India's Leather Industry Seeks Import Duty Exemptions Amidst Rising Costs

India’s leather and footwear industry is grappling with high input costs exacerbated by the ongoing Middle East crisis. The sector is seeking exemptions from import duties on essential raw materials, machinery, and components.

Industry representatives have communicated these concerns to the commerce and industry ministry, warning that the disruption has led to a sharp increase of 40% to 60% in the cost of several crucial inputs.

"The industry is facing a sharp increase in raw material and input costs - rising by 40-60% - due to the West Asia crisis," an official told PTI. "In view of this, we have urged the government to provide import duty exemptions on critical inputs such as synthetic leather (PU-coated fabrics), footwear components, metal accessories, leather and footwear machinery, threads, moulds, toe puffs, eyelets, certain leather chemicals and packaging materials."

Alongside duty relief, exporters have recommended the early execution of the proposed FLOAT (Footwear and leather oriented transformation) scheme. They advocate for its coverage to extend across the full leather and footwear product chain, including raw materials, machinery, and inputs.

The industry has also pressed for duty-free imports of crust and finished leather as part of efforts to strengthen domestic manufacturing.

A major concern for the sector is the impact of Iran’s closure of the Strait of Hormuz, which has affected oil and gas vessel movement. Since products such as PU leather, certain rubber chemicals, adhesives, plastics, and shoe soles are petroleum-based, supply disruptions have pushed costs significantly higher.

Apart from petroleum-linked materials, the domestic industry also relies on imports from China, Korea, Indonesia, and Japan for several inputs. Imports in the sector fell 4.49% year-on-year to $938 million during the 2025-26 fiscal year.

On the export front, leather and leather product shipments declined 2.36% year-on-year to $4.26 billion in 2025-26. However, according to industry estimates, total exports could rise to $5.6 billion once non-leather goods figures are added.

Overall exports from the sector, covering finished leather, leather footwear, footwear components, leather garments, leather goods, saddlery and harness, non-leather footwear, non-leather goods, and fur and fur products, reached $5.57 billion in 2024-25, compared to $5.38 billion in 2023-24 and $6 billion in 2022-23.