The Indian leather & footwear industry plays a crucial role in employment generation, with nearly 42 lakh (4.2 million) people working in the sector. It has also been a major contributor to the country’s exports. However, the industry has been facing challenges due to certain policies that needed revision to ensure Indian exporters remain competitive in the global market. Through the Council for Leather Exports (CLE), the industry has been actively advocating for these changes.
On 1 February 2025, during the Union Budget, Finance Minister Nirmala Sitharaman announced key policy changes that will benefit the leather and footwear manufacturers, exporters, and the industry as a whole.
Interestingly, these policy changes were announced right in the middle of the 38th India International Leather Fair (IILF) 2025, held from 1–3 February in Chennai. The timing couldn’t have come at a more opportune time as more than 400 national and international exhibitors were present, making it a significant moment for the industry.
Key policy changes
In a big move to boost productivity, quality, and global competitiveness, the government introduced a Focus Product Scheme that aims to:
- Enhance design capabilities and foster innovation;
- Develop component manufacturing for a stronger supply chain;
- Upgrade machinery to modernise production processes.
While the scheme emphasises non-leather footwear production, it also provides substantial support for leather footwear and leather product manufacturing in India.
Another major policy shift is the removal of the 20% export duty on crust leather (semi-finished leather) and the 10% import duty on wet blue (tanned leather), bringing both down to 0%.
This is expected to revitalise the tanning sector and promote the export of value-added leather products, making Indian manufacturers more competitive in global markets.
These new measures are projected to generate employment opportunities for 22 lakh (2.2 million) people and significantly boost industry revenues. The financial impact is expected to be massive:
- Over ₹4 lakh crore ($47 billion USD) in total revenue generation by 2029-30.
- Exports worth ₹1.11 lakh crore ($13 billion USD) in the leather and footwear sector.
What does this mean for Indian leather exports?
If we look at the past three years, Indian leather industry exports have hovered around $5-6 billion. Here’s a quick breakdown of export figures over the last few financial years:
- FY21: $3.30 billion
- FY22: $4.36 billion
- FY23: $5.26 billion
- FY24: $4.28 billion
One of the biggest winners in this policy shift is the finished leather export sector, which did close to US$430 million last year.
The removal of export duty on crust leather is a game-changer since Indian semi-finished leather has always had strong demand in export markets.
European companies, in particular, prefer importing crust leather over finished leather from India.
This policy shift could significantly increase leather exports, potentially bringing figures back to FY13 levels, when finished leather exports alone touched $1.3 billion, compared to today’s $300-450 million.
Even the Executive Director of the Council for Leather Exports (CLE), R Selvam, weighed in on the impact of these reforms: "It will increase the leather exports from Rs 3,000 crore to Rs 8,000 crore (~USD 1 billion)."
