Table of Contents
- US Tariff Impact on Indian Leather Exports
- 50% Tariff Hike and Its Effect on Export Viability
- Loss Estimates in Leather Footwear and Garments
- Shift in Buyer Preferences to Bangladesh and Vietnam
- Key Product Categories and Market Exposure
- Leather Footwear: 66% Export Share to UK, US, Germany
- Finished Leather Demand in Italy and Spain
- Leather Garments and Goods: Growth in France and Netherlands
- Opportunities in UK and EU Markets Post-FTA
- India-UK FTA: 99% Duty-Free Access for Leather Exports
- EU Market Entry via Compliance and Sustainability Certifications
- Growth Potential in Germany, France, and Italy
- Smart Strategies to Double Leather Export Growth
- Focus on Value-Added Products and Brand Partnerships
- Adoption of Cost Leadership and Differentiation Models
- Leveraging Leather Export Incentives India Offers
- Strengthening Leather Goods Manufacturing Hubs India-wide
- Utilizing Indian Government Export Policies for MSMEs
- Conclusion
- References
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The recent 50% tariff hike imposed by the Trump administration has certainly created hurdles for the Indian leather industry. However, we believe this presents a strategic opportunity to diversify our global market presence rather than a setback. While US tariffs create immediate obstacles, the newly signed India-UK Free Trade Agreement opens virtually unfettered access to the UK’s £27 billion market. In fact, UK imports from India in textiles, apparel, and leather could rise by up to £2.9 billion, representing an 85% increase. As a result, Indian exporters now have the chance to significantly strengthen their position in European and Asian markets.
In this article, we will explore how India’s leather export sector can not only survive but potentially double its growth through smart strategies, market diversification, and leveraging new trade agreements. From analyzing the impact of US tariffs to identifying promising opportunities in the UK and EU markets, we’ll provide a comprehensive roadmap for navigating these changing trade dynamics.
US Tariff Impact on Indian Leather Exports
The recent dual-tier tariff increase has sent shockwaves through India’s leather export industry. President Trump initially announced a 25% tariff on Indian goods, subsequently adding another 25% due to India’s Russian oil purchases, bringing the total to an unprecedented 50% [1]. This drastic measure affects approximately $48.20 billion worth of Indian exports [1], creating what industry experts describe as a “strategic shock” to established trade patterns [1].
50% Tariff Hike and Its Effect on Export Viability
The doubled tariffs have essentially made many Indian leather products commercially unviable in the American market overnight. According to Ajay Sahai, director general of the Federation of Indian Export Organizations, “Some product lines will simply become unviable overnight” [1]. The timing couldn’t be worse, coming during peak production season for autumn and winter collections — traditionally the busiest period for export factories [2]. Consequently, many US buyers have already instructed manufacturers to hold shipments, even for goods ready for dispatch [2].
Loss Estimates in Leather Footwear and Garments
Footwear represents the hardest-hit category, accounting for 40% of global leather exports [3]. In FY25 alone, India’s leather footwear shipments to the US approached $500 million [3]. West Bengal, which contributes nearly half of India’s leather exports valued at Rs 5,000–6,000 crore annually, stands to lose approximately 20% of its market [3]. Furthermore, around 7,000–10,000 jobs in processing units face immediate risk [3], particularly at manufacturing centers like the Bantala leather hub near Kolkata that employs five lakh people [3].
Shift in Buyer Preferences to Bangladesh and Vietnam
Perhaps most concerning for Indian exporters is the competitive disadvantage created against regional rivals. While India faces a 50% tariff, Southeast Asian nations enjoy significantly lower rates of 19–20% [3]. Specifically, Vietnam’s tariff stands at just 20% compared to China’s 30% [2]. Leather exporter Umakant Dubey notes, “Now, the orders will be given to Bangladesh, Vietnam and Pakistan instead of India” [2]. Particularly telling is that buyers have begun actively canceling orders, with some already looking toward China and Vietnam where they can secure more favorable rates [2].
This competitive imbalance threatens to undermine years of effort by Indian manufacturers who had been strategically working to expand their presence in the American market [2].
Key Product Categories and Market Exposure
India’s leather sector boasts a diverse product portfolio with footwear leading the charge in global markets. Understanding the product categories and key export destinations reveals opportunities beyond US markets affected by recent tariffs.
Leather Footwear: 66% Export Share to UK, US, Germany
Footwear dominates India’s leather export landscape, accounting for approximately 51% of the industry’s total exports in 2024–25 [4]. During April-August 2022 alone, leather footwear exports were valued at USD 1077.80 million [5]. The three major markets — USA, Germany, and UK — collectively absorb nearly 66% of India’s leather footwear exports. These markets show strong affinity for Indian products, with the USA claiming 21.65% market share, Germany 11.24%, and the UK 9.07% as of 2024–25 [4]. Additionally, export growth to these regions has shown resilience even amid global economic fluctuations.
Finished Leather Demand in Italy and Spain
Italy and Spain represent crucial European markets for India’s finished leather. Italy imported finished leather worth USD 301.13 million in 2024–25, representing 6.24% of India’s total leather exports [4]. Similarly, Spain accounted for 5.08% of leather exports, valued at USD 245.53 million [4]. Notably, during April-August 2022, finished leather exports stood at USD 189.73 million [5]. Italian leather goods manufacturers primarily source Indian finished leather for their luxury goods production, making this relationship strategically important for value-added exports.
