How India’s Leather Reforms Are Making the Sector Export-Ready

On May 26, 2025, the Ministry of Commerce and Industry issued a notification through the Directorate General of Foreign Trade (DGFT) that removes port restrictions and testing requirements for the export of Finished Leather, Wet Blue Leather, Crust Leather, and EI-tanned leather. This means now these leather items can be exported from any port or inland container depot across the country.

In addition, the government has also abolished the mandatory requirement for testing and certification by the Central Leather Research Institute (CLRI) for the export of these leather items.

This decision marks a significant development for India's leather industry and represents a crucial milestone for exporters.

This move is aligned with the expectation to boost competition, ease the export process, and further strengthen India's position as a leading exporter of leather and its products.

Another move that can have an immense impact on this sector is the announcement of the restoration of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for exporters. This reinstatement applies to exports made by Advance Authorisation (AA), Export-Oriented Units (EOUs), and units operating in Special Economic Zones (SEZs) and is set to take effect from June 1, 2025.

The RoDTEP scheme targets to refund taxes and duties that are not rebated under any other scheme, and benefit rates range between 0.3% and 4.3%.

Till February 5 of this year, the scheme benefits were available. After the export bodies lobbied hard for an extension, it has again come to pass.

Government Initiative to Bolster Leather Sector

The Union Budget of FY 2025-2026 introduced significant policy reforms, which include the removal of the 20% export duty on crust leather and the 10% import duty on wet blue leather. These steps are expected to be given a new life in the tanning industry and help bolster exports of high-quality leather goods.

The Central Sector Scheme, Indian Footwear and Leather Development Programme (IFLDP), which is continuing from FY 2021-22 until March 31, 2026, with a budget of RS 1,700 crore, aims to enhance manufacturing competitiveness and is expected to provide employment opportunities for 2.2 million people. Production Linked Initiative (PLI) Scheme (Union Budget 2025-26) envisions an RS 26,00 crore incentive scheme to increase turnover to RS 4 lakh crore.

To establish a leather fashion training centre, infrastructure development plans are underway, such as in Kanpur's Leather Cluster, which aims to support over 2,500 SMEs and generate RS 9,000 crore annually through exports.

The recently finalised India-UK Free Trade Agreement (FTA) is expected to significantly enhance bilateral trade, where Indian leather exporters will benefit from reduced tariffs and improved market access.

Significance of India's Leather Industry

India is the 2nd largest producer and consumer of leather footwear globally, after China. The second largest exporter of leather garments and the 4th largest exporter of leather goods in the world.

India's Leather Industry comprises four verticals: Tanning, Footwear, Leather Garments, and Accessories. This industry accounts for 13% of the world's leather production, which makes it a significant export contributor.

India owns probably 20% of the world's cattle and buffalo population, and 11% of the goat and sheep population, which ensures the apple raw material supply.

This industry employs 4.42 million people, with a 30% female workforce, who mostly belong to rural regions.

Exports in FY25, the garments sector accounted for 7.62% of the country's total leather exports. India exports leather to more than 50 countries, with the US (21.82%) and the UK (9.17%) as the top importers.

Future Outlook & Market Dynamics

Presently, the Indian leather industry stands at the cusp of transformation, poised to evolve from a legacy-driven sector to a future-facing export engine. Over 90% of leather units in India fall under the MSME category. Registering a near 25% year-on-year growth in FY2024- 25, reaching $5.7 billion. The new bilateral trade agreements, like the India-UAE and India-UK FTAs, offer preferential market access. Leaders of this sector are now targeting $7 billion in exports by FY2025- 26.

India’s leather industry is no longer content with just being a volume player; it is eyeing leadership in value, design, and sustainability. For SMEs and exporters ready to adapt, innovate, and scale, the leather sector offers not just a runway but a global stage.

 Footwear and Leather Sector