Trade Watch- Quarterly (January - March [Q4] FY25)

Choose Report Type

Publication Date

Mon, 10/06/2025 - 12:04

Report Upload

download (4.67 MB)

vertical

Economics & Finance-I

PDF Text

TRADE WATCH
QUARTERLY
THEMATIC ANALYSIS:
LEATHER AND FOOTWEAR EXPORTS
January - March (Q4) FY25 TRADE WATCH QUARTERLY, Publication for FY25
Copyright@ NITI Aayog, 2025
Published: October 2025
NITI Aayog
Government of India
Sansad Marg, New Delhi-110001, India January - March (Q4) FY25
TRADE WATCH
QUARTERLY iTrade Watch January - March (Q4) FY25
ADVISORY BOARD
S. No.Board MemberAffiliation
1 Harsha Vardhana Singh Former Deputy Director, WTO
2 Santosh Kumar Sarangi
Former Additional Secretary & Director
General, DGFT
3 Pravin KrishnaProfessor, Johns Hopkins University
4 Rupa ChandaDirector, UNESCAP
5 Deepak MishraDirector and Chief Executive, ICRIER
6 Rakesh Mohan Joshi Professor and Vice Chancellor, IIFT, Delhi
7 Arpita Mukherjee Professor, ICRIER
8 James J. Nedumpara
Professor and Head, Centre for Trade and
Investment Law (CTIL)
9 Pritam Banerjee
Professor and Head, Centre for WTO
Studies
10 C VeeramaniDirector, Centre for Development Studies
11 Sanjay Kathuria Visiting Senior Fellow, CSEP
12 Biswajit NagProfessor, IIFT
13 Debashis Chakraborty Professor, IIFT, Kolkata
14 Pranjul Bhandari Chief India Economist, HSBC iiTrade Watch January - March (Q4) FY25
EXECUTIVE SUMMARY
The World Trade Policy Uncertainty Index doubled to an average of 478 for the quarter
Jan-March 2025
12
compared to the previous quarter of 237 (Oct-Dec’ 24), primarily due
to developments in trade and tariff-related policies across multiple countries. These
developments have heightened trade-related risks, affecting global trade and investment
flows. Since then, heightened trade uncertainty has persisted in international trade,
primarily due to US trade policy and geopolitical developments. The continued policy
uncertainty could trigger structural shifts in global value chains, alter manufacturing
landscapes, reshape export capacities and drag down world trade.
India’s external sector continues to demonstrate resilience, with FY25 trade reaching
$1.73 trillion. Exports reached $823 billion, supported by record services exports of
$387.5 billion and historic highs in non-petroleum merchandise exports at $374.1
billion. Imports rose to $908 billion, and the Q4 deficit moderated due to a strong
performance of services exports. India’s export growth has been driven by electrical
machinery, pharmaceuticals, and cereals, with emerging sectors like aerospace
showing high potential. For the year 2024, India has achieved competitiveness in
select high-demand products, with strong CAGR growth in mineral fuels, electrical
machinery, and nuclear reactors, and promising expansion in emerging areas such
as aerospace and high-value manufacturing. The trade trajectory highlights the twin
imperatives of deepening India’s edge in knowledge-based services while diversifying
the merchandise export base towards globally scalable sectors to strengthen its long-
term trade resilience.
This edition focuses on the Indian leather and footwear exports, which plays a pivotal
socio-economic role, employing 4.4 million people, with nearly half of them being
women. India holds strong global positions in leather garments, saddlery, and leather
goods, with Tamil Nadu leading the way in production and exports. However, despite
strengths in processed leather and niche high-RCA products, India’s global leather
and footwear export share remained less than 2% since 2004, amounting to $5.5
billion in 2024 out of a $296.5 billion global market. While global demand increasingly
favours non-leather footwear, India’s focus on leather footwear, despite higher growth
rates (~8%), has resulted in a largely stagnant overall market share. Although India has
shifted from raw leather to higher value-added products, its export growth has only
kept pace with global expansion, not surpassed it.
Globally, China dominates the mass footwear and travel goods market, Vietnam
excels in textile- and leather-based footwear, and Italy leads in premium processed
leather and apparel. India remains competitive in processed leathers (with a share of
over 10%) and leather apparel, but its presence in footwear, especially in non-leather and
high-demand categories, remains limited. India imposes ~10% tariffs on key footwear
inputs, while Vietnam and Italy levy near-zero rates. With similar reliance on China for
sourcing, Vietnam’s lower duties give its producers a cost edge. For India, reducing tariffs,
pursuing diversification, strengthening MSMEs, promoting sustainability, enhancing
skills, improving infrastructure, implementing FTAs, investing in R&D, and enhancing
branding are critical to boosting competitiveness.
1
https://www.policyuncertainty.com/trade_cimpr.html iiiTrade Watch January - March (Q4) FY25
HIGHLIGHTS
1. India’s total trade in FY25 stood at $1.73 trillion, growing 6% y-o-y, with exports
at $823 bn and imports at $908 bn, resulting in a trade deficit of $84.8 bn.
2. Services exports reached a record $387.5 bn in FY25, up 13.6% y-o-y, supported
by IT, telecom, and business services, while services imports rose modestly,
leading to a surplus of $53 bn in Q4 FY25.
3. Merchandise exports contracted in Q4 FY25 (–4.3% y-o-y) due to declines in
exports of mineral fuels (–37.8%) and organic chemicals (–14.5%). Imports,
however, grew by 1.84% y-o-y, driven by higher demand for inorganic chemicals,
nuclear reactors, and electrical machinery.
4. India’s merchandise export basket reflects a structural mismatch with
global demand, nearly 66% ($15.8 trillion) of global imports are concentrated
in products where India’s share is only 0.2%, while just 3% ($1.5 trillion) of global
imports lie in products where India has high 18.2% share, showing a clear gap to
address for aligning with global trade growth.
5. India’s overall exports grew at 10% CAGR (2020–24), outpacing the world
import CAGR of 6%; emerging sectors like aerospace (44% CAGR, $7.4 bn) and
electronics highlight India’s evolving export sophistication.
6. Import patterns shifted as the UAE overtook Russia as India’s second-largest
source, driven by gold imports under CEPA duty benefits, while imports from
China rose on strong demand for portable computers.
7. India’s leather & footwear exports stood at $5.5 bn in 2024, just 1.8% of global
trade worth $296.5 bn, with exports concentrated in HS 4202 (travel goods) and
HS 6403 (leather-upper footwear).
8. India shows revealed comparative advantage in leather apparel (RCA 5.35),
saddlery (RCA 4.18), and prepared leathers (RCAs >6). However, these are niche,
low-demand categories globally with a shrinking share in the world market.
9. India’s footwear exports remain concentrated in leather products, while non-
leather footwear exports are very low, despite strong global demand (USD
110 bn market). In 2024, the United States, Germany, France, and Italy together
accounted for nearly 30% of global import demand for footwear, representing
key markets where India has significant scope to expand its presence.
10. India has aligned its shift toward value-added exports (leather articles and
footwear) with global trends but has not translated this into market share gains,
pointing to the need for competitiveness-enhancing strategies.
11. India needs to strengthen skilling and technology adoption by expanding
apprenticeship-based training, promoting R&D for design innovation, and
bridging material gaps through domestic production of soles, moulds, and
synthetic uppers.
12. India must modernise fragmented MSME clusters with vertical industrial
complexes and plug-and-play parks offering shared testing, compliance,
logistics, and machinery access to cut costs and boost competitiveness. ivTrade Watch January - March (Q4) FY25
Contents
A. India’s Trade Analysis.............................................................................................................1
1. Merchandise and Services Analysis...........................................................................................1
2. Compositional Analysis.....................................................................................................................3
3. Trade Direction........................................................................................................................................5
4. Regional Analysis..................................................................................................................................7
5. Merchandise Trade with FTA Partners....................................................................................8
6. India’s Merchandise Exports Presence Globally...............................................................10
7. Mapping of India’s export demand and

identification of potential markets.................................................................................................11
8. Services Export Performance.......................................................................................................14
B. Thematic Analysis: Leather and Footwear Exports..................................................17
1. Analysing Peer Presence in Exports of Leather and Footwear...............................18
2. Mapping of India’s Leather and Footwear Exports with

