Union Budget 2025: Major push for leather and footwear sectors

Finance Minister Nirmala Sitharaman, while presenting the Union Budget for 2025-26, announced a series of strategic measures aimed at transforming India’s leather and footwear industry. The government plans to launch a dedicated Focus Product Scheme to enhance the sector's global competitiveness and productivity.

The new scheme is designed to provide comprehensive support for design capacity, component manufacturing, and the specialized machinery required for production. A significant portion of this initiative will target the non-leather footwear segment, alongside traditional leather products. The Finance Minister stated that these measures are expected to generate a total turnover of Rs 4 lakh crore, with exports contributing over Rs 1.1 lakh crore.

Key Budgetary Provisions

The 2025-26 Budget introduced specific fiscal changes to reduce production costs and encourage exports, these include Customs Duty Exemptions, Export Duty Removal, Employment Generation and National Manufacturing Mission.

The government has fully exempted Wet Blue leather from the 10% Basic Customs Duty (BCD) to lower raw material costs for tanners. To make Indian leather more competitive in international markets, the 20% export duty on Crust leather has been abolished. The leather and footwear initiatives are projected to create approximately 22 lakh (2.2 million) new jobs, providing a significant boost to the labor-intensive sector. A new mission will be launched to support clean technology and modern manufacturing across small, medium, and large industries.

Industry Reactions

The leather and footwear industry has largely welcomed the announcements, viewing them as a positive turn for domestic manufacturing. The Council for Leather Exports (CLE) expressed strong support for the Focus Product Scheme. CLE Chairman Rajendra Kumar Jalan noted that the budget focuses on the right areas, productivity and design, which will help the industry reach its ambitious export targets.

Dilip Kapur, Founder of Hidesign, called the removal of customs duty on Wet Blue leather a positive step that would directly assist in managing raw material expenses. However, he also pointed out that while these supply-side measures are excellent, the industry still keeps a close watch on private consumption trends.

Beyond leather, the finance minister highlighted plans to make India a global toy manufacturing hub through a National Action Plan. The government aims to develop specialized clusters and a robust ecosystem to produce high-quality, innovative toys under the ‘Made in India’ brand.

By streamlining the tariff structure and providing targeted incentives, the Union Budget 2025-26 seeks to position these labour-intensive sectors as primary drivers of India's export-led growth.