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According to CareEdge Ratings, the Indian leather sector is set for significant expansion, targeting a USD 50?billion turnover by 2030, supported by rising export momentum and increasing domestic consumption.

India’s leather industry remains a value-added, labour-intensive sector with a strong export orientation. The industry’s export basket is dominated by finished products such as footwear, leather goods, and garments, rather than raw hides, indicating significant domestic processing and value addition.

CareEdge Ratings notes that India’s Union Budget 2026–27, along with the completion of the India–European Union (EU) Free Trade Agreement (FTA) as of January 27, 2026, and the recent cut in U.S. import tariffs, collectively create a positive policy environment for India’s leather industry. The Budget’s focus on streamlining import duties, reducing input costs, and simplifying procedures is likely to boost cost efficiency and operational performance. Additionally, the EU–FTA significantly improves market access and export competitiveness.

Given the industry’s existing focus on finished footwear, leather goods, and garments, the improved trade environment strengthens its ability to scale exports, stabilise demand, and deepen engagement with global buyers, enabling the Indian leather industry to capture a larger market share in the medium to long term. Together, these developments are expected to generate cost efficiencies, thereby improving profitability margins.

Priti Agarwal, Senior Director, CareEdge Ratings said, “The industry is prioritising sustainability and technology adoption to enhance global competitiveness. Key initiatives include eco-friendly tanning, zero?liquid?discharge systems and comprehensive waste?reduction practices. At the same time, companies are accelerating value-added production, particularly in footwear, to capture greater market share in the US and EU. Its renewed focus on innovation, environmental compliance and export diversification positions it as a strong contributor to India’s growth trajectory and a sector with substantial opportunities for scale and modernisation.”

Elimination of EU import tariffs currently as high as 17% under the agreement substantially enhances the cost competitiveness of Indian leather and footwear products in the European market. CareEdge Ratings highlights that this will support India’s exports of around Rs. 0.21 lakh crore (USD 2.4 billion) and help Indian companies gain a larger share of the EU’s leather and footwear market imports valued at approximately Rs. 8.71 lakh crore (USD 100 billion).

Puneet Kansal, Director, CareEdge Ratings, opined, “India’s leather sector is poised for strong and sustained export momentum, supported by zero?duty access to the EU under the 2026 FTA and Budget?led measures that enhance cost efficiency, ease input sourcing, and improve execution timelines. The recent reduction in US tariffs further strengthens demand visibility across key markets, positioning Indian exporters to capture higher?value opportunities, deepen engagement with global brands, and consolidate their presence in international supply chains.”

India emerges as the principal gainer, with tariffs falling sharply from around ~17% to 0% in FY26, thereby enhancing its cost competitiveness and export potential. The removal of these duties under the new agreement is expected to improve India’s relative value proposition and drive a material expansion in demand, particularly from major European fashion houses in Italy, France and Germany

Source: EU Trade Agreement

Reduction in US Import Tariffs in February 2026

The Indian leather export market contributed USD 4.58 billion in FY25, of which ~22% share was to the US market. Following the aggressive 50% tariff hike (a 25% reciprocal tariff plus a 25% penalty) in 2025, exports to the US market became uncompetitive, prompting manufacturers to shift their focus to less profitable markets.

The reduction of US tariffs to 18% effective February 03, 2026, is expected to enhance the price competitiveness of Indian products in the US market, potentially strengthening buyer interest and supporting exporters’ margins. The improved cost position may also allow India to regain export share in the US leather market, which had previously shifted to less profitable markets. As demand stabilises, exporters may see better production planning, order pipelines, and improved capacity use across key manufacturing hubs.

Rajan Sukhija, Associate Director, CareEdge Ratings said, “The alignment of trade liberalisation, fiscal measures, and tariff adjustments has created a meaningful inflection point for India’s leather industry, offering more than a temporary recovery. Enhanced access to European markets, the restoration of competitiveness in the United States, and reduced domestic cost pressures together improve India’s standing in global trade.”

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