Global Demand and Supply................................................................................................................23
3. Evolving Trends in India’s Leather and Footwear Exports........................................25
4. Footwear Trade: India’s Performance and Tariff Disadvantage, 2024...............27
5. Industry Insights on Strengthening India’s Leather and Footwear Sector...30
6. Way Forward.............................................................................................................................................32
C. Policy Highlights.......................................................................................................................33
1. Global Trade–Related Policy Updates.......................................................................................34
2. India’s Trade Policy Developments...........................................................................................34
3. Commodity Price Trends (Jun 2024-25).................................................................................34 1Trade Watch January - March (Q4) FY25
A.
INDIA’S
TRADE ANALYSIS 2Trade Watch January - March (Q4) FY25
A. India’s Trade Analysis
Global trade expanded by approximately 1.5% in Jan-March 2025, driven primarily by
price increases, as trade volume rose by only around 1%. Trade between developed
countries outpaced developing economies reversing the recent trade in favour of
developing countries.
2
India’s merchandise and services trade performance continued to remain steady
between April-March 2024-25. During this period, total trade reached $1731 billion,
marking a y-o-y growth of approximately 6%. Both exports and imports also grew
by around 6% each, with exports reaching $823 billion and imports at $908 billion
during April–March 2025. (Figure 1).
Figure 1: Trade performance in Apr-Mar FY25
5.91%
5.79%
6.03%
5.75%
5.80%
5.85%
5.90%
5.95%
6.00%
6.05%
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Total Trade Export Import
USD Billion
Apr 2023-Mar 2024 Apr 2024-Mar 2025 Change % (RHS)

Source: Department of Commerce, MoC&I, GOI
1. Merchandise and Services Analysis
India’s total trade (merchandise + services) in Q4 FY25 stood at $441 bn, up 2.2%
y-o-y, with services trade growth (+12.6%) offsetting the contraction in merchandise
trade (–1.1%). In Q4 FY25, merchandise exports declined by 4% y-o-y to $115 bn, and
imports rose marginally by ~2% reaching $175 bn. (Figure 3). However, in March 2025,
merchandise exports recorded a marginal increase, reaching $42 bn, while imports
witnessed a strong growth of ~12%, reaching $63.7 bn (Figure 2). During Q4 FY25,
monthly exports averaged $38.4 bn, and imports averaged $58.3 bn
Figure 2: Merchandise Trade (Monthly) Figure 3: Merchandise Trade (Quarterly)
0.89%
11.82%
0%
2%
4%
6%
8%
10%
12%
14%
0
10
20
30
40
50
60
70
Mar (EX) Mar (IM)
US $ Billion
FY 2024 FY 2025 y-o-y % (RHS)

-4.31%
1.84%
-6%
-4%
-2%
0%
2%
4%
0
40
80
120
160
200
Q4 (EX) Q4 (IM)
US $ Billion
FY 2024 FY 2025 y-o-y % (RHS)

Source: Department of Commerce, MoC&I, GOI
2
https://unctad.org/news/global-trade-grew-300-billion-first-half-2025-led-us-imports-and-eu-exports 3Trade Watch January - March (Q4) FY25
India’s services exports for March’25 stood at $35.6 bn, registering a strong y-o-y
growth of 19%, while services imports increased by 5.2% reaching $17.5 bn. (Figure
4). During Q4 FY25, services exports witnessed a robust annual expansion of 14%,
reaching $102 bn. Services imports rose by 4.2% to $49 bn during the same period,
resulting in a net services trade surplus of $53 bn. (Figure 5)
Figure 4: Services Trade (Monthly) Figure 5: Services Trade (Quarterly)

18.56%
5.22%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
5
10
15
20
25
30
35
40
Mar (EX) Mar (IM)
US $ Billion
FY 2024 FY 2025 y-o-y % (RHS)
14.04%
4.26%
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
20
40
60
80
100
120
Q4 (EX) Q4 (IM)
US $ Billion
FY 2024 FY 2025 y-o-y % (RHS)

Source: Department of Commerce, MoC&I, GOI
The combined balance of trade in goods and services registered a net deficit of
$51.4 bn for the quarter. This has been the lowest deficit across the four quarters,
supported by robust services exports. Annually, services exports continued to power
overall growth, reaching a record $387.5 billion in 2024–25, a 13.6% increase over $341.1
billion in the previous year. In the same period, non-petroleum merchandise exports
also hit a historic high
3
of $374.1 billion, rising 6.0% from $352.9 billion in 2023–24,
marking the highest-ever annual exports in this category. For FY25, the combined
deficit stands at $84.8 bn up from $78.2 bn in the previous year, registering a y-o-y
growth in the deficit of 8% for the financial year.
2. Compositional Analysis
2.1 Merchandise Exports
In Q4 FY25, the leading
4
exports amounted to $73.4 bn marking a y-o-y decline of 3%.
The leading commodities continued to be mineral fuels (12.6%), electrical machinery
and equipment (12.2%), and nuclear reactors (7.7%). Among the top ten export
categories, articles of apparel and clothing accessories entered the list, replacing
aircraft, spacecraft, and related parts. However, significant y-o-y declines were
observed in specific sectors; most notably, mineral fuels and related products, which
fell by 37.8%, and organic chemicals, which dropped by 14.5%. (Figure 6)
Non-petroleum exports rose due to strong demand for electrical machinery,
particularly smartphones, and pharmaceutical products in the US, likely driven by
pre-deadline, tariff-related shipments. Cereal exports were supported by higher rice
shipments, driven by a bumper Kharif crop and duty cuts
5
, especially to newer markets
like Benin and Guinea, as well as traditional markets such as Bangladesh, Nepal, and
3
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2126119#:~:text=Services%20exports%20contin-
ued%20to%20drive,%2430.0%20billion%20in%20March%202024.
4
Leading commodities are the top ten commodities with the highest value share in exports.
5
https://www.spglobal.com/commodity-insights/en/news-research/latest-news/agriculture/041725-be -
nin-struggles-with-supply-glut-following-indias-export-surge 4Trade Watch January - March (Q4) FY25
Yemen. In contrast, petroleum exports declined due to weakening demand in UAE,
Netherlands, and Singapore due to transportation chokepoints constraining supply.
6
Figure 6: Composition and Growth of Exports
12.6%(-37.8%)
12.2%(38.2%)
7.7%(12.0%)
7.3%(0.3%)
6.2%(20.5%)
5.1%(10.3%)
4.6%(-14.5%)
3.3%(20.2%)
2.4%(3.3%)
2.3%(4.1%)
0% 2% 4% 6% 8%10%12%14%16%
Mineral fuels, mineral oils & products
Electrical machinery & equipment & parts
Nuclear reactors, boilers, machinery & parts
Natural, cultured pearls,precious or semiprecious
stones
Pharmaceutical products
Vehicles other than railway & parts thereof
Organic chemicals
Cereals
Articles of iron or steel
Articles of Apparel and Clothing (not knitted)

