India’s leather exporters facing mounting cost pressures: AFMEC's Gopal Gupta

Geopolitical shocks and rising operational costs

The Indian leather and footwear manufacturing sector is currently confronting a complex matrix of international supply chain disruptions and rising domestic overheads. According to Gopal Gupta, President of the Agra Footwear Manufacturers and Exporters Chamber (AFMEC), ongoing geopolitical instability in West Asia has directly intensified input costs across the production value chain. The conflict has driven up global prices for petroleum-derived materials, leading to sharp price inflation for essential industrial inputs such as technical adhesives, solvents, and chemical agents.

These external cost pressures are compounded by local regulatory shifts. The recent revision of statutory labour wages by the Uttar Pradesh government has substantially elevated wage bills in major regional production belts. Collectively, the dual impact of heightened raw material expenses and increased payroll commitments has raised total production costs for local manufacturers by 12 to 15 per cent, narrowing profit margins for export-oriented enterprises.

Demands for targeted policy and fiscal support

To safeguard the competitiveness of this labour-intensive industry, enterprise leaders are advocating interim fiscal measures from both state and central government authorities. Existing institutional relief mechanisms are widely viewed as inadequate for current market realities. Specifically, the prevailing cap of Rs 50 lakh on interest subsidies offers limited financial relief to medium-sized export houses operating with larger working capital requirements.

Industry representatives emphasise that structural resilience requires targeted fiscal interventions, including turnover-linked incentives, reductions in corporate income tax rates, and dedicated state funding for research and development. Enhanced R&D support is considered essential to help domestic manufacturers upgrade technological capabilities, refine design precision, and meet increasingly strict international specifications.

Embracing sustainability through material innovation

Environmental compliance and sustainable production practices have transitioned from voluntary industry benchmarks into mandatory requirements for global fashion retail chains. Major international buyers, including brands such as Zara, H&M, and Mango, are enforcing stringent sustainability standards across their global vendor networks. While Indian manufacturers have progressively adopted material recycling within their facilities, comprehensive waste management requires larger structural investment.

The sector is seeking dedicated government assistance to upgrade scrap leather processing technology. With institutional backing, industrial leather waste and factory offcuts can be systematically upcycled into higher-value architectural and consumer products, such as decorative leather tiles. Such circular economy practices offer a viable pathway to reduce environmental impact while creating additional revenue streams.

International engagement at Meet in Agra

Despite macroeconomic headwinds, industrial interest in raw material innovation and component sourcing remains steady. Preparations for the annual "Meet in Agra" trade event signal strong engagement from both domestic and foreign suppliers. The upcoming component fair expects to host approximately 300 exhibitors, dominated by Indian enterprises alongside direct participation from nine mainland Chinese firms exhibiting without local intermediaries, as well as suppliers from Taiwan, Vietnam, Italy, Germany, and Hong Kong.

Designed as a specialised trade platform for footwear components, machinery, and material innovations rather than finished goods, the event functions as an essential procurement fair. It provides key manufacturing clusters across Agra, Kanpur, and the National Capital Region (NCR) direct access to upcoming seasonal trends, new material samples, and foreign supply partnerships necessary to sustain global trade relations.