Import substitution in the footwear industry led to increased demand for raw materials
Photo: TASS/Sergei Fadeichev
The Eurasian economic Union (EEU) is considering Russia’s proposal on the zero rates of import customs duties of the goods for the leather and footwear industry. Such action is expected to be for two years. Thus, the Russian side hopes to reduce the cost of production of leather products and increase the competitiveness of manufacturers of these goods.
Russia has proposed the EAEC to zero rates of import customs duties on raw materials for the enterprises of leather-Shoe industry (draft decision is at the disposal of “Izvestia”). We are talking about certain types of chemical products (dyes, etc.) used for the production of leather, footwear and leather goods. At the moment customs duties represent one of the positions 5% of the customs value of the goods, other is 8.5%. To zero duty is proposed for a period of two years.
This initiative is not surprising, given the integration within the EAEC, the first Vice-President of “OPORA Russia” Paul Segal. He noted that the main market of the EEU in any case is Russia, it is here that the highest activity of consumers. For the Russian manufacturers more than other EAEU countries interesting markets of Kazakhstan and Belarus. Will benefit from the adoption of the document, in his opinion, primarily consumers of leather products that will be able to enjoy lower prices and increase range.
In turn, an analyst “Finam” Timur Nigmatullin believes that in General this decision will be significant for the market and “will have a direct impact on reducing the cost of production.”
According to “Finam”, currently in Russia there are about 15 large enterprises for the production of different kinds of leather and footwear products. Almost all of them are concentrated in the European part of the country. In the year the volume of production of main kinds of leather goods is around 2.4 billion sq. DM. Of them including suede has 196 million sq. DM on the hard leather goods 19 million sq. DM and lacquered/laminated skin — 6.8 million sq. DM. At the same time, according to analysts, a significant part of the market is accounted for by imports (mostly from Europe and Asia). Only Russian enterprises are processed annually about 130 thousand tons of primary raw hide.
Meanwhile, in the backdrop of the intensification of import substitution in light industry, the economic demand for raw materials has increased and now account for at least 250 thousand tons per year. Thus, concludes the analyst, lack of raw materials of local production is not less than 70 thousand tons per year.
— The deficit is because of lack of modern processing industries raw hides has recently become profitable to export overseas for recycling than to sell to processing companies in Russia, — explained Nigmatullin.
Thus, in his opinion, without the support of investment projects in the industry through the reduction of import duties on the ingredients to solve this problem is impossible.