Note: Y-o-y growth of the commodity in India’s export for this quarter is mentioned in parenthesis
Source: Department of Commerce, MoC&I, GOI
2.2 Merchandise Imports
In Q4 FY25, the leading
7
imports amounted to $137.5 bn marking a y-o-y decline of
0.7%. The imports continue to be led by mineral fuels (29.5%), electrical machinery
(13.8%), natural and cultured pearls (10.8%), and nuclear reactors (9.3%). Among
the top ten import categories, inorganic chemicals and aircraft, spacecrafts, and
their parts replaced optical, photographic, and cinematographic instruments and
fertilisers, compared to the previous quarter. The overall increase in certain import
segments was driven by significant y-o-y growth in inorganic chemicals, nuclear
reactors, animal or vegetable fats, and electrical machinery. (Figure 7)
Imports of organic chemicals surged, rising from $2 billion to $3.5 billion, driven by
higher demand for gold compounds, aluminium amalgams, and other compounds
in countries such as Japan, Indonesia, and the UAE. On the other hand, the decline
in imports of natural cultured pearls is attributed to reduced demand in markets
like Switzerland, Russia, and Canada as well as a cut in prices of rough diamonds by
10-15%.
8
6
https://www.eia.gov/todayinenergy/detail.php?id=65504
7
Leading commodities are the top ten commodities with the highest value share in imports.
8
https://www.theguardian.com/business/2025/jan/25/diamonds-lose-their-sparkle-as-prices-come-crash-
ing-down 5Trade Watch January - March (Q4) FY25
Figure 7: Composition and Growth of Imports
29.5%(-12.2%)
13.8%(16.6%)
10.8%(-7.3%)
9.3%(18.1%)
3.7%(8.2%)
2.9%(2.2%)
2.4%(-6.4%)
2.2%(17.8%)
2.1%(82.1%)
2.0%(-19.2%)
0% 5% 10% 15% 20% 25% 30% 35% 40%
Mineral fuels, mineral oils & products
Electrical machinery & equipment & parts
Natural, cultured pearls,precious or semiprecious
stones
Nuclear reactors, boilers, machinery & parts
Organic chemicals
Plastic and articles
Iron and steel
Animal or vegetable fats and oils
Inogranic Chemicals and Compounds
Aircraft, Spacecraft & parts

Note: y-o-y growth of the commodity in India’s imports for this quarter is mentioned in parentheses
Source: Department of Commerce, MoC&I, GOI
3. Trade Direction
3.1 Merchandise Exports
India’s exports to its top markets
9
including the USA, UAE, Netherlands, UK and China,
remained steady, collectively contributing around 42% of total exports in Q4 FY25,
amounting to ~$48.5 bn, witnessed a marginal y-o-y decline of 1.23%. Among the
top ten export destinations, with four countries India registered a positive growth.
(Figure 8)
The overall export decline was mainly driven by the UAE, Netherlands, China and
Singapore. Exports to China fell mainly due to reduced demand for Indian iron ore,
impacted by China’s steel production cuts
10
and rising domestic demand in India
for its increased steel production
11
. Mineral fuel exports dropped significantly to the
UAE, Netherlands, and Singapore due to disruptions in global shipping caused by
the conflict in the Bab-el-Mandeb Strait
12
, which increased costs even for unaffected
routes. Exports of marine vessels, electrical machinery, and iron and steel articles
to the UAE showed growth, driven by the India-UAE Comprehensive Economic
Partnership Agreement (CEPA), which removed tariffs, streamlined customs, and
enhanced the competitiveness of Indian engineering goods.
9
Top markets are those that account for the top 10 shares of total exports in Q4 FY25.
10
https://www.spglobal.com/commodity-insights/en/news-research/latest-news/metals/031725-chinas-po -
tential-steel-output-cuts-supporting-iron-ore-steel-markets-sources
11
https://www.hellenicshippingnews.com/indian-iron-ore-exports-face-downward-pressure/
12
https://blogs.worldbank.org/en/developmenttalk/navigating-troubled-waters--the-red-sea-shipping-crisis-
and-its- 6Trade Watch January - March (Q4) FY25
Figure 8: India’s exports to major destinations
-60%
-40%
-20%
0%
20%
40%
60%
0
5
10
15
20
25
30
USD Billion
Q4 FY24 Q4 FY25 % Y-o-Y Growth Q4 % share in India's exports Q4'FY25 (RHS)

Source: Department of Commerce, MoC&I, GOI
3.2 Merchandise Imports
India’s share of imports from its top
13
markets - China, Russia, UAE, USA remained
stable, contributing around 39% of total imports in Q4 FY25, amounting to ~$71.4
billion. In Q4 FY25, India recorded significant y-o-y import growth, with notable
increases from China (16.53%), the UAE (15.81%), and Singapore (15.56%). However,
import growth declined with Iraq (-17.28%), Russia (-11.72%) and Saudi Arabia (-7.90%).
(Figure 9)
While China remains India’s largest import source, with a 16.5% y-o-y rise, UAE
overtakes Russia as the second-largest, registering a 15.8% increase, as imports from
Russia fell by 11.7%.
Figure 9: India’s imports from major destinations
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
0
5
10
15
20
25
30
35
USD Billion
Q4 FY24 Q4 FY25 % Y-o-Y Growth Q4 (RHS) % share in India's imports Q4'FY25 (RHS)

