Indian leather industry hit hard by US tariff, revenue projected to fall

India's leather and allied products industry is projected to face a significant decline of 10-12 percent in revenue during the current fiscal year (FY26), according to a report by Crisil Ratings.

This substantial downturn is primarily attributed to the steep 50 percent tariff imposed by the United States on Indian leather imports, which is expected to severely impact export earnings that typically account for around 70 percent of the industry's estimated annual revenue of 56,000 crore rupees.

The high tariff has made Indian products significantly more expensive and less competitive compared to those from rival exporting nations like Vietnam, Italy, and France, which face lower tariffs ranging between 15 percent and 20 percent. As a direct result of these export difficulties, Crisil anticipates that the profitability of leather companies will fall by 1.5 percent to 2 percent, increasing financial strain.

This combination of higher export taxes and dampened global demand is forecast to keep the margins and credit profiles of key companies under pressure for the remainder of the current financial year.