Tariffs impacts: Indian leather exporters incurring business losses in US, staring at sharp decline in shipments

Indian leather exporters are incurring huge business losses in the US and staring at a sharp decline in shipments to their top overseas market due to the impact of steep tariffs imposed by the Donald Trump administration.

Facing the tariffs shock of as high as 50 per cent, the exporters are losing the lucrative market to Vietnam, Cambodia, Indonesia and the Philippines, even as they have resorted to offering 10-40 per cent discounts to their US clients.

From Bantala near Kolkata, one of Asia’s largest leather hubs, exports to the US have so far gone down by 25 per cent, while at Ambur in Tamil Nadu, companies with around 60 per cent exposure in the US market, are in distress with lots of uncertainty. In both West Bengal and Tamil Nadu, units depending solely on exports to the US have already braced for temporary layoff of workers.

September was the first full month of Trump’s 50 per cent tariffs on Indian goods, which kicked in on 27 August, delivering a major blow to trade between India and the US.

The US has been the largest export market for Indian leather and leather products. In fact, exporters had witnessed a 16.58 per cent year-on-year increase in shipments to the US to $1,045.27 million for the last financial year from $896.63 million for the previous financial year. In FY25, the US market constituted 21.65 per cent of India’s total leather and leather products exports, up from 19.13 per cent during FY24.

India, which accounts for around 13 per cent of world leather production, is the second largest global exporter of leather garments. The country is the fifth largest global exporter of leather goods and accessories.

Fresh orders

“We are facing massive trouble in the US market. For the Christmas orders, which we delivered in October and November, our American clients sought 15-20 per cent discounts. Moreover, they are now shifting most of the fresh orders to countries like Cambodia, Vietnam and China. So, this is a huge business loss for us,” said Rana Rajarshi Dey, Founder and Managing Director, Edcons Exports Private Ltd.

Kolkata-based Edcons, a major exporter of leather products, exports handbags for women, portfolio bags, wallets and backpacks to the US. It has a manufacturing unit in Bantala, where around 700 leather goods companies and around 500 tanneries operate.

Around 15 per cent of Edcons’ total sales used to go to the US before the punitive tariffs. Also, the company caters to European clients, and some of them sell its goods to America.

“For our company, both direct and indirect orders have fallen. Fresh orders from the US have come down significantly. We have not got fresh orders for January and March from our American importers,” said Dey, who is also Vice-President of Indian Leather Products Association (ILPA).

To mitigate this impact, the company is eyeing major overseas markets like the UK and West Asia. It is also exploring alternative markets like Australia and New Zealand.

Out of 700 leather goods companies in Bantala, around 100 units export to the American market. “Due to the US tariff, around 25 per cent of their turnover has gone down. It has impacted the Bantala leather complex very badly. It has also impacted the companies’ growth rates. Every year these companies used to register 5-7 per cent growth. Some of the units are making huge losses,” Council for Leather Exports Vice Chairman Ramesh Juneja told businessline.

“The Indian leather industry is very badly impacted. Of our total exports, the US contributes over 20 per cent. Now, it is coming down drastically because of the 50 per cent tariffs. It has become unviable for the American clients to buy from us even as companies are offering high discounts to retain the markets. The US importers have started shifting their orders to other countries because they think they would not be able to sell our products at high prices,” Juneja said.

Shutting down

“All the factories which were doing business with the US are almost shutting down their operations,” he informed.

Sanjay Lulla, Managing Director of Chennai-based SM Lulla Industries Worldwide, which exports high fashion leather garments to Europe and the US, said, “We have no choice but to share the tariff with the US clients. If not, they say, they would move to other markets for their sourcing.”

“We will be burning money for some time in anticipation of change in the policies of both countries with reduced tariffs,” Lulla said.

For SM Lulla Industries, nearly 20 per cent business comes from the US. “Clients in the US want to share 50 per cent of the tariffs. Many in the industry are doing this to keep the customer,” he informed.

The company is looking at new clients in Europe like Germany, Spain and Portugal. At present it serves Italy, Sweden and Norway.

A senior official of a large unit in the leather cluster of Ambur said for those companies with exposure of over 60 per cent in the US market, it is a nightmare with lots of uncertainty. “We managed three months with orders in hand, but things are getting tougher each passing day,” he said.

“Those units having exposure of over 80 per cent to the US market will start layoff,” he added. Over 80 per cent of employees are women.

Panic mode

An employee at a Chennai leather unit said workers are in a panic mode reading media reports on layoff, which is yet to start in the company.

“In Chennai, we are witnessing a drop of exports of leather, leather goods and footwear to the US market to the extent of 5-7 per cent. In order to retain the business and since the brands have long-term relationships, companies are currently offering discounts. The range of discounts is anywhere between 5-10 per cent, depending on the brands. Due to this the loss for the exporters at the end of FY26 would be around 5 per cent because there is some currency gain also,” Abdul Wahab, regional chairman, Council for Leather Exports, told businessline.

“We may see around 7 per cent decline in the US export from Chennai by this fiscal-end. Many of our companies are also currently exploring other markets, especially the European zone and Japan, to counter this drop in business,” Wahab added.

Published on December 23, 2025