Uzbek President signs decree to boost leather and footwear sector

Uzbek President Shavkat Mirziyoyev has signed a new resolution aimed at driving the manufacturing of finished goods within the nation's leather and footwear industry and significantly elevating its export capacity. Executed on July 1, 2026, the executive order introduces a sweeping financial framework, infrastructure funding, and targeted tax holidays to accelerate sectoral growth over the next few years.

Target 2027

The official document outlines substantial annual growth metrics across multiple areas of production and value addition by 2027 compared to 2026 levels:

• Leather Production: Projected to rise to 800 million square decimeters, up from 690 million.

• Footwear Manufacturing: Target set at 115 million pairs, an increase from 100 million.

• Export Volumes: Expected to climb to US$150 million from the current US$110 million.

• Haberdashery Output: Planned to hit 300 billion soums, up from 246 billion soums.

• Industry Value Added: Targeted to grow from 860 billion soums to 1.2 trillion soums.

Direct Subsidies, Retail Incentives

To support manufacturers, a comprehensive financial aid strategy will be deployed through the Light Industry Support Fund between July 1, 2026, and December 31, 2028. Under this scheme, finished leather producers will be granted 350 soums per square decimeter of products sold. Meanwhile, footwear and haberdashery manufacturers are eligible to receive 1 million soums for every newly developed design model, with an annual cap of 50 million soums per enterprise.

The state will also co-finance supply chain components, covering 50% of the import costs for shoe lasts and molds. This specific reimbursement is capped at US$10,000 annually for imports originating from European Union nations, and US$5,000 per year for shipments from all other countries.

Furthermore, the government intends to subsidize retail expansion. Businesses establishing brand stores and trading houses in Tashkent, regional administrative centers, and major cities with populations over 100,000 will receive a 50% reimbursement on property rental costs during their first year of operation, subject to a maximum ceiling of 100 million soums.

3-Year Tax Holidays, Dedicated Managing Entity

In an effort to streamline raw material sourcing, entrepreneurs focused on collecting leather and wool raw materials will be fully exempt from corporate income tax, property tax, land tax, and value-added tax (VAT). This fiscal holiday will run from July 1, 2026, to July 1, 2029, with a directive issued to draft the necessary Tax Code amendments within the next three months.

The resolution additionally mandates the creation of a dedicated management entity—the Directorate for the Management of Leather and Footwear Industrial Zones. Established as a limited liability company with a charter capital of US$23 million, the directorate will take over the administration of existing specialized industrial hubs in the Akhangaran district (Tashkent region) and the Shahrihan district (Andijan region), which encompass a total area of 43.5 hectares.

Infra Funding, Capital Allocation

Substantial state funding is being directed toward environmental compliance and engineering infrastructure. Over the 2026–2027 period, the state budget will allocate 360 billion soums for building modern wastewater treatment plants at leather and wool processing units located in the Tashkent and Syrdarya regions. An additional 80 billion soums has been allocated to set up external engineering and communication networks for the industrial zones.

Financially, the decree restructures a US$33 million fund that had been set aside for the sector under a prior 2024 resolution:

• US$10 million will be distributed via commercial banks to fund new investment projects through 10-year loans carrying a 5% annual interest rate and a three-year grace period.

• US$23 million will be injected directly as the foundational charter capital for the newly created industrial zones directorate.