India’s leather industry has emerged as the “principal gainer” among leather-exporting nations to the European Union following the recent trade pact, which saw the tariffs cut to zero from 17% earlier, CareEdge Ratings said.
The rating agency said the cost competitiveness of labour-intensive Indian leather and footwear products in the European market has significantly improved after the India-EU trade deal brought its tariffs to zero at par with competing countries such as Bangladesh, Turkey and Vietnam. China continues to face tariffs of 16–17%, among the highest for leather exports.
The move is expected to support India’s exports of about $2.4 billion and help domestic companies gain a larger share of the EU’s leather and footwear import market, valued at roughly $100 billion, the ratings agency said.
India is the second-largest exporter of leather garments, the third-largest exporter of saddlery and harness, and ranks fourth globally in leather goods exports. According to CareEdge, the India-EU FTA, along with incentives announced in the Union Budget 2026-27 and the recent US tariff reduction from 50% to 18%, has created a favourable policy environment for the sector.
The Union Budget 2026-27 relaxed Basic Customs Duty on key imported inputs used across the leather and footwear value chain, helping import-dependent manufacturers lower production costs. It also extended the timeline for realisation of export proceeds from six months to one year, easing working capital pressures for exporters.
India’s leather exports including footwear, garments, tanned leathers and accessories stood at $4.58 billion in FY25. The United States accounts for a 22% share. After a steep 50% tariff hike in 2025, monthly exports to the US fell to $66 million in November 2025 from $111 million in August.
“The reduction of US tariffs to 18% effective February 3 is expected to enhance the price competitiveness of Indian products in the US market,” CareEdge Ratings said.
In the nine months of FY26, leather footwear exports stood at ₹15,000 crore, with the EU accounting for 45% and the US 20%. “The Indian leather sector is set for significant expansion, targeting a $50 billion turnover by 2030, supported by rising export momentum and increasing domestic consumption,” said Priti Agarwal, Senior Director, CareEdge Ratings.
Rajan Sukhija, Associate Director, said improved access to European markets, restored competitiveness in the US and lower domestic cost pressures together strengthen India’s position in global trade.