Non-leather footwear hub grapples with GST hike, labour shortage

Bahadurgarh, an industrial town located on the Delhi-Haryana border, has emerged as the largest centre for affordable non-leather (rexine and cloth) footwear in India but it is grappling with some major challenges, including increased goods and services tax (GST) on footwear products, steep electricity tariffs and an acute shortage of labour.

As far as footwear production is concerned, Bahadurgarh town alone accounts for over 60 per cent of the country’s production in this category. Slippers, sandals, and various types of shoes manufactured here are not only supplied across most Indian states but are also exported to regions in South Africa, Arab and other Asian countries.

Footwear in the price range of Rs 50 to Rs 1,000 is manufactured extensively in Bahadurgarh. As per local industrialists, the town hosts nearly 2,500 units—both directly and indirectly linked to the footwear sector—producing a wide variety of products including casual, formal and sports footwear. Leading brands such as Action, Relaxo, Rexona, Lancer, Aqualite, Today, Welcome, Diamond and Reshma have their established manufacturing units in Bahadurgarh.

“The GST hike—from 5 per cent to 12 per cent on footwear priced up to Rs 1,000—has severely impacted sales over the last three years. The sales have dropped by over 30 per cent and to remain in competition, some manufacturers have been compelled to avoid formal billing, hence we are persistently demanding the rollback of the GST rate to improve sales but no one is paying any heed towards the justified demand,” said Narendra Chhikara, senior vice-president of the Footwear Association, Bahadurgarh.

Sharing similar concerns, Subhash Jagga, president of the Bahadurgarh Chamber of Commerce and Industries (BCCI), said the increased GST had pushed even footwear out of reach for many poor consumers following rise in its prices.

“The declining sales have led to revenue losses for the state as some manufacturers are now resorting to tax evasion through informal channels in neighbouring Delhi. Despite repeated appeals to the Central Government to revert GST to 5 per cent, their concerns have been ignored. The problem is growing more serious with each passing day,” Jagga warned. He further pointed out that a significant hike in electricity tariffs had raised production costs even more, making footwear less affordable and thus reducing the sales further.

“The footwear manufactured in Bahadurgarh are meant for the common man and so the prices are affordable. However, the government’s decision to increase the GST rates and electricity tariffs has pushed the prices beyond the reach of the ordinary consumers. The government must reconsider these decisions and provide relief to the industrialists by rolling back these hikes,” Jagga added.

The labour shortage has added to the woes of the industrialists. “In the last couple of years, there has been more than 30 per cent drop in migrant workers from other states. Many of them are now staying back in their home states where they benefit from government schemes and employment opportunities. In such a situation, the industrialists have to struggle to arrange labourers in adequate numbers,” pointed out Jagga.

Reflecting on the growth of the footwear industry in the town, Narendra Chhikara said, “The footwear industry in Bahadurgarh has come a long way, but not without struggle. Two decades ago, the Chinese-made shoes and sandals dominated the Indian market due to their attractive designs, variety and affordability. The local manufacturers were struggling to survive under the stiff competition. Faced with the challenge, the Bahadurgarh’s manufacturers made improvements in their production techniques and offered competitive pricing. Their efforts paid off—today, the town contributes nearly 63 per cent of India’s total non-leather footwear output.”

He said the annual turnover of Bahadurgarh’s footwear industry now exceeded Rs 25,000 crore and provided employment to over two lakh workers, a majority of whom are migrant labourers. However, he warned that the industry was at present battling serious challenges that threatened its stability and long-term sustainability.

Meanwhile, the industrialists have urged the state government to allot additional land at affordable rates in Bahadurgarh and its surrounding areas, as the existing Footwear Park in Bahadurgarh has reached its capacity.

“The Footwear Park, developed over 300 acres in 2007, initially accommodated 100 factories within a few years. Today, the number of footwear units has increased to 368, leaving little room for new setups or the expansion of the existing ones. Besides the Footwear Park, many footwear units are also located in Modern Industrial Estate Part-1 and 2, Sector 16 and other nearby places. We request the government to provide land at lower rates to the entrepreneurs interested in establishing more footwear units in the region,” said Narendra Chhikara.

Haryana Tribune