Leather Garments and Goods: Growth in France and Netherlands
Beyond footwear, India holds impressive global rankings in other leather categories. Remarkably, India stands as the second-largest exporter of leather garments worldwide [6]. The garments sector contributed 7.03% to India’s total leather exports in 2021–22 [5]. France and Netherlands have emerged as promising growth markets, with exports valued at USD 233.18 million (4.83% share) and USD 211.56 million (4.85% share) respectively [4][7]. Moreover, India ranks third globally in saddlery and harness exports and fourth in leather goods exports [6], showcasing the diversity and strength of our leather manufacturing capabilities beyond the footwear segment.
Opportunities in UK and EU Markets Post-FTA
With US tariff challenges looming, the newly signed India-UK Free Trade Agreement opens remarkable new paths for Indian leather exporters seeking growth alternatives.
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India-UK FTA: 99% Duty-Free Access for Leather Exports
First and foremost, the landmark India-UK FTA grants 99% duty-free access for Indian leather exports to the UK market [1]. Previously, these products faced tariffs of up to 16% [1]. This agreement unlocks a USD 8.5 billion leather and footwear export market for Indian manufacturers [1]. Above all, exporters can now gain at least 5% additional market share in the UK within 1–2 years [1][8]. This positions India to outperform regional competitors like Vietnam, Indonesia, Cambodia, Turkey, and Bangladesh [1]. Given these advantages, leather exports to the UK could exceed USD 900 million in the near term [1][9].
EU Market Entry via Compliance and Sustainability Certifications
For EU market access, meeting compliance standards remains critical. The EU’s REACH Regulation restricts numerous chemicals including azo dyes, heavy metals, and formaldehyde [2]. Furthermore, standards like Oeko-Tex® Leather certification guarantee compliance with both REACH and additional EU requirements [2]. Supply chain transparency has also become increasingly important under stricter EU laws such as CSDDD, CSRD and EUDR [2][10]. Simultaneously, European buyers increasingly seek vegetable-tanned or chrome-free leathers [2][10].
Growth Potential in Germany, France, and Italy
The European Union represents a cornerstone for Indian leather exports [11]. Italy, France, and Germany — known for their fashion capitals — are major importers of Indian leather goods [11]. Based on recent import trends, France shows the highest price level at 105.4 points (compared to European average of 100), followed by Germany at 98.7 and Spain at 84.8 [2]. Coupled with sustainability certifications, Indian exporters can unlock substantial growth in these premium markets that value both quality and environmental responsibility.
Smart Strategies to Double Leather Export Growth
Transforming India’s leather sector requires strategic approaches that build on its impressive 12.93% share of global leather production [12].
Focus on Value-Added Products and Brand Partnerships
After decades of evolution, India has shifted from being a raw material exporter to a value-added product manufacturer [12]. Currently, many Indian exporters focus on creating high-quality, luxury leather products for discerning US and European consumers [3]. Partnering with reliable manufacturers ensures quality standards that meet international requirements [13].
Adoption of Cost Leadership and Differentiation Models
Indian leather exporters excel by leveraging technology such as computer-aided design and 3D printing for customized products [3]. Firstly, this enables innovation in design; secondly, it maintains cost competitiveness in global markets [3].
Leveraging Leather Export Incentives India Offers
The government reinstated the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme from June 2025 [14], offering 2% duty credit scrips on FOB value [15]. For this purpose, the Indian Footwear and Leather Development Program received ₹1,700 crore allocation [16].
Strengthening Leather Goods Manufacturing Hubs India-wide
Major production centers include Tamil Nadu (Chennai, Ambur), West Bengal (Kolkata), Uttar Pradesh (Kanpur, Agra), and Maharashtra (Mumbai) [12]. Tamil Nadu and Uttar Pradesh contribute 50% and 40% of exports respectively [12].
Utilizing Indian Government Export Policies for MSMEs
The Mega Leather Cluster scheme received ₹600 crore for infrastructure development [17]. In essence, these policies help MSMEs access global markets through improved design capacity and component manufacturing [18].
Conclusion
India’s leather export sector stands at a pivotal crossroads despite facing unprecedented challenges from the 50% US tariff hike. Therefore, a strategic pivot toward alternative markets represents not merely a defensive measure but a genuine opportunity for growth. The newly signed India-UK Free Trade Agreement offers 99% duty-free access to a market previously restricted by tariffs up to 16%, essentially creating an immediate avenue for expansion.
Rather than viewing the US tariff situation as insurmountable, we must recognize it as a catalyst for necessary market diversification. After all, our leather industry already holds impressive global rankings — second in leather garments, third in saddlery exports, and fourth in leather goods. Additionally, European nations like Italy, France, and Germany present substantial growth potential for high-quality Indian leather products.
Smart strategies focused on value-added manufacturing will undoubtedly play a crucial role going forward. The shift from raw material exports to finished luxury goods production demonstrates our industry’s evolution and adaptability. Computer-aided design and 3D printing now enable both customization and cost competitiveness, creating distinct advantages in premium markets.
Government support through programs like RoDTEP and the Indian Footwear and Leather Development Program further strengthens our competitive position. Strong manufacturing hubs across Tamil Nadu, West Bengal, Uttar Pradesh, and Maharashtra provide the infrastructure needed for continued growth.
Though US tariffs certainly present immediate challenges, they simultaneously push our industry toward markets that may ultimately prove more sustainable and profitable. Subsequently, compliance with EU standards and sustainability certifications will unlock doors to premium European consumers who value both quality and environmental responsibility. The potential to double growth exists not despite these challenges but because they force us to pursue smarter, more diversified export strategies that align with global market trends.
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References
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