Indian leather exporters are facing severe business losses and a looming decline in shipments to the United States following the imposition of steep tariffs by the Donald Trump administration, with exporters warning that the punitive duties have made the market increasingly unviable.
With tariffs rising as high as 50 per cent, Indian exporters are rapidly losing market share to competitors such as Vietnam, Cambodia, Indonesia and the Philippines. To retain American buyers, companies have been forced to offer discounts ranging from 10 to 40 per cent, significantly eroding margins.
The impact is being felt acutely across major leather clusters. In Bantala near Kolkata, one of Asia’s largest leather hubs, exports to the US have dropped by around 25 per cent so far. In Ambur, Tamil Nadu, firms with exposure of nearly 60 per cent to the US market are facing deep uncertainty, while export-dependent units in both West Bengal and Tamil Nadu have begun preparing for temporary worker layoffs.
September marked the first full month of the 50 per cent tariffs, which came into effect on August 27, delivering a major blow to bilateral trade. The US has historically been India’s largest export destination for leather and leather products. In FY25, shipments to the US had grown 16.58 per cent year-on-year to $1.05 billion, accounting for 21.65 per cent of India’s total leather exports, up from 19.13 per cent in FY24.
India accounts for around 13 per cent of global leather production and is the world’s second-largest exporter of leather garments and the fifth-largest exporter of leather goods and accessories.
Exporters say fresh orders from the US have slowed dramatically. Rana Rajarshi Dey, Founder and Managing Director of Kolkata-based Edcons Exports Private Ltd, said American clients sought 15–20 per cent discounts on Christmas orders delivered in October and November and are now diverting most new orders to Southeast Asian countries and China. Dey noted that the company has not received fresh US orders for the January–March period.
Edcons, which exports handbags, wallets and backpacks and operates a manufacturing unit in Bantala, earlier derived about 15 per cent of its revenue from the US market. Both direct and indirect orders linked to US demand have fallen, prompting the company to explore alternative markets such as the UK, West Asia, Australia and New Zealand.
Industry bodies say the damage is widespread. Of the 700 leather goods companies operating in Bantala, around 100 export to the US, with their turnover down by roughly 25 per cent. Council for Leather Exports Vice Chairman Ramesh Juneja said the tariffs have severely hit growth, with several units incurring heavy losses after years of steady 5–7 per cent annual expansion.
“The Indian leather industry is very badly impacted. The US accounts for over 20 per cent of our exports, and with 50 per cent tariffs, it has become unviable for American buyers despite steep discounts,” Juneja said, adding that many factories dependent on US business are close to shutting operations.
Chennai-based exporters report similar stress. Sanjay Lulla, Managing Director of SM Lulla Industries Worldwide, said exporters have no option but to share the tariff burden with US clients to retain relationships, even if it means operating at a loss. The company, which earns nearly 20 per cent of its revenue from the US, is now actively seeking new clients in European markets such as Germany, Spain and Portugal.
Executives in Ambur warn that companies with more than 80 per cent exposure to the US market may soon begin layoffs, a move that would disproportionately affect women, who make up over 80 per cent of the workforce in many units.
Workers, meanwhile, are increasingly anxious. Employees in Chennai-based leather units say fears of layoffs are spreading as media reports highlight the industry’s troubles.
According to Abdul Wahab, Regional Chairman of the Council for Leather Exports, Chennai has already seen a 5–7 per cent drop in leather, footwear and leather goods exports to the US. While exporters are offering discounts of 5–10 per cent to retain long-term brand relationships, Wahab estimates that exporters could still face losses of around 5 per cent by the end of FY26, partly offset by currency gains. He added that exports to the US from Chennai could decline by about 7 per cent by the end of the fiscal year, prompting companies to intensify efforts to diversify into Europe and Japan.
