US tariff shock puts 75,000 Tamil Nadu leather jobs at risk

C Shivakumar @ CHENNAI:

As many as 75,000 jobs in Tamil Nadu’s leather sector are at risk after Washington doubled tariffs on Indian leather imports to 50 per cent, threatening one of the state’s largest export industries and prompting calls for urgent intervention from New Delhi.

Tamil Nadu, which accounts for the bulk of India’s leather goods production, is expected to bear the brunt of the move. About 30 per cent of the state’s leather exports are shipped to the US, with some companies relying on the market for up to 60 per cent of their sales.

“The rise will hit the sector very hard,” said Abdul Wahab, managing director of KH Shoes. “US buyers are demanding discounts of up to 20 per cent, which they expect exporters to absorb. If we spend ₹100 to produce a product, they want it at ₹80. That is simply not viable.”

He added that several American brands had already put new orders on hold until the tariff issue is resolved. For existing contracts, exporters are reluctantly offering temporary discounts. “We can manage this for one or two months,” Wahab said, warning that companies may then be forced to cut 20–30 per cent of their workforce.

Industry executives have urged the government to provide immediate relief, including incentives to offset part of the tariff burden. Wahab suggested that the government absorb 15 per cent of the additional levy, exporters bear 5 per cent, and US buyers cover the rest. “This would ensure continuity of business and prevent job losses. Otherwise, countries like Indonesia, Vietnam, Bangladesh and Cambodia will take our place — and once this business goes, it will not return.”

Exporters are also calling for support from the Tamil Nadu government, including a stipend of ₹10,000 for laid-off workers to help with reskilling.

Israr Ahmed, director of Farida Prime Tannery, said companies were selling at a discount to keep US consumers from switching suppliers. “This buys us time, but the US was always the growth market. These tariffs will hurt India for a long time if it stays on,” he said.

The exposure is greater for Tamil Nadu than for most states. While the US accounted for 20 per cent of India’s $433.6bn merchandise exports last year, the figure was 31 per cent for Tamil Nadu’s $52.1bn exports.

The timing of the setback is particularly acute. India’s leather and footwear industry has set an ambitious goal of nearly doubling turnover to $47.1bn by 2029–30, up from $23.7bn in 2023–24. The plan includes raising exports to $13.7bn and creating 2.5mn new jobs on top of the 4.4mn already employed.

But exporters warn that unless the state and central governments step in quickly, the 50 per cent US tariffs could derail both investment and employment growth in one of Tamil Nadu’s backbone industries.