Source: Department of Commerce, MoC&I, GOI
13
Top markets are those that account for the top 10 shares of total imports in Q4 FY25. 7Trade Watch January - March (Q4) FY25
The surge in UAE imports is driven by a massive y-o-y rise in gold compound imports
as importers avoided a 6% duty by importing gold in compound form under the
CEPA, which allows duty-free imports. Additionally, a 1% preferential duty reduction
under the Tariff Rate Quota (TRQ) mechanism led to a sharp increase in unwrought
gold (gold bars) imports from the UAE.
The rise in imports from China is fueled by a spike in portable computer imports due
to the anticipation of import curbs similar to those imposed in 2023. On the other
hand, the decline in imports from Russia is mainly due to reduced imports of mineral
fuels, reflecting a shift in global trade patterns post the Russia-Ukraine conflict.
4. Regional Analysis
4.1 Merchandise Exports
India’s exports to its top 10 export regions, accounting for a significant 89% of its total
exports, show a y-o-y decline of 5%. North America remains India’s largest export
market, accounting for approximately a quarter of total exports during this quarter,
with growth of around 25%. The USA contributes 90% to this growth. EU countries,
another major export destination, experienced a decline of ~15%, primarily from the
Netherlands, Italy, and Belgium. A similar decline was recorded in the GCC region,
due to reduced exports to the UAE, Saudi Arabia, Qatar and Kuwait. The steepest
drop came from ASEAN countries, driven by Singapore, Malaysia, Vietnam, and
Indonesia. This is primarily due to a sharp fall in mineral fuel products and organic
chemicals. Exports to Northeast Asia declined by 10.9%, led by China and Hong Kong,
while Japan showed a nearly 31% rise, driven by increased demand for motor vehicles
and electrical equipment. (Figure 10)
Figure 10: Region-Wise Export Composition and Growth
25.1%(25.2%)
15.9%(15.3%)
13.0%(-12.3%)
8.0%(-10.9%)
7.3%(-33.2%)
6.0%(13%)
4.5%(4.3%)
3.3%(10.1%)
3.2%(13.1%)
2.6%(-12.8%)
0% 5% 10% 15% 20% 25% 30%
North America
EU Countries
West Asia- GCC
NE Asia
ASEAN
South Asia
Other European Countries
Latin America
West Africa
East Africa
Note: y-o-y growth of the commodity in India’s exports for this quarter is mentioned in parentheses
Source: Department of Commerce, MoC&I, GOI
4.2 Merchandise Imports
India’s Q4 FY25 imports registered an overall growth of 5% to the top ten regions,
reaching $163 bn this quarter. Six out of ten regions continue to experience positive
y-o-y growth. India’s imports mainly came from North East (NE) Asia, West Asia
(GCC), ASEAN, accounting for 57.2% of total imports during the quarter. (Figure 11) 8Trade Watch January - March (Q4) FY25
NE Asia, comprising 26% of total imports, registered a nearly 9% rise, primarily driven
by higher imports of electrical equipment and industrial machinery. UAE, comprising
53.4% of regional imports, led the growth in West Asia-GCC. However, imports from
Saudi Arabia, which contribute 22.9% of the region’s trade, declined by 7.9%, largely
due to reduced imports of mineral fuels, aircraft and their parts.
The EU accounting for 9% of India’s total imports shows a 17.33% rise, primarily driven
by an increase in imports of industrial machinery and electrical equipment. While
most of the increase in the import of electrical equipment in the region comes
from Ireland, increase in imports of industrial machinery came from France and
Italy. Imports from Other CIS nations, making up 8.26% of total imports, fell by 11.7%,
mainly from a decline in imports from Russia. Latin America, with a modest 3.38%
share, grew by 4.95%, led by imports of fats, oils, ores, and slags mostly from Brazil,
Chile, Peru and Argentina.
Figure 11: Region-Wise Import Composition and Growth
2266..11%%((88..88%%))
1188..99%%((77..66%%))
1122..33%%((1111..88%%))
99..00%%((1177..33%%))
88..33%%((--1111..77%%))
77..00%%((66..55%%))
44..66%%((--1144%%))
33..44%%((55..00%%))
22..11%%((--55..99%%))
11..77%%((--1122..77%%))
0% 5% 10% 15% 20% 25% 30%
NNEE AAssiiaa
WWeesstt AAssiiaa-- GGCCCC
AASSEEAANN
EEUU CCoouunnttrriieess
OOtthheerr CCIISS CCoouunnttrriieess
NNoorrtthh AAmmeerriiccaa
OOtthheerr WWeesstt AAssiiaa
LLaattiinn AAmmeerriiccaa
EEaasstt AAssiiaa ((OOcceeaanniiaa))
OOtthheerr EEuurrooppeeaann CCoouunnttrriieess
Note: y-o-y growth of the commodity in India’s imports for this quarter is mentioned in parentheses
Source: Department of Commerce, MoC&I, GOI
5. Merchandise Trade with FTA Partners
In Q4 FY25, exports to FTA countries totalled $37.3 bn, reflecting a 20% y-o-y decline
driven by a notable drop in exports to major FTA partners like ASEAN (-33.2%), UAE
(-10.6%), SAFTA (-20.3%) and Singapore (-53.2%). (Figure 12)
Exports to ASEAN declined sharply, led by a steep drop in shipments to Singapore,
which accounts for a significant share of the region’s trade. Malaysia, Vietnam, and
Indonesia also saw notable reductions. In Malaysia, the decline is mainly driven by
mineral fuels and aluminium products, while in Vietnam, it is primarily driven by iron
and steel, cotton, and meat products. The decline in exports to the UAE, a key FTA
partner, is driven mainly by a decrease in mineral fuels, despite a notable increase
in exports of electrical equipment, precious stones, metals, and jewellery. The sharp
decline in exports to Singapore was driven by a reduction in shipments of mineral
fuels, organic chemicals, marine vessels, and lead articles. In contrast, exports to
Australia rose sharply, mainly due to higher mineral fuel exports.
Exports to major FTA partners show varying trajectories throughout the year. For 9Trade Watch January - March (Q4) FY25
instance, exports to ASEAN, which stood at $10 billion in the Q1 FY25 and rose to
$10.6 billion in the Q3 FY25, then registered a decline to $8.4 billion in the Q4 FY25.
In contrast, exports to the UAE have shown growth, increasing from $7.5 billion in Q1
FY25 to $9.7 billion in Q4 FY25.
Figure 12: Exports- FTA Partners
-60%
-40%
-20%
0%
20%
40%
60%
0
2
4
6
8
10
12
14
USD Billion
Q4 FY24 Q4 FY25 y-o-y change in Q4'FY25 (RHS)
Source: Department of Commerce, MoC&I, GOI
India’s imports from its FTA partner countries totalled $68.4 bn in Q4 FY25, recording
a 10% y-o-y increase. The surge in imports is driven by ASEAN (11.8%), UAE (15.8%),
Thailand (113.3%), Singapore (15.6%) and SAFTA (30.8%) countries. Imports from the
UAE rose sharply, driven primarily by a mix of raw gold and gold compound imports.
Thailand’s surge was led by precious stones, metals, and jewellery. Imports from
Singapore grew significantly, supported by industrial machinery, electronics, and
electrical equipment. (Figure 13)
Imports from key FTA partners have trended upward over the year, with inflows
from ASEAN increasing from $20.4 billion in the first quarter to $21.5 billion, while
those from the UAE rose more sharply from $10.3 billion to $17.6 billion over the same
period. 10Trade Watch January - March (Q4) FY25
Figure 13: Imports- FTA Partners
-120%
-80%
-40%
0%
40%
80%
120%
0
4
8
12
16
20
24
USD Billion
Q4 FY24 Q4 FY25 y-o-y change in Q4'FY25 (RHS)

Source: Department of Commerce, MoC&I, GOI
6. India’s Merchandise Exports Presence Globally
India’s export basket shows an apparent mismatch with global demand. Nearly
two-thirds of global imports are concentrated in products where India’s share is
just 0.2% (Category 1). Yet, these account for only 8% of India’s exports ($36.9 billion),
highlighting India’s weak presence in demand-rich sectors. At the other end, just
3% of global imports lie in products where India has a strong presence (Category 4),
here India commands an impressive 18.2% share ($121.9 billion). This contrast shows
that India is highly competitive in small, niche markets but underrepresented in the
largest demand pools.
Table 1: India’s Exports Presence in Global Demand
 
Category
Average Share % (2020-2024) 2024 (US$ billion)Share % in 2024 India’s
Export
Share %
in World’s
Import

(2024)
India’s export share in
World’s import
Number of
6HS items
India’s
Exports
World’s

Imports
India’s
Export
Basket
World’s
Import
Basket
Category 1 Less than 1% 4342 36.9 15863.9 8% 66% 0.2%
Category 2 Between 1% - 5% 1443 161.9 5961.3 34% 25% 2.7%
Category 3 Between 5% - 10% 393 121.0 1596.8 34% 7% 10.1%
Category 4 More than 10% 464 121.9 668.4 28% 3% 18.2%
 
