All materials imported for the processing and manufacture of leather and leather related products is to be exempt from import duty and Value Added Tax, Mahinda Rajapakse, Sri Lanka's President and finance minister, said Thursday.
Equipment and machinery needed for the industry is to also be allowed in duty free, Rajapakse said, presenting the country's budget proposals for 2007.
The cess on imported shoes is to be raised to 25 percent or 300 rupees a pair, whichever is higher, while footwear parts will also be taxed at the same rate.
The cess comes into effect from November 17, this year.
Meanwhile, the government has also said that it will promote domestic sales of locally produced clothes by Sri Lanka's apparel industry, the country's top revenue earner.
Sales of locally produced clothes will be allowed, subject to a charge of 25 rupee duty a unit.
"In order to discourage unnecessary and poor quality imports of garments, local sales of garment manufacturers will be encouraged subject to a payment of a consolidated duty, inclusive of cess of 25 rupees per piece on their local sales," Rajapakse said.
The economic service charge on textiles, apparel manufacturers and trading houses is to also be reduced to 0.
1 percent. Development of dedicated textile processing zones at Horana and an apparel hub at Katunayake is to also be encouraged.