and guaranteed minimum return, underscores the government’s commitment to promoting retirement savings among lower-income groups. The Atal Pension Yojana, named after former Prime Minister Atal Bihari Vajpayee, was launched in 2015 to provide pension benefits to workers in the unorganized sector. It aims to address the significant gap in pension coverage among India’s workforce, particularly those employed in informal and low-income sectors. The scheme offers subscribers fixed pension amounts ranging from Rs. 1,000 to Rs. 5,000 per month, depending on their contribution and age at entry, after attaining the age of 60. Sitharaman’s response comes after Congress criticism alleging the APY’s inefficacy and coercive tactics in enrolment.

Congress General Secretary Jairam Ramesh described the scheme as poorly designed, citing instances of subscribers dropping out due to unauthorized account openings. However, Sitharaman refuted these claims, emphasizing the APY’s transparent and beneficiary-oriented approach. The finance minister’s defense focuses on three key aspects of the APY: Choice Architecture: Sitharaman highlights the opt-out feature of the APY, which automatically continues premium payments unless subscribers choose to discontinue.

This design element aims to encourage long-term participation and ensure consistent retirement savings among subscribers. By simplifying the decision-making process, the scheme seeks to overcome inertia and promote financial discipline among participants. Guaranteed Minimum Return: Sitharaman underscores the APY’s guarantee of a minimum 8% return, irrespective of prevailing interest rates. This assurance provides subscribers with confidence in the scheme’s financial viability and incentivizes long-term savings.

The government’s commitment to subsidizing any shortfall in actual returns further strengthens the attractiveness of the APY as a retirement planning tool. Targeting the Needy: Sitharaman defends the predominance of pension accounts in lower income slabs, arguing that it reflects the scheme’s successful targeting of its intended beneficiaries – the poor and lower-middle class. She criticizes Congress for its alleged elitist mindset and suggests that the party’s opposition to welfare schemes like the APY stems from a disconnect with the needs of marginalized communities. Sitharaman’s rebuttal also addresses broader political narratives surrounding social welfare policies in India.

She accuses Congress of exploiting vote bank politics and coercive tactics, contrasting it with the transparent and inclusive framework of the APY. The exchange underscores the ideological differences between the ruling Bharatiya Janata Party (BJP) and the opposition Congress, with each side advocating for their vision of social welfare and economic development. In addition to defending the APY, Sitharaman’s remarks shed light on the broader challenges and opportunities facing India’s pension sector.

Despite significant progress in expanding pension coverage through schemes like the APY, the country still grapples with issues such as financial literacy, informal employment, and pension portability. Addressing these challenges requires a multifaceted approach involving government intervention, private sector participation, and civil society engagement.

As India strives to achieve its vision of inclusive and sustainable development, initiatives like the APY play a crucial role in promoting economic security and social equity. Sitharaman’s defense of the scheme underscores the government’s commitment to addressing the needs of vulnerable populations and ensuring their financial well-being in the long run.

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Economic

Regulatory steps will make financial sector strong, but raise cost of capital

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India’s financial system regulator, the Reserve Bank of India (RBI), is demonstrating a serious commitment to improving governance and transparency at finance companies and banks, with the RBI’s recent measures aimed at curtailing lenders’ overexuberance, enhancing compliance culture and safeguarding customers.

While the global ratings firm has appreciated the RBI’s “diminishing tolerance for non-compliance, customer complaints, data privacy, governance, know-your-customer (KYC), and anti-money laundering issues”, it has cautioned that increased regulatory risk could impede growth and raise the cost of capital for financial institutions. “Governance and transparency are key weaknesses for the Indian financial sector and weigh on our analysis. The RBI’s new measures are creating a more robust and transparent financial system,” says S&P Global Credit Analyst, Geeta Chugh. “India’s regulator has underscored its commitment to strengthening the financial sector. The drawback will be higher capital costs for institutions,” Chugh cautions.

The RBI measures include restraining IIFL Finance and JM Financial Products from disbursing gold loan and loans against shares respectively and asking Paytm Payments Bank (PPBL) to stop onboarding of new customers. Earlier in December 2020, the RBI suspended HDFC Bank from sourcing new credit card customers after repeated technological outages. These actions are a departure from the historically nominal financial penalties imposed for breaches, S&P Global notes.

Besides, as the global agency points out, the RBI has decided to publicly disclose the key issues that lead to suspensions or other strict actions against concerned entities and become more vocal in calling out conduct that it deems detrimental to the interests of customers and investors. “We believe that increased transparency will create additional pressure on the entire financial sector to enhance compliance and governance practices,” adds Chugh. The global agency has also lauded the RBI’s recent actions demonstrating scant tolerance for any potential window-dressing of accounts.

These actions include the provisioning requirement on alternative investment funds that lend to the same borrower as the bank finance company. Amidst the possibility of some retail loans, such as personal loans, loans against property, and gold loans getting diverted to invest in stock markets and difficulty of ascertaining the end-use of money in these products, S&P Global underlines the faith of market participants that the RBI and market regulator, the Securities and Exchange Board of India, want to protect small investors by scrutinizing these activities more cautiously.

On the flip side, at a time of tight liquidity, the RBI’s new measures are likely to limit credit growth in fiscal 2025 (year ending March 2025). “We expect loan growth to decline to 14 per cent in fiscal 2025 from 16 per cent in fiscal 2024, reflecting the cumulative impact of all these actions,” says Chugh. The other side of the story is that stricter rules may disrupt affected entities and increase caution among fintechs and other regulated entities and the RBI’s decision to raise risk weights on unsecured personal loans and credit cards may constrain growth. Household debt to GDP in India (excluding agriculture and small and midsize enterprises) increased to an estimated 24 per cent in March 2024 from 19 per cent in March 2019. Growth in unsecured loans has also been excessive and now forms close to 10 per cent of total banking sector loans.

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