Zero Tariffs Under The EU Pact To Boost Competitiveness Of India’s Leather Sector: CareEdge

New Delhi, Feb 18 (KNN) India’s leather industry is expected to gain significantly from the recent India–European Union (EU) Free Trade Agreement (FTA), with import tariffs on Indian leather and footwear products reduced to zero from around 17 per cent, according to CareEdge Ratings.

The ratings agency said the tariff elimination improves the cost competitiveness of Indian products in the European market, placing them on par with exporters such as Bangladesh, Turkey and Vietnam. China, by contrast, continues to face duties of 16–17 per cent on leather exports to the EU.

The move is projected to support India’s leather exports of about USD 2.4 billion and help domestic firms expand their share in the EU’s leather and footwear import market, estimated at nearly USD 100 billion.

Stronger Market Access and Export Momentum

India is the world’s second-largest exporter of leather garments, third-largest exporter of saddlery and harness, and fourth-largest exporter of leather goods. The sector remains one of the country’s top foreign exchange earners.

CareEdge noted that the trade agreement, along with supportive measures in the Union Budget 2026–27 and a recent reduction in US tariffs, has created a favourable policy environment for the industry.

Under the India–European Union FTA, zero-duty access is expected to enhance India’s value proposition, particularly among European buyers in countries such as Italy, France and Germany. Europe currently accounts for nearly half of India’s leather footwear exports.

Budget Measures to Lower Costs

The Union Budget 2026–27 reduced Basic Customs Duty on key imported inputs used in the leather and footwear value chain, helping manufacturers lower production costs. 

It also extended the timeline for realisation of export proceeds from six months to one year, easing working capital pressures and aligning export cycles with global buyers.

These measures are expected to improve operational flexibility and profitability margins for exporters.

(KNN Bureau)