writingonblog uncensored: India’s leather exporters weigh tariff-driven turm...

writingonblog uncensored: India’s leather exporters weigh tariff-driven turm...: C Shivakumar As the United States slaps fresh tariffs on Indian goods, leather exporters in Tamil Nadu — a key hub of the country’s leather...

India’s leather exporters weigh tariff-driven turmoil and opportunity in US trade shift

C Shivakumar

As the United States slaps fresh tariffs on Indian goods, leather exporters in Tamil Nadu — a key hub of the country’s leather industry — are bracing for short-term disruption, even as they eye long-term gains from shifting global trade flows.

Earlier this month, Washington announced a 26 per cent tariff on a range of Indian exports, including footwear and leather goods. The move, part of a broader trade recalibration under President Donald Trump’s administration, places India in a comparatively better position than East Asian competitors such as Vietnam and Cambodia, which now face steeper duties of 46 per cent and 49 per cent respectively.

While the hike has rattled Indian exporters, some in the sector see an opening.

“With the new tariffs in place, India becomes a more attractive sourcing destination,” said Israr Ahmed, director of Farida Prime Tannery and vice-president of the Federation of Indian Export Organisations (FIEO). “Major brands will start looking at India more seriously, and we anticipate a rise in order books.”

Tamil Nadu accounts for 38 per cent of India’s footwear and leather goods production. The state, home to several export-driven clusters, is likely to feel the impact of any shift in global sourcing strategies. India exported $4.01 billion worth of leather and leather products in the last fiscal year, with the United States accounting for nearly $873 million — over a fifth of total exports.

Despite optimism from some quarters, industry players warn that the immediate future could prove challenging.

“About 20 per cent of our exports go to the US,” said Abdul Wahab, managing director of K H Shoes. “It’s our single largest market, and a 26 per cent tariff is a serious blow. In the next four to five months, we expect disruption — cancellations and reduced orders.”

Wahab said his company, like many others, is scrambling to assess the full implications. “We’re moving from meeting to meeting, trying to understand the tariff lines. Right now, it’s too early to comment with certainty — but we already know that customers won’t absorb the full cost. They expect us to share the burden.”

He added that the impact will be felt almost immediately. “The tariffs come into effect from April 5. That covers our peak production season — the months leading up to the major fall and holiday sales in the US. These months are critical. Any shift in cost structures now directly hits manufacturers and brands.”

Beyond the short-term turbulence, exporters believe India’s leather sector could stand to benefit from a long-term realignment of supply chains away from traditional powerhouses in Southeast Asia.

“In the longer term, there is definitely an opportunity for India,” Wahab said. “We are one of the few competing manufacturing countries with scale. But before we can talk about gains, we need to get through this very real and immediate challenge.”

Industry bodies have begun lobbying the Indian government for relief and support. “This is a labour-intensive sector,” Wahab said. “We’re engaging with the Commerce and Finance Ministries to help us navigate this critical juncture.”

As the global trade map is redrawn, India’s leather exporters are hoping that short-term pain will lead to long-term repositioning — but for now, the focus is on survival.

ICA Signs Loan Agreement to Boost Tamil Nadu’s Investment Landscape with Third Phase of Development Program

CHENNAI:
In a significant move to enhance Tamil Nadu's investment climate, the Japan International Cooperation Agency (JICA) has inked a loan agreement worth 36,114 million Japanese Yen (approximately Rs 2,106 crore) for the third phase of the Tamil Nadu Investment Promotion Program. This funding aims to strengthen the state's regulatory frameworks, infrastructure, and skill development initiatives, positioning Tamil Nadu as a global industry hub.

The third phase of the program will focus on sustainable and future-oriented development, particularly in emerging and green sectors. The initiative aligns with India's rapid growth and emphasizes environmental responsibility, marking a critical step in Tamil Nadu's long-term economic strategy. JICA had previously supported the first and second phases of the program in 2013 and 2017, respectively, with a focus on similar developmental goals.

Key components of the Tamil Nadu Investment Promotion Program include the establishment of the Tamil Nadu Green Climate Fund (TNGCF) to support green and climate-smart industrial projects, as well as energy conservation incentives in partnership with Japan. Another crucial element is the Tamil Nadu Emerging Sector Seed Fund (TNESSF), which aims to promote investment in startups and high-growth industries, including semiconductors and advanced electronics. The Tamil Nadu World Innovation and Skill Training Hub (TNWISH) will also be established to provide cutting-edge, industry-relevant skill development opportunities.

The program further seeks to streamline the business environment for Japanese companies in Tamil Nadu by strengthening the Japan Desk, a collaborative initiative between the state government and JICA.

The Official Development Assistance (ODA) loan agreement was signed by Manisha Sinha, Additional Secretary, Department of Economic Affairs, Ministry of Finance, and Takeuchi Takuro, Chief Representative of JICA India.

Commenting on the partnership, Takuro emphasized Tamil Nadu's pivotal role in India’s industrial growth, noting the success of initiatives like the Japan Industrial Township (JITs) in Chennai. He highlighted that the third-phase program would play a crucial role in fostering green industries and advancing technologies such as semiconductors, further contributing to India’s and Japan’s sustainable development goals.

The Industries, Investment Promotion & Commerce Department of the Government of Tamil Nadu will oversee the implementation of the program, ensuring the effective rollout of policy reforms and infrastructure projects that will drive growth and job creation across the state.