Total of the above 6642 441.7 24090.3      
Source: ITC Trade Map
Mid-range products (Categories 2 and 3, where India’s share is between 1–10%)
together contribute $283 billion, or nearly two-thirds of India’s export basket.
Although they account for 32% of the global import basket, they generate a
disproportionately large share of India’s export earnings. Notably, in 2024, exports 11Trade Watch January - March (Q4) FY25
in Category 2 rose to $161.9 billion from $136 billion in 2023, reflecting the upward
movement of products from other categories. However, India’s position remains very
limited in large-demand items such as electronic circuits, petroleum oils, gold, and
medicines, which together represent $15.9 trillion of global demand. Diversifying
into these high-demand sectors is essential to align India’s exports with world trade
patterns and scale them sustainably.
7. Mapping of India’s export demand and identification of potential markets
Mapping India’s exports against global import trends helps identify sectors where
India is underrepresented despite high global demand. This analysis focuses on India’s
top export categories to target potential markets and better align the country’s trade
strategy with evolving global needs. The comparison of India’s export CAGR with the
World’s import CAGR helps identify products where India is competitive and aligned
with global demand, as well as sectors where opportunities need to be capitalised.
For instance, where both India’s exports and global imports are rising strongly (e.g.,
electrical machinery, mineral fuels), it signals that India has the capacity to capture a
larger share of expanding markets. Conversely, where world demand is growing but
India’s exports are stagnant or declining (e.g., iron and steel), it highlights structural
bottlenecks, competitiveness gaps, or trade barriers that require corrective policy
action. (Figure 14)
Table 2: India’s Top Export Sectors (accounting for 72% of India’s total exports)
Top Export Sectors
World’s
imports ($
bn)
India’s exports to
the world ($ bn)
India’s
Contribution to
Global Demand
Mineral fuels3080.775.32.4%
Electrical machinery and equipment 3795.1 40.21.1%
Nuclear reactors & machinery 2880.332.51.1%
Pearls, stones, precious metals 958.829.93.1%
Pharma953.023.32.4%
Vehicles except railway1872.622.11.2%
Organic chemicals519.821.04.0%
Cereals164.412.17.4%
Iron and steel467.810.32.2%
Articles of iron or steel 366.510.12.8%
Articles of apparel (not knitted) 220.98.23.7%
Plastics and articles thereof 738.98.11.1%
Articles of apparel (knitted) 241.67.53.1%
Aircraft, spacecraft, and parts thereof 239.77.43.1%
Aluminium and articles thereof 241.87.43.0%
Source: ITC Trade Map
India’s export performance reveals strong potential across both traditional and
emerging sectors, with its overall exports rising faster at 10% CAGR from 2020 to 2024
compared to the 6% CAGR of the world’s imports. India’s exports CAGR outperforms
the World’s imports across eight of the top fifteen products analysed, depicting 12Trade Watch January - March (Q4) FY25
strong export demand. Mineral fuels remain the largest contributor, with exports
reaching $75.3 billion in 2024, growing at a rate of 22% annually compared to global
import growth of 13%. Electrical machinery ($40.2 billion) and nuclear reactors
and machinery ($32.5 billion) also stand out, with India’s growth rates of 24% and
13% respectively, well above global demand, depicting the rising competitiveness
in engineering and technology-linked sectors. Pharmaceuticals ($23.3 billion) and
vehicles ($22.1 billion) continue to expand steadily, aligning with global demand
trends, while organic chemicals ($21 billion) and cereals ($12.1 billion) reflect stable
niches. Precious metals and apparel exports exhibit slower growth compared to
global markets, indicating the need for diversification and value-added strategies.
Figure 14: India’s Export Potential
Mineral fuels
Electrical machinery and
equipment
Nuclear reactors &
machinery
Pearls, stones, precious
metals
Pharma
Vehicles except railway
Organic chemicals
Cereals
Iron and steel
Articles of iron or steel
Articles of apparel (not
knitted)
Plastics and articles
thereof
Articles of apparel
(knitted)
Aircraft, spacecraft, and
parts thereof
Aluminium and articles
thereof
0%
4%
8%
12%
16%
-10%0%10%20%30%40%50%
World's Imports (CAGR, 2020
-
24)
India's Exports (CAGR, 2020-24)
Note: Size of the circle represents volume of India’s exports to the World
Source: ITC Trade Map
At the same time, emerging segments like aircraft and spacecraft, though smaller
in value at $7.4 billion, are expanding rapidly at 44% CAGR, highlighting new
frontiers for export expansion. Together, these patterns indicate India’s potential to
consolidate its position in energy and machinery, while scaling newer domains such
as aerospace, electronics, and high-value manufacturing.
For market expansion and product diversification, the focus is on those chapters
where India’s export growth has outpaced global import growth, as these signal
areas of relative competitiveness. China, Vietnam, and South Korea are considered as
benchmarks given their expanding presence in global exports. Between 2005 and 2024,
India’s share in world merchandise exports has increased from 1% to 2%, while China’s
has more than doubled from 7% to 15%, Vietnam’s has risen from less than 1% to 2%, and
Korea’s has remained broadly stable at 3%. The analysis compares India’s performance
with that of these competitors in the world’s major importing markets. The objective is
to identify opportunities for product and market expansion and diversification in these
major markets that would allow India to capture a larger share. (Table 3) 13Trade Watch January - March (Q4) FY25
Table 3: Strong Growth Sectors – Market Size and Competitor Presence, 2024
Product
Commodity
share in
India's
exports
World
Import
Demand
($ bn)
Top
Importing
Countries
($ bn)
Top
Importing
Country
Demand
($ bn)
India's
exports to
top
importing
countries
($ bn)
China's
exports to
top
importing
countries
($ bn)
Vietnam's*
exports to
top
importing
countries
($ bn)
S. Korea's
exports to
top
importing
countries ($
bn)
China 503 1.23- 0.23 3.75
US 251 4.4 1.09 0.04 5.46
India 220- 0.38 0 1.23
China 585 0.82- 31.64 63.5
US 486 12.58 126.09 35.96 20.9
Hong Kong 372 0.59 157.08 5.86 25.48
US 531 6.58 92.56 9.65 26.7
China 230 1.14- 6.13 13.27
Germany 174 1.43 20.55 0.62 1.37
US 391 2.66 20.37 0.83 42.97
Germany 147 0.59 6.35 0.15 1.85
Canada 900.13 3.3 0.16 5.52
China 150.06 - 0.53 0
Mexico 80 0 0 0
Egypt 70.08 0.030 0
US 53 2.97 14.04 1.16 3.08
Germany 270.46 2.6 0.18 0.12
France 130.15 1.03 0.02 0.04
US 36 2.59 13.3 6.43 0.05
Germany 20 0.36 2.17 0.50
France 130.36 1.79 0.24 0.01
US 36 0.48 1 0.18 1.01
Ireland 200.14 0.010 0
UK 15 0.15 0.35 0.03 0.22
Mineral fuels 17% 3081
Electrical
machinery and
equipment
9% 3795
Nuclear reactors
& machinery
7% 2880
Vehicles except
railway
5% 1873
Cereals3% 164
Articles of iron
or steel
2% 366
Articles of
apparel (not
knitted)
2% 221
Aircraft,
spacecraft, and
parts thereof
2% 240

Note: i. Green highlights the country with the largest exports to the top importing country among the four listed
economies.

