Leather & Footwear: Duty Exemptions Sought in 2026

What the industry is asking the government for

India’s leather and footwear industry has sought import duty exemptions on a range of critical inputs, citing cost stress linked to the ongoing West Asia crisis. Industry representatives have taken up the issue with the commerce and industry ministry, asking for immediate relief for exporters and domestic manufacturers. An industry official said raw material and input costs have risen by 40-60 percent because of the crisis. The industry’s request covers both materials and production-related items, reflecting pressure across the value chain. Exporters have also asked for duty-free import of crust and finished leather to support domestic manufacturing. Alongside duty relief, the sector has called for the early rollout of the proposed FLOAT scheme.

Inputs where duty relief has been sought

According to industry representatives, the request for duty exemptions includes synthetic leather such as PU-coated fabrics, footwear components, and metal accessories. It also includes leather and footwear machinery, threads, moulds, toe puffs, eyelets, certain leather chemicals, and packaging materials. The industry position is that these items are critical to production and export fulfilment. The list indicates that both upstream inputs and factory-level requirements are being impacted. Companies argue that duty relief on these inputs could help cushion the immediate spike in costs. They have framed this as a competitiveness issue for exports and as a cost-containment step for domestic manufacturing.

Why the West Asia crisis is feeding into higher costs

A significant share of inputs used by the sector is either petroleum-based or closely linked to petroleum supply chains. Inputs cited in the reports include rubber chemicals, PU leather, adhesives, plastics, and shoe soles. The crisis in West Asia has disrupted the movement of oil and gas shipments, particularly around the Strait of Hormuz. Industry representatives have specifically pointed to disruptions linked to Iran’s closure of the Strait of Hormuz. The impact has been felt through higher input prices as well as volatility in procurement. These pressures are being compounded by broader global supply chain disruptions.

Import dependence adds to the pressure

Several key inputs are also imported from countries including China, South Korea, Indonesia, and Japan. This import dependence makes the sector vulnerable when freight routes are disrupted or costs move sharply. With supply chains stressed, companies face higher landed costs for components and chemicals used in manufacturing. The industry’s demand for duty exemptions is positioned as a way to partially offset these higher landed costs. Exporters argue that without policy relief, the cost base becomes difficult to manage while still meeting delivery commitments and price expectations.

Freight, marine insurance, and air cargo costs are also rising

Beyond materials, exporters have highlighted a rise in freight and marine insurance premiums linked to the Iran war. Firms have reported longer transit times, with shipments avoiding conflict-affected zones. Exporters have also cited month-long disruptions and cost spikes of 20-30 percent, with international buyers unwilling to share the increase. Routes to Europe and the USA, two major destinations for leather exports, have seen longer voyages and higher freight costs. Exporters also claimed air freight prices have increased two to three times. Juneja said the industry has written to the commerce ministry seeking assistance through air freight subsidy and import duty relief.

FLOAT scheme: the second key ask from the sector

The sector has asked for the early rollout of the proposed FLOAT (Footwear and Leather Oriented Transformation) scheme. Industry representatives said the scheme is expected to cover the entire value chain, including raw materials, machinery, and inputs. The request signals that the industry sees a need for a structured support framework, not only a short-term duty relief measure. Exporters have linked the scheme to improving domestic manufacturing capability and supporting export competitiveness. The industry’s messaging suggests that both immediate relief and medium-term policy support are being sought together.

What trade data is showing

The cost pressures have started to reflect in trade numbers cited by the industry. Imports in the sector declined 4.49 percent year-on-year to USD 938 million. Exports of leather and leather products also fell 2.36 percent year-on-year to USD 4,260 million in 2025-26. While the reports do not attribute the full movement to a single factor, the industry has pointed to higher input and logistics costs as a major challenge. Exporters have warned that sustained cost pressure, if not addressed, could affect production, employment, and India’s competitiveness.

Government’s parallel move on petrochemicals and why it matters here

Separately, the government announced full customs duty exemption on a range of critical petrochemical products for three months, from April 2 to June 30, 2026. The finance ministry said the move was a temporary and targeted relief measure to ensure availability of key petrochemical inputs, reduce cost pressures on downstream sectors, and safeguard supply stability amid global volatility. The exemption covers products such as methanol, anhydrous ammonia, toluene, styrene, dichloromethane, vinyl chloride monomer, polybutadiene, styrene-butadiene, and unsaturated polyester resins. The duty waiver is projected to cost the exchequer about Rs 1,800 crore. While the announcement is not specific to leather and footwear, the sector’s input profile includes petroleum-linked materials, making the broader policy context relevant.

Key facts at a glance

Why this matters for listed value chains and employment exposure

Leather and footwear manufacturing has broad linkages across chemicals, polymers, packaging, components, and logistics services. When input and freight costs rise sharply, exporters may face difficulty in maintaining margins on orders booked months earlier, as ILPA president Mohammed Azhar said buyers are unwilling to share the increase. The reports also point to operational disruption risks from longer transit times and shipment delays, which can affect working capital cycles. The industry has warned that without timely intervention, cost pressures could impact production and employment. The policy asks, including duty exemptions and the FLOAT scheme rollout, are framed as tools to protect competitiveness during a period of supply chain stress.

Conclusion

India’s leather and footwear industry is pressing for import duty exemptions on key inputs and duty-free import of crust and finished leather, citing a 40-60 percent rise in costs linked to the West Asia crisis. Exporters have also asked for early rollout of the FLOAT scheme and support measures such as air freight subsidy. Trade data cited alongside these demands shows sector imports at USD 938 million and exports at USD 4,260 million in 2025-26, both lower year-on-year. The next trigger points for the sector are government decisions on duty relief requests and timelines around the proposed FLOAT scheme.