US tariffs to cut Indian leather revenue by up to 12%: Crisil

India’s leather and footwear industry is expected to see a revenue drop of 10% to 12% this fiscal year following the imposition of steep 50% tariffs by the United States. According to a report by Crisil Ratings, the decline is largely due to a significant reduction in export volumes to the US, a critical market for Indian leather goods.

The high tariffs are split into two parts: a 25% reciprocal tariff introduced in early August and an additional 25% penalty effective August 27, 2025, linked to India’s import of Russian oil. This combined 50% duty puts Indian exporters at a major disadvantage compared to competitors like Vietnam, Cambodia, Italy, and France, who face much lower US tariffs of 15% to 20%.

The industry, which generated approximately Rs 56,000 crore in fiscal 2025, relies heavily on international buyers. Exports account for nearly 70% of total revenue, with the European Union making up over 50% and the US contributing about 22% of the market. Jayashree Nandakumar, Director at Crisil Ratings, noted that the loss of US orders is expected to drive down overall export volumes by 13% to 14% this year.

While domestic demand has shown signs of improvement, it is not expected to be enough to offset the export losses. Local growth has been supported by the rationalization of the Goods and Services Tax (GST), lower income taxes, controlled inflation, and low interest rates. However, Crisil warned that the high concentration of exports means the industry remains highly sensitive to these sharp international trade barriers.