High US tariffs to cut Indian leather industry revenue by 10-12% this fiscal: Crisil Ratings

New Delhi: Revenues of Indian leather and allied product firms will decline by 10-12 per cent this fiscal following the steep 50 per cent tariffs imposed by the US, a report by Crisil Ratings said on Thursday.

The US is a major market for domestic leather players.

Given the significant export concentration, companies would witness a decline despite a moderate improvement in domestic demand following the rationalisation of Goods and Services Tax (GST), besides other favourable macro-economic factors such as lower income taxes, benign inflation, and low interest rates, it said.

"The leather and allied products industry in India will see revenue decline 10-12 per cent on-year this fiscal as the 50 per cent tariff (25 per cent reciprocal tariff plus 25 per cent penalty for purchase of Russian oil) imposed by the United States will slash export volume," it added.

The leather and allied products industry is estimated to have logged a revenue of about Rs 56,000 crore in fiscal 2025, and exports accounted for about 70 per cent of the revenue pie, it said.

A large chunk of the exports was to the European Union (over 50 per cent) and the US (about 22 per cent), it added.

Signs of a slowdown in the US export demand were already visible with the 25 per cent reciprocal tariff taking effect in the first week of August.

The additional 25 per cent punitive tariff, effective August 27, 2025, has placed India at a further disadvantage vis-à-vis other major exporting nations such as Cambodia, Italy, Vietnam and France, where the US tariffs are lower at 15-20 per cent.

Jayashree Nandakumar, Director at Crisil Ratings, said that with the loss of orders from the US, the export volume is expected to drop 13-14 per cent this fiscal.

"Revenue will be hit harder as the bulk of exports to the US is of finished leather products such as shoes and leather accessories, which fetch higher realisations," Nandakumar said.