India's leather and footwear industry is grappling with a significant surge in input costs triggered by the ongoing Middle East crisis. Industry representatives have approached the commerce and industry ministry, requesting import duty exemptions on essential raw materials, machinery, and components to alleviate the financial burden.
Rising Costs and Industry Concerns
The disruption in the Middle East has led to a sharp increase in the cost of several crucial inputs, ranging from 40% to 60%. An official stated, "The industry is facing a sharp increase in raw material and input costs - rising by 40-60% - due to the West Asia crisis." In response, the industry has urged the government to provide import duty exemptions on critical inputs such as synthetic leather (PU-coated fabrics), footwear components, metal accessories, leather and footwear machinery, threads, moulds, toe puffs, eyelets, certain leather chemicals, and packaging materials.
Proposed FLOAT Scheme and Duty-Free Imports
Alongside duty relief, exporters have recommended the early implementation of the proposed FLOAT (Footwear and Leather Oriented Transformation) scheme. This scheme should cover the entire leather and footwear product chain, including raw materials, machinery, and inputs. The industry has also pressed for duty-free imports of crust and finished leather to strengthen domestic manufacturing.
A major concern is the impact of Iran's closure of the Strait of Hormuz, which has affected oil and gas vessel movement. Since products such as PU leather, certain rubber chemicals, adhesives, plastics, and shoe soles are petroleum-based, supply disruptions have pushed costs significantly higher.
Import Dependence and Trade Data
Apart from petroleum-linked materials, the domestic industry relies on imports from China, Korea, Indonesia, and Japan for several inputs. Imports in the sector fell 4.49% year-on-year to $938 million. On the export front, leather and leather product shipments declined 2.36% year-on-year to $4.26 billion in 2025-26. However, according to industry estimates, total exports could rise to $5.6 billion once non-leather goods figures are added.
Overall exports from the sector, covering finished leather, leather footwear, footwear components, leather garments, leather goods, saddlery and harness, non-leather footwear, non-leather goods, and fur and fur products, reached $5.57 billion in 2024-25, compared to $5.38 billion in 2023-24 and $6 billion in 2022-23.
