India’s leather and allied products sector could see revenues fall by 10–12% this financial year due to new U.S. tariffs, according to a report from Crisil Ratings. By ILM.

The U.S. has imposed a total 50% tariff on Indian leather exports, which is made up of a 25% reciprocal duty plus an additional 25% penalty linked to India’s purchase of Russian oil. Crisil said the higher duties have triggered order cancellations and factory shutdowns, especially among small tanneries and exporters focused on the U.S. market.

Exports account for around 70% of India’s INR560 billion (US$6.38 billion) leather industry, with the U.S. making up 22% and the European Union over 50% of overseas sales. The report noted that competing exporters such as Vietnam, Italy, Cambodia and France face lower U.S. tariffs of 15–20%, bludgeoning India’s competitiveness.

“Revenue will be hit harder as the bulk of exports to the U.S. is of finished leather products such as shoes and leather accessories, which fetch higher realisations,” said Jayashree Nandakumar, Director, Crisil Ratings.

Crisil estimates export revenues will drop 14–16% to between US$3.9 billion and US$4 billion this year, as average realisations on finished products are about 14–15% higher than the overall export basket.