US Tariffs Deal Heavy Blow: India’s Leather Exports Face 12% Revenue Drop This Year
Crisil warns US tariffs could cut Indian leather export revenues by up to 12%.
India's leather and allied products industry faces a stark revenue decline of 10-12% this fiscal year, driven by the United States' imposition of a 50% tariff on Indian imports, according to a Crisil Ratings report. Comprising a 25% reciprocal tariff and an additional 25% penalty linked to India's purchase of Russian oil, this measure targets a sector where exports account for nearly 70% of the estimated Rs 56,000 crore revenue in fiscal 2025. The US, absorbing around 22% of these exports, emerges as a critical market now under threat.
The tariffs, effective from August 27, 2025, exacerbate an already evident slowdown in US demand, which began with the initial 25% reciprocal tariff in early August. Crisil highlights that this positions India at a competitive disadvantage against nations like Cambodia, Italy, Vietnam, and France, facing US tariffs of only 15-20%. Consequently, export volumes are projected to drop by 13-14%, severely impacting domestic firms despite their high export concentration.
While moderate improvements in domestic demand are anticipated—bolstered by GST rationalization, lower income taxes, benign inflation, and low interest rates—these factors may not fully offset the export losses. Jayashree Nandakumar, Director at Crisil Ratings, emphasized, “With the loss of orders from the US, the export volume is expected to drop 13-14% this fiscal,” underscoring the sector's vulnerability.
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Over 50% of India's leather exports traditionally flow to the European Union, but the US market's contraction could ripple through the supply chain, prompting calls for diversification and policy interventions. As the industry navigates this turbulent period, stakeholders must adapt swiftly to mitigate long-term damage and sustain growth in a globally interconnected trade landscape.
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