NextFin news, India's thriving leather industry is experiencing significant challenges following the imposition of a 50% tariff by the United States, a move enacted by the Trump administration that took effect in two phases during August 2025. The tariffs have directly impacted exports from India to the US, one of its largest trading partners.
The tariffs were introduced first as a 25% levy on August 7, 2025, followed by an increase to 50% on August 27, 2025. The US government justified these duties citing India's continued imports of Russian crude oil and longstanding trade barriers.
Labour-intensive sectors such as leather, textiles, gems and jewellery, shrimp, and footwear have been disproportionately affected by these tariffs. The leather industry, in particular, which contributes significantly to India's export earnings and employment, has seen a sharp decline in shipments to the US market.
According to the Goods and Trade Report, India's exports to the US fell for the third consecutive month in August 2025, with a notable 16.3% drop attributed largely to the tariff hike. The US accounted for 20% of India's $437.42 billion exports in the fiscal year 2024-25, underscoring the scale of the impact.
In response, Indian Finance Minister Nirmala Sitharaman announced on Monday, September 22, 2025, that the government is preparing a comprehensive relief package to support exporters affected by the tariffs. Sitharaman stated that various ministries are consulting industry stakeholders to assess the damage and develop targeted assistance measures.
She emphasized that the government is working on 'hand-holding' exporters to mitigate the adverse effects of the US tariffs. The relief package aims to provide financial and policy support to vulnerable sectors, including the leather industry, to sustain export activities and protect jobs.
Chief Economic Adviser Anantha Nageswaran has warned that if unaddressed, the tariffs could reduce India's GDP growth by up to 0.5%. The government is also implementing domestic reforms, including a significant overhaul of the Goods and Services Tax (GST) system effective September 22, 2025, to boost domestic consumption and offset external shocks.
The GST reform reduces tax slabs on essentials to 5% and most other goods to 18%, while introducing a 40% rate on luxury and sin goods. This move is expected to lower household expenses and stimulate demand within India.
The leather industry, a key employer in several Indian states, continues to monitor the evolving trade situation closely. Industry representatives have called for swift government intervention to prevent further erosion of export markets and to sustain the sector's growth trajectory.
As of September 25, 2025, the Indian government remains engaged in dialogue with exporters and trade bodies to finalize the relief measures, aiming to stabilize the leather sector and other affected industries amid ongoing international trade tensions.
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