Tariffs Impact on Indian Leather Exports: A Steep Decline

The Indian leather industry faces a revenue decline of 10-12% this fiscal year due to a steep 50% tariff imposed by the US. This significant export dependency sees companies affected despite domestic demand improvements. Exports, primarily to the US and EU, are vital for this sector.

A steep 50% tariff hike imposed by the United States has spelled tough times ahead for the Indian leather and allied products sector, with revenues predicted to fall by 10-12% this fiscal year, according to a report by Crisil Ratings released on Thursday.

While the US remains a critical market for Indian leather manufacturers, the heavy export concentration is likely to drive a revenue drop despite a rise in local demand bolstered by the rationalization of the Goods and Services Tax (GST) and other favorable economic factors like lower income taxes and inflation.

Jayashree Nandakumar, Director at Crisil Ratings, warned that the loss of orders from the US might lead to a 13-14% fall in export volumes this fiscal year. With finished leather products constituting the bulk of these exports, the revenue impact could be significant as these products yield higher returns.

(With inputs from agencies.)