ii.* indicates data for 2023
Source: ITC Trade Map
South Korea emerges as a consistent exporter across mineral fuels, electrical
machinery, and vehicles, securing a notable presence in eight of the top importing
destinations. China dominates electrical machinery exports to the US and Hong
Kong, with a combined share of ~68% in the top markets. The US remains the
largest export destination for nuclear reactors, machinery, and vehicles, accounting
for a significant share of India’s exports. Vietnam leverages its competitiveness in
electrical machinery, apparel, and nuclear machinery, particularly in the US and EU
markets. India, while demonstrating strength in mineral fuels and niche areas such as
cereals and apparel, remains underrepresented in most top importing destinations
compared to its competitors, with export shares often below 2%.
At the product level, in mineral fuels (HS 27), India’s exports have grown at an annual
rate of 22% compared to global demand growth of 13%. The Netherlands, UAE,
and Singapore together account for about 40% of India’s exports in this category,
reflecting a concentrated market structure. While the US has emerged as the
fourth-largest destination, with imports of $0.4 billion, India’s presence in China
remains marginal, at $0.1 billion, despite its position as the world’s largest importer.
Diversifying towards China and other high-demand Asian markets would reduce
concentration risks and enable India to capture a larger share of global trade in this
sector. 14Trade Watch January - March (Q4) FY25
In electrical machinery (HS 85), India has grown at 24% against global demand of 5%,
but its shares in key hubs such as China and Hong Kong are negligible compared to
China’s dominance of over 25%. The supply to US is relatively stronger at 2.6% with
~30% of its exports pertaining to the chapter directed here, pointing to the need for
India to expand its supply chain integration in Asian and European markets.
In nuclear machinery (HS 84), India has expanded at 13% compared to 6% globally, but
its presence in the US, China, and Germany remains under 1.2%, whereas China and
Korea have double-digit shares, suggesting scope to strengthen integration into US
and EU supply chains. Vehicles (HS 87) have grown at 11% compared to 8% globally,
but India’s share in the US, Germany, and Canada remains marginal, far behind Korea
and China; this highlights alternate opportunities in Canada, Latin America, and
emerging markets. Aircraft and parts (HS 88) are different: though smaller in value
at $7.4 billion, India’s growth of 44% compared to 8% globally, coupled with relatively
weak competition, indicates potential for deeper integration into aerospace supply
chains in Ireland and the UK.
8. Services Export Performance
As of 2024, India’s services export profile reveals a strong concentration in digitally
delivered services, particularly in telecommunications, computer and information
services (32.8% of India’s service exports; 9.8% global share) and other business
services (41.4%; 7.3% global share), together accounting for 74.2% of India’s total
services exports. (Figure 15)
In contrast, India’s presence in contact-based services such as travel (2.0%), transport
(2.3%), and financial services (1.0%) remains limited, despite these forming significant
portions of global services trade at 19.7%, 16.8%, and 8.8%, respectively. Additionally,
categories such as construction (4.6% global share) and personal, cultural, and
recreational services (3.7%), which have moderate global shares, contribute
minimally to India’s own export basket (1.5% and 1.2%). This divergence highlights
India’s comparative advantage in knowledge-intensive, remote services, while
also depicting the untapped opportunities in high-growth, contact-based global
segments.
Developing economies that trade intensively in the knowledge-intensive services
markets have been more successful in advancing their services exports.
14
Based on
quarterly estimates released by UNCTAD for 2024, India is among the top ten service
exporters in developing economies, second to China.
15
14
United Nations Conference on Trade and Development. (2024, September). Trade in services: Annual
bulletin 2023
15
United Nations Conference on Trade and Development. (2024, July). Trade in services: Quarterly bulletin Q1
2024 15Trade Watch January - March (Q4) FY25
Figure 15: Export Share of Services, 2024
2.3%
2.0%
4.6%
1.5%
1.0%
7.3%
3.7%
9.8%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Transport
Travel
Construction
Insurance and pension
Financial
Other business
Personal, cultural, and recreational
IT and Telecom
India's share in World Exports Share in India's Exports Share in World Exports
Source: UNCTAD
India’s total commercial services exports grew from approximately USD 155 billion in
2015 to around USD 374 billion in 2024, marking a more than two-fold increase over
eight years. During the same period, global commercial services exports increased
from USD 4.9 trillion to USD 8.8 trillion, reflecting a nearly twofold expansion. India’s
share in meeting global demand has increased steadily, rising from 3.1% to 4.3%.
(Figure 16)
Figure 16: Export of Commercial Services
16
, 2015-2024
105
175
130
240
100
140
180
220
260
2016 2018 2020 2022 2024
World's Growth India's Growth
161 204 202 309 374
3.2%
4.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2016 2018 2020 2022 2024
World demand India's exports India's share in World Exports
Note: Volume in billion dollars
Source: UNCTAD
Amid rising global trade uncertainties, India’s Global Capability Centres (GCCs)
are emerging as resilient engines of services-led growth, anchoring the country’s
ascent as a global hub for enterprise innovation and operations. With over 1,700
GCCs employing 1.9 million professionals and generating $64.6 billion in revenue as
of 2024
17
, India leverages its unmatched edge in talent, technology adoption, and
cost efficiency to attract multinational firms across sectors. Key hubs like Bengaluru,
Hyderabad, Pune, Chennai, Mumbai, and NCR serve as nerve centres for high-
value services in AI, cybersecurity, analytics, and digital transformation. GCCs now
16
Commercial services refer to all services except government services, comprising transport, travel, and
other commercial services such as financial, insurance, telecom, construction, licensing, and business
services.
17
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2106222 16Trade Watch January - March (Q4) FY25
contribute 23% of India’s IT exports
18
underscoring their strategic role in delivering
high-value services. By 2030, the sector is projected to grow to $105 billion, with 2,400
GCCs and 2.8 million employees
19
, aligning with India’s $1 trillion digital economy goal.
India’s surplus in services trade underscores the strategic importance of GCC-led
exports in bolstering the balance of payments and creating high-quality domestic
employment. To fully realize this potential, it is essential to expand the geographic
footprint of GCCs beyond their current concentration in a few metropolitan hubs. As
these cities approach saturation, Tier 2 and 3 cities present promising alternatives
provided they are equipped with robust digital infrastructure, streamlined business
regulations, and a skilled workforce.
18
EY- Global Capability Center (GCC) Pulse Survey 2024
19
EY- Global Capability Center (GCC) Pulse Survey 2024 17Trade Watch January - March (Q4) FY25
B.
THEMATIC ANALYSIS:
LEATHER AND
FOOTWEAR EXPORTS 18Trade Watch January - March (Q4) FY25
B. Thematic Analysis: Leather and Footwear Industry
1. Overview of India’s Footwear and Leather Exports
Amid evolving global trade dynamics, this quarter’s thematic focus turns to India’s
leather and footwear industry, a sector that sits at the intersection of tradition,
livelihoods, and global opportunity. This duality, of being both a key pillar of social
and economic inclusion at home and a sector under pressure abroad, makes it a
particularly compelling case for deeper exploration in this edition.
The Indian leather industry is one of the most significant contributors to employment,
export earnings, and inclusive growth in the country. It supports approximately 4.4
million workers, mostly from the weaker sections of society, and 40% are women,
highlighting its critical socio-economic role
20
. With leading export positions, India
ranks second globally in leather garments, third in saddlery & harness, and fourth in
leather goods, demonstrating strong global competitiveness in design- and labour-
intensive leather sectors.
21
Tamil Nadu is a leader in the traditional leather sector and is now championing the
growth of non-leather footwear. The state accounts for 38% of India’s footwear and
leather products output and nearly 47% of the country’s total leather exports.
22

From 2004 to 2024, India’s share in global leather and footwear exports has stayed
modest at about 1.8%, showing a brief rise in 2014. During this period, India’s export
growth (CAGR 4.2%) trailed the global average of 4.7%. At the same time, the export
basket has undergone a significant shift, with the country transitioning from raw
leather to higher-value-added products, such as footwear and leather articles.
Global footwear demand between 2020 and 2024 has been driven by non-leather
products, which now account for 61% of exports, while leather footwear is losing
ground worldwide. In contrast, India’s export growth has been stronger in leather
footwear (~8%) than in non-leather (~5%), leaving its global share largely stagnant.
India’s footwear exports both leather and non-leather is estimated at $2.5 billion,
against the world market size of $180 billion, in 2024
23
. MSMEs make up over 95%
of production units, contributing significantly to employment. With a workforce of
approximately 1.10 million people in the footwear manufacturing industry, India is
well-positioned as a global leader.
24

