Policy Shift Enhances Footwear Export Competitiveness

New government initiatives are poised to significantly bolster India's leather and non-leather footwear export industries. The recent inclusion of key imported components necessary for manufacturing shoe uppers under the Import of Goods on Concessional Rate of Duty (IGCR) scheme effectively eliminates import duties on these items. This strategic move is expected to markedly improve the cost-competitiveness of Indian manufacturers in the global market.

Streamlined Operations and Extended Timelines

Israr Ahmed, Managing Director of Farida Group, noted the practical advantages of these policy adjustments. He stated that the extension of the re-export condition for goods manufactured with imported inputs from six months to one year simplifies business operations and reduces administrative burdens for exporters. This policy, announced as part of the Union Budget 2026-27, aims to provide greater operational flexibility and ease of doing business for the sector. Previously, similar duty-free import provisions for specific inputs were introduced under the Budget 2022-23, contingent on exporting value-added products within six months.

Significant Job Creation Potential

The Council for Leather Exports anticipates a substantial positive impact on employment, estimating the potential to generate approximately two to three lakh additional jobs. This surge in employment is directly linked to the anticipated growth in export volumes, driven by enhanced cost efficiencies and a more favorable trade environment. India's leather and footwear exports stood at $3.3 billion during April-December 2025-26, demonstrating resilience despite global trade challenges. The broader Indian Footwear and Leather Development Programme (IFLDP) aims to reach a turnover of $50 billion by 2030, further indicating the sector's growth trajectory.

Navigating Sectoral Challenges and Global Standing

This policy update arrives as the Indian leather and footwear industry navigates complexities such as past U.S. tariffs and global demand fluctuations. The sector has been actively seeking reforms to sustain its global competitiveness, with footwear components constituting a significant portion of India's leather export revenue. India holds a strong position internationally, being the second-largest exporter of leather garments and fourth-largest of leather goods globally. The recent policy, by reducing import costs and extending operational windows, directly addresses some of these competitive pressures, aligning with previous government efforts to support the sector, including the removal of export duties on crust leather and import duties on wet blue leather in earlier budgets. The extended export obligation period from six months to one year is expected to improve working capital management for exporters.