Andhra Pradesh Leather & Footwear Policy (LEAF 4.0) 2025-30: A Comprehensive Analysis
The Government of Andhra Pradesh has introduced the new Andhra Pradesh Leather & Footwear Policy (LEAF 4.0) for 2025-30 to establish the state as a global hub for sustainable and innovative manufacturing in the sector. This policy aligns with the Government of India's vision of achieving a $50 billion turnover for the Indian leather industry by 2030 and aims to attract significant investment by providing a favorable business environment and a robust incentive package.
The policy is designed to boost new innovations, preserve traditional craftsmanship, and promote a circular economy in the value chain. It offers a wide array of financial and non-financial interventions for manufacturers and ecosystem enablers, including support for Micro, Small, and Medium Enterprises (MSMEs), large projects, and private park developers
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Explore government incentives, capital subsidies, and policy benefits available for industries in Andhra Pradesh.
Incentives for MSME Manufacturers
The policy provides a comprehensive package for Micro, Small, and Medium Enterprises (MSMEs) in the leather, footwear, and tannery sectors. These incentives cover various stages of a project, from initial investment to operational costs and skill development
|
Incentive Category |
Details |
Maximum Limit |
|
Investment Subsidy |
35% of eligible Fixed Capital Investment (eFCI) for new projects. |
Up to INR 12 Cr, disbursed over 4 years from the date of commercial production (DCP). |
|
Technology Upgradation/Modernization Subsidy |
30% of eFCI for expansion and diversification projects. |
Up to INR 10 Cr, disbursed over 4 years from DCP. |
|
Power Cost Reimbursement |
Reimbursement of INR 1.5 per unit for tannery activities and INR 1 per unit for other activities. |
Up to INR 20 lakh per annum for tanneries and INR 15 lakh per annum for other activities for 5 years from DCP. |
|
Branding & Marketing Assistance |
25% of the cost incurred for obtaining trademarks, GI tags, and participating in trade summits. |
Up to INR 1 Cr per annum for 3 years from DCP. |
|
Quality Certification Subsidy |
50% of the cost incurred for obtaining national or international certifications (e.g., ISO, ISI, BIS). |
Up to INR 1 Cr for the period of investment. |
|
Skill Development Assistance |
50% of the training cost for upskilling local craftsmen. |
Up to INR 3 lakh per enterprise. |
|
Energy & Water Audit Cost Reimbursement |
75% of the cost for water and energy audits. |
Capped at INR 1 Lakh for water and INR 2 Lakhs for energy audits. |
|
Equipment Cost Subsidy |
25% of the cost of equipment as per auditing recommendations. |
Capped at INR 50 Lakhs. |
|
Land Cost Rebate |
75% of land cost for SC/ST-led enterprises in APIIC industrial parks. |
Limited to INR 25 Lakh. |
|
Stamp Duty Reimbursement |
100% reimbursement on the purchase or lease of land and for mortgages and hypothecations. |
One-time reimbursement on the land. |
|
Land Conversion Charges |
100% reimbursement of the fee charged for land conversion. |
No cap specified. |
Incentives for Large Enterprises
Large enterprises with a fixed capital investment (FCI) above INR 125 Cr are eligible for a specialized package of incentives, designed to attract significant investment and promote high-value manufacturing.
|
Incentive Category |
Details |
Maximum Limit |
|
Investment Subsidy |
25% of eFCI for footwear and leather products. & 30% of eFCI for semi-processed leather/wet blues. |
Up to INR 50 Cr for footwear/leather products .<br>Up to INR 60 Cr for semi-processed leather/wet blues. |
|
Early Bird Incentive |
Investment subsidy of up to 40% of eFCI for early applicants, overriding the regular investment subsidy. |
Up to INR 60 Cr for qualifying projects. |
|
Employment Subsidy |
Based on the Employment to Investment (E/I) ratio, up to 10% of FCI. |
Disbursed over 5 years. |
|
Local Procurement Subsidy |
1% of annual turnover for units meeting at least 60% of their input requirements from local ancillaries. |
Up to INR 10 Cr for 3 years. |
|
Internship/Apprenticeship Assistance |
Financial assistance to onboard and train individuals from footwear and leather clusters. |
INR 1.5 Lakh per individual, up to a maximum of INR 30 Lakh. |
|
Quality Certification Cost Subsidy |
50% of the total cost for certifications like ISO, ISI, BIS, etc.. |
Up to INR 1 Cr. |
|
Traceability Enablement Assistance |
50% of the expenditure on specialized software licenses or implementation of traceability systems. |
Up to INR 25 Lakhs. |
|
Net SGST Reimbursement |
100% of net SGST payable on the sale of final products. |
For a period of 5 years from the date of commercial production. |
|
Reimbursement of Power Cost |
Fixed power cost reimbursement of INR 1 per unit. |
Up to INR 30 Lakh for 2 years. |
|
Stamp Duty & Transfer Duty Reimbursement |
100% reimbursement for standalone units on the purchase or lease of land/sheds, mortgages, and hypothecations. |
One-time reimbursement on the land. |
|
Reimbursement of Land Conversion Charges |
100% of the fee charged for land conversion for standalone units. |
No cap specified. |
Eligibility Criteria
The policy is applicable to industries engaged in the leather and footwear sectors, including faux leather products and tannery units.
- Policy Period: The policy is valid for a period of 5 years from its date of issue, May 27, 2025, or until a new policy is announced.
- Eligible Projects: All new, expansion, and diversification projects with a Date of Commercial Production (DCP) within the policy operative period are eligible for incentives.
- Investor Categories: Projects are categorized based on investment in plant and machinery and annual turnover.
- Micro: Investment up to INR 2.5 Cr and turnover up to INR 10 Cr.
- Small: Investment up to INR 25 Cr and turnover up to INR 100 Cr.
- Medium: Investment up to INR 125 Cr and turnover up to INR 250 Cr.
- Large: Investment above INR 125 Cr and up to INR 500 Cr.
- Mega: Investment above INR 500 Cr.
Ineligibility Criteria
The policy document does not explicitly list a section on ineligibility, however, it specifies certain conditions for receiving incentives.
- Stamp Duty: Reimbursement for stamp duty is a one-time benefit on a specific plot of land and will not be provided for subsequent transactions.
- Employment Subsidy: Projects with an Employment to Investment (E/I) ratio of less than 1 are not eligible for the employment subsidy.
- Project Completion: Large projects must complete their investment period within two years from the date of CFE (Clearance for Establishment).
How to Apply & The Approval Process
Andhra Pradesh utilizes a robust Single Desk Approval mechanism to streamline the application process for project proponents. The state also provides dedicated liaison officers for large and mega investors to offer handholding services and track approval status.
While the policy outlines the various incentives, the specific forms and detailed operational guidelines for claiming them are aligned with the broader IDP 4.0 policy and will be notified separately by the Department of Industries & Commerce.
Important Points to Note to Avoid Subsidy Cancellation
To secure and maintain the benefits under the LEAF 4.0 policy, investors must pay close attention to the following:
- Timely Project Completion: Ensure the project meets the stipulated investment period, which is typically within two years from the date of the Clearance for Establishment (CFE) for large projects.
- Adherence to Guidelines: All specific forms and guidelines, which will be notified by the Department of Industries & Commerce, must be followed meticulously to process incentive claims.
- Policy Amendments: While the policy may be amended, any modifications will be applied prospectively and will not affect any benefits already granted
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