The Indian government has approved a special INR26bn (US$404m) package to generate employment in the leather and footwear sectors.

The three-year initiative involves implementing the 'Indian Footwear, Leather & Accessories Development Programme' – and has the potential to generate 324,000 new jobs and help formalise 200,000 jobs.

"The scheme would lead to development of infrastructure for the leather sector, address environment concerns specific to the leather sector, facilitate additional investments, employment generation and increase in production," an official statement said.

"Enhanced tax incentive would attract large scale investments in the sector and reform in labour law in view of seasonal nature of the sector will support economies of scale."

Also included are measures to simplify labour laws and incentives to generate employment, such as income tax deductions to help manufacturers cover additional wages for new workers. And the provision of a minimum 240 days' employment in a year to a worker has been relaxed to 150 days for footwear, leather and accessories, "considering the seasonal nature of this sector."

According to the Indian ministry of commerce, India exported US$2.15bn worth of finished leather goods in the 11 months to February 2017, with the European Union (EU) accounting for more than half of these sales.

However, the sector has been under pressure from environmental concerns – as well as challenges that include trying to overcome the shortage of raw hides and loss of business to Brazilian companies.