India’s leather industry is poised to benefit from a favourable policy and trade environment following the Union Budget for fiscal year 2026–27, the conclusion of the India–European Union Free Trade Agreement (FTA), and a recent reduction in United States import tariffs, according to CareEdge Ratings.
In its latest assessment, CareEdge Ratings stated that the combined impact of domestic policy reforms and improved market access conditions was expected to enhance the cost competitiveness and export potential of the sector.
The agency noted that India had emerged as the principal gainer under the revised tariff regime, with duties falling sharply from approximately 17% to nil in FY ’26. It observed that this substantial reduction would strengthen India’s relative value proposition in global markets and support a meaningful expansion in export demand.
CareEdge Ratings further stated that the Union Budget’s focus on streamlining import duties, lowering input costs, improving cost competitiveness and simplifying regulatory procedures was likely to enhance operational efficiency and flexibility across the leather value chain. These measures, it said, would strengthen the competitiveness of Indian exporters in international markets.
The agency also highlighted that the completion of the India–EU FTA significantly improved market access for Indian leather products, enhancing export competitiveness. Given the industry’s established focus on finished footwear, leather goods and garments, the improved trade framework was expected to enable exporters to scale shipments, stabilise demand and deepen engagement with global buyers.
CareEdge Ratings added that the removal of duties under the new trade agreement would likely drive stronger demand from leading European fashion houses, particularly in Italy, France and Germany. Over the medium to long term, the strengthened trade environment was expected to allow the Indian leather industry to capture a larger share of global markets while improving profitability margins through greater cost efficiencies.
