The US is a significant marketplace for home leather-based gamers.
Given the numerous export focus, firms would witness a decline regardless of a reasonable enchancment in home demand following the rationalisation of Items and Companies Tax (GST), in addition to different beneficial macro-economic elements akin to decrease earnings taxes, benign inflation, and low rates of interest, it stated.
“The leather-based and allied merchandise business in India will see income decline 10-12 % on-year this fiscal because the 50 % tariff (25 % reciprocal tariff plus 25 % penalty for buy of Russian oil) imposed by the US will slash export quantity,” it added.
The leather-based and allied merchandise business is estimated to have logged a income of about Rs 56,000 crore in fiscal 2025, and exports accounted for about 70 % of the income pie, it stated.
A big chunk of the exports was to the European Union (over 50 %) and the US (about 22 %), it added. Indicators of a slowdown within the US export demand had been already seen with the 25 % reciprocal tariff taking impact within the first week of August. The extra 25 % punitive tariff, efficient August 27, 2025, has positioned India at an extra drawback vis-a-vis different main exporting nations akin to Cambodia, Italy, Vietnam and France, the place the US tariffs are decrease at 15-20 %.
Jayashree Nandakumar, Director at Crisil Scores, stated that with the lack of orders from the US, the export quantity is predicted to drop 13-14 % this fiscal.
“Income will likely be hit more durable as the majority of exports to the US is of completed leather-based merchandise akin to sneakers and leather-based equipment, which fetch increased realisations,” Nandakumar stated.