Overall, the leather and footwear products market is valued at $296.5 billion as of
2024, and India has captured $5.5 billion of this, which represents roughly 1.8% of the
market share. India’s leather and footwear exports across the top ten HS-4 products
by value amount to USD 5.43 billion, accounting for 1.9% of global demand worth
USD 281.76 billion. The largest segments by world demand are trunks and suitcases
and footwear with leather uppers. High revealed comparative advantage is seen in
leather apparel (HS 4203; RCA 5.35), saddlery (HS 4201; RCA 4.18), and certain prepared
leather products (HS 4112, HS 4113; RCAs 7.57 and 6.02, respectively). However, these
advantages have not translated into higher export shares for the respective products,
20
https://leatherindia.org/wp-content/uploads/2024/08/overview-Indian-leather-industry-2024.pdf
21
https://leatherindia.org/wp-content/uploads/2024/08/overview-Indian-leather-industry-2024.pdf
22
https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf
23
ITC Trade Map
24
https://www.maximizemarketresearch.com/market-report/india-footwear-market/20980/ 19Trade Watch January - March (Q4) FY25
as India’s RCA remains much lower than that of its competitors, such as Vietnam,
China, and Italy, which consistently register much stronger comparative advantages
across major product categories. (Table 4)
Three major global players dominate most segments, with Vietnam and China
leading in footwear and Italy in leather products. Overall, India’s competitive
strengths lie in niche, high-RCA leather goods, while market share remains low in
large-demand footwear categories.
Table 4: India’s Presence in Global Demand, 2024
HS 4 Product
World
demand
(USD bn)
Product
Share in
World
Demand
India’s
exports to
the world
(USD bn)
India’s
export
share in
World
demand
India’s
RCA
25
Major Global
Player
6403
Footwear with
outer soles of
rubber, plastics,
leather or
composition
leather and
uppers of leather
64.57 21.8% 1.80 2.8% 1.51
Vietnam
(Share - 19%,
RCA - 12.7)
4202
Trunks, suitcases,
vanity cases,
executive-cases,
briefcases, school
satchels, spectacle
cases, etc
89.33 30.1% 1.58 1.8% 0.96
China (Share
- 39%, RCA -
2.6)
4203
Articles of apparel
and clothing
accessories,
of leather or
composition
leather
7.42 2.5% 0.73 9.9% 5.35
Italy (Share
- 17%, RCA -
6.14)
4107
Leather further
prepared after
tanning or
crusting of bovine
or equine animals
7.32 2.5% 0.29 4.0% 2.15
Italy (Share
- 31%, RCA -
10.8)
6406
Parts of footwear,
incl. uppers
whether or not
attached to soles
other than outer
soles
9.64 3.2% 0.26 2.7% 1.48
China (Share
- 43%, RCA -
2.85)
6402
Footwear with
outer soles and
uppers of rubber
or plastics
49.62 16.7% 0.22 0.4% 0.24
China (Share
- 50%, RCA -
3.3)
4201
Saddlery and
harness for any
animal
2.58 0.9% 0.20 7.7% 4.18
China (Share
- 43%, RCA -
2.9)
25
A country is said to have a revealed comparative advantage (RCA) in a given product i when its ratio of ex-
ports of product i to its total exports of all products exceeds the same ratio for the world as a whole. If RCA
takes a value greater than unity, the country has a revealed comparative advantage in that product. 20Trade Watch January - March (Q4) FY25
6404
Footwear with
outer soles of
rubber, plastics,
leather or
composition
leather and
uppers of textile
materials
50.13 16.9% 0.19 0.4% 0.21
Vietnam
(Share - 29%,
RCA - 19.4)
4113
Leather further
prepared after
tanning or
crusting “incl.
parchment-
dressed leather”
0.69 0.2% 0.08 11.1% 6.02
Italy (Share -
21%, RCA - 7.6)
4112
Leather further
prepared after
tanning or
crusting of sheep
or lambs
0.46 0.2% 0.06 14.0% 7.57
Italy (Share -
22%, RCA - 7.6)
 
Total281.76   5.43 1.9%    
Source: ITC Trade Map
2. Analyzing Peer Presence in Exports of Leather and Footwear
India’s specialisation is relatively stronger in processed leathers (HS 4112, 4113), where
it supplies over 10% of global demand, reflecting capabilities in semi-finished and
treated leather. It also holds a modest but notable share in leather goods such
as apparel (9.9%) and saddlery (7.7%), suggesting some presence in value-added
downstream products. However, its role in footwear and components remains
negligible, with under 3% share in most categories. (Figure 17)
In leather goods and accessories (HS 4201, 4202, 4203), sourcing reflects a more
mixed structure with China as the leading competitor. China dominates in saddlery
(43.3%) and travel goods like trunks and suitcases (38.7%), while also maintaining
a comparatively lower share in leather apparel (12.1%) to Italy. Italy and France
supply mid- to high-value segments, particularly in leather apparel (17.3% and 11%
respectively) and travel goods (11.6% and 14.8%). India’s role is relatively stronger here
compared to footwear, although it is still far behind the selected competitors. 21Trade Watch January - March (Q4) FY25
Figure 17: India’s Share vs. Peers in Global Export Demand, 2024 (%)
0% 20% 40% 60% 80% 100%
6402:Footwear with outer soles and uppers of rubber
or plastics
6403:Footwear with outer soles of rubber, plastics,
leather or composition leather and uppers of leather
6404:Footwear with outer soles of rubber, plastics,
leather or composition leather and uppers of textile
materials
6406:Parts of footwear, incl. uppers whether or not
attached to soles other than outer soles
4107:Leather further prepared after tanning or crusting
of bovine animals
4112:Leather further prepared after tanning or crusting
of sheeps and lambs
4113:Leather further prepared after tanning or crusting
of goats, reptiles etc.
4201:Saddlery and harness for any animal
4202:Trunks, suitcases, vanity cases, executive-cases,
briefcases, school satchels, spectacle cases, etc
4203:Articles of apparel and clothing accessories, of
leather or composition leather
IndiaVietnam ChinaItalyFrance Others
77..44
8899..33
22..66
00..77
00..55
77..33
99..66
5500..11
6644..66
4499..66
Values mentioned refer to world exports in billion dollars of the respective product
Source: ITC Trade Map
In the case of leather and semi-processed inputs (HS 4107, 4112, 4113), the sourcing
pattern is more diversified across different countries, indicating a wider supplier
base; however, Italy is the leading competitor. Italy’s strong position in high-value
processed leathers, supplying over 21–30% of imports, particularly in crust and
parchment-dressed leather. India also has a mid-tier presence, contributing 14% in
HS 4112 and 11.1% in HS 4113, though its share in finished leather (HS 4107) is smaller at
4%. Vietnam and China remain minor players in this segment.
Finally, in footwear and parts (HS 6402, 6403, 6404, 6406), China emerges as the
dominant supplier, particularly in mass footwear and components. It accounts for
nearly half of the world’s imports of footwear made from rubber or plastics (49.8%)
and footwear parts (42.7%). Vietnam has gained a strong position in textile-based
footwear, supplying 28.7% of the world’s imports, while also maintaining a sizeable
share in leather-upper footwear (18.9%). Italy and France remain niche suppliers,
contributing more significantly in premium segments. In contrast, India’s presence
is limited, with only a modest role in leather-upper footwear (2.8%) and negligible
shares in other categories. 22Trade Watch January - March (Q4) FY25
Overall, the structure suggests a clear segmentation in global value chains: China
leads in mass footwear, parts, and leather and travel goods.
26
Vietnam is an emerging
competitor in textile and leather footwear; Italy retains dominance in premium
processed leather and apparel; France plays a secondary but important role in
leather goods; and India’s share in processed leather remains a small to mid-level
supplier. Vietnam paired deep FTAs with domestic reforms to boost export-oriented
manufacturing and global value chain integration.
27
India’s FTAs have delivered
limited gains due to cautious liberalisation, weaker logistics and compliance reforms,
and low utilisation of preferential tariffs amid complex rules of origin.
28
The Emergence of Vietnam’s Footwear Industry
Vietnam has emerged as the world’s third-largest footwear producer and the second-
largest exporter, trailing behind China. The industry exported about US$23.2 billion worth
of footwear in 2024, a 13% increase from the previous year. The footwear market is projected
to hit US$2.92 billion by 2028, reflecting a CAGR of 5.58% from 2024 to 2028.
• Dominated by textile and other footwear segments valued at US$0.76 billion, the
market also sees strong contributions from leather footwear and sneakers.
• A key driver of this expansion is Vietnam’s pivot towards non-leather segments,
particularly textile and synthetic footwear, which dominate export structures and
reflect shifting global demand for sustainable and affordable fashion.
• Textile footwear alone contributed about US$12.4 billion of exports in 2023, underscoring
its growing weight in the sector.
• On the policy front, Vietnam is leveraging trade agreements such as the EVFTA and
CPTPP to reduce tariffs and expand its reach in the EU and trans-Pacific markets.
The government and industry associations are also prioritizing the development
of supporting industries, including soles, fabrics, and accessories to reduce import
dependence and enhance supply chain resilience.
• The industry is also shaped by its integration into global value chains. Vietnam hosts
major manufacturing operations for global giants such as Nike, which operates 96
factories in the country, and Adidas, which sources around 40% of its global footwear
from Vietnam.
• The industry is steering production towards eco-friendly lines, reflecting a shift in
consumer trends. The local consumer base is expanding too, with Vietnam’s middle
class expected to grow by 23 million by 2030, creating rising demand for athletic,
fashion, and sustainable footwear.
Reference: https://wtocenter.vn/chuyen-de/27919-vietnam-ranks-third-in-global-footwear-production-second-in-
exports#:~:text=News-, News,which%20primarily%20serve%20domestic%20markets, https://asemconnectvietnam.
gov.vn/default.aspx?ID1=2&ID8=140810&ZID1=8, https://vietnam.incorp.asia/footwear-market-vietnam/, https://
oec.world/en/profile/bilateral-product/textile-footwear/reporter/vnm, https://vietnamnews.vn/economy/1690146/
leather-footwear-industry-aims-to-gain-export-growth-of-10-in-2025.html?utm_
26
China’s leather goods market stood at USD 27.9 billion in 2023 and is projected to reach USD 47.8 billion
by 2030 (8% CAGR), with synthetic and vegan segments emerging as key growth drivers. Its export
dominance stems from FIE tax and land incentives, WTO tariff cuts, robust infrastructure, cluster-based
manufacturing and support through the “Genuine Leather Mark” and SME programs - China Leather
Goods Market Size & Outlook, 2030, https://www.dsir.gov.in/sites/default/files/2019-11/3_6.pdf
27
https://www.worldbank.org/en/news/press-release/2018/03/09/cptpp-brings-vietnam-direct-econom-
ic-benefits-and-stimulate-domestic-reforms-wb-report-says
28
Free Trade Agreements (FTAs) by India: Review and Implications for Future. Misra Centre for Financial
Markets & Economy, IIM Ahmedabad 23Trade Watch January - March (Q4) FY25
3. Mapping of India’s Leather and Footwear Exports with Global Demand and Supply
This section analyses India’s leather and footwear exports across key product categories
and compares their positioning with global market leaders. While India maintains a
foothold in traditional leather segments, it faces rising competition from Vietnam,
China, and Italy, which benefit from scale, brand strength, and preferential market
access. (Table 5)
The USA, Germany, and the UK remain India’s leading destinations, yet increasing India’s
presence in Southeast Asia, Africa, and Eastern Europe can help diversify demand.
Advancing FTAs and market-access negotiations can deliver the most significant
long-term impact by reducing tariff and non-tariff barriers. Simultaneously, efforts to
strengthen MSME participation, through capacity building, design improvements, and
digital traceability, are showing early gains in product quality and buyer confidence.
The transition towards sustainable leather processing and alignment with EU green
norms is another high-impact area, as it directly influences India’s ability to retain and
grow in premium European markets.
Table 5: Mapping of India’s leather and footwear Supply with Leading Exports and their Prime
Destinations (2024)
USA 20.9Vietnam (18.9) USA (40.1), China (9.7), Belgium (6.3)
UK13.8Italy (12.8) Netherlands (14.4), Germany (9.6), France (9.3)
Germany11.5China (12.1)USA (28.1), Russia (10.6), UK (4)
USA 29.5China (38.7)USA (16.8), Japan (6.1), Malaysia (4.6)
UK9.7France (14.8)China (17.5), USA (13.3), Japan (11.5)
Germany9.6Italy (11.6)China (17.5), France (13.3), Spain (11.5)
USA 29.8Italy (17.3)France (16.5), USA (15.1), Germany (9.2)
Germany11.1China (12.1)Italy (60.9), France (10.3), Spain (7.4)
Spain9.5France (11)USA (16.2), China (13.8), Itlay (9.3)
China14.3Italy (30.6)France (9.8), Spain (6.7), USA (6.5)
Vietnam13.5China (10) Vietnam (50.9), Indonesia (11.6), Hong Kong (11.2)
Italy11.9Brazil (7.7)USA (27.4), China (16.7), Italy (10.3)
Germany27.5China (42.7)Vietnam (31.6), Russia (5.6), Bangladesh (5.2)
Russia11.5Vietnam (8.5) Cambodia (15.3), Indonesia (14.8), China (11.7)
Portugal10.2Italy (6.2)USA (29.2), UK (12.4), Germany (7.5)
6403- Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather
4202- Trunks, suitcases, vanity cases, executive-cases, briefcases, school satchels, spectacle cases
4203- Articles of apparel and clothing accessories, of leather or composition leather
4107- Leather further prepared after tanning or crusting
6406 - Parts of footwear
Supply SideDemand Side
India's Top Export
Destinations
Share of Each Destination in
India’s Exports of the Product
(%)
Leading Global Exporter in the
Product Category (Share in
World Exports %)
Top Export Destinations of the Leading Global
Exporter (% share in its exports)
Source: ITC Trade Map
Footwear with Outer Soles of Rubber, Plastics, Leather or Composition Leather (HS
Code 6403): Vietnam, Italy, and China dominate the market. Key destinations for these
leading exporters include the USA, China, and European markets. India’s exports remain
price-sensitive and focused on mid-range products. To move up the value chain, India must
invest in design and branding, while also tapping into emerging markets like Russia, Eastern
Europe, and Africa. FTA-led preferential access to EU markets can enhance competitiveness.
Trunks, Suitcases, Vanity Cases, Briefcases, School Satchels, and Spectacle Cases (HS
Code 4202): The USA, UK, and Germany account for nearly half of India’s exports in this
segment. With leading exporters such as China and France targeting the USA, Japan, 24Trade Watch January - March (Q4) FY25
and the EU, India should also improve quality standards, design appeal, and packaging to
enhance product visibility in these markets. Participation in global exhibitions and linking
with premium brands will aid market expansion.
Articles of Apparel and Clothing Accessories of Leather (HS Code 4203): India’s leather
apparel exports rely on the USA, Germany, and Spain, but competitors like Italy and China
are gaining ground. While India offers competitive pricing, global buyers seek design,
craftsmanship, and sustainability. Strengthening artisan clusters, promoting eco-leather,
and leveraging Geographical Indication (GI) tags can differentiate Indian products. Also,
enhancing trade facilitation with the EU and Latin American countries will diversify demand.
Leather Further Prepared After Tanning or Crusting (HS Code 4107): India faces
competition from Italy (30.6%) and China (10%), as they focus on high-value segments for
developed markets such as the USA, France, and Spain. India must shift from raw leather
exports to processed, finished leather products, supported by environmentally compliant
tanneries. Collaboration with global leather designers and buyers can support the transition
to finished exports.
Parts of Footwear (HS Code 6406): India exports primarily to Germany (27.5%), Russia (11.5%),
and Portugal (10.2%). However, global exports are dominated by China (42.7%), Vietnam (8.5%),
and Italy (6.2%), with Vietnam, Russia, and the USA emerging as the top export markets. This
segment offers potential for MSME-led growth, especially in modular production, contract
manufacturing, and aftermarket components. Building capacity in design prototyping, and
integrating with global value chains (GVCs) will allow India to scale. Access to newer markets
like Cambodia, Indonesia, and Africa can reduce dependence on traditional buyers.
Italy’s Luxury Leather & Footwear Market: Global Prestige Built on Craft & Strategy
Italy’s luxury leather goods market is a cornerstone of global fashion, with a projected
revenue of US$1.47 billion in 2025 and an expected annual growth rate of 1.20% (CAGR
2025–2030). Italy is the leading footwear producer in the EU, accounting for nearly 30% of
total output, and ranks third globally in export value, particularly for leather-upper shoes.
While the United States leads in overall revenue, Italy holds a unique position as the global
benchmark for quality, craftsmanship, and heritage. Its reputation is built on centuries of
artisanal tradition, particularly in regions like Florence and Tuscany, which are home to
iconic brands such as Gucci, Prada, Fendi, and Bottega Veneta. The following initiatives
showcase Italy’s strategy to strengthen its global standing in luxury leather and footwear:
• Collaborative Industrial Clusters: The country has strategically developed industrial
clusters where tanneries, designers, and suppliers collaborate closely, enhancing
efficiency and innovation.
• Authenticity & Branding: Italy enforces strict “Made in Italy” labelling standards,
ensuring authenticity and reinforcing consumer trust. Trade fairs like MICAM and Pitti
Uomo further amplify Italy’s