Leather exporters eye new markets, domestic demand to offset US tariffs

Exporters expect a 5-8% drop in shipments in FY26 due to higher US tariffs but say strong domestic demand and FTAs will help cushion the impact

Indian leather and leather goods exporters are expecting a 5–8 per cent drop in shipments in FY26 due to higher US tariffs but are banking on new markets and strong domestic demand to cushion the impact.

 

Export decline likely, but domestic demand remains strong 

Rajarshi Dey, Vice-President of the Indian Leather Products Association (ILPA), noted that while export volumes were likely to decline by 5–8 per cent, companies’ turnover may not fall as much because of captive demand.

 

Arjun Kulkarni, President of ILPA, also said that domestic demand was likely to outweigh the drop in American business.

 

According to a CRISIL Ratings report published on Thursday, the leather and allied products industry was estimated to have logged revenue of ₹56,000 crore in FY25, with exports accounting for 70 per cent of the revenue pie. A large chunk of exports was to the European Union (over 50 per cent) and the US (22 per cent).   

 

Exporters banking on FTAs and diversification 

Pointing to the resilience of entrepreneurs in the face of challenges, Dey said, “We have converted the tariffs to targets and when life gives us tariffs, we make leather wallets and sell them elsewhere.”

 

He added that the government has already signed several free trade agreements (FTAs) with countries such as the UK, Australia, and the UAE, while one with the European Union is in the pipeline.

 

These agreements, he said, have opened up significant opportunities, allowing exporters to diversify.

 

India’s growing consumer base a major cushion 

ILPA members also pointed to the Indian market. “India itself is a fast-growing economy and a large-sized economy, with several young billionaires, with an appetite for quality,” Dey said.

 

“The same brands we export to in Europe and the US — those brands are right here in the home market,” he further pointed out.

 

Global fair to boost trade opportunities 

In a bid to showcase the sector to global buyers, ILPA will host AILPA 2025, an international B2B fair, in Kolkata towards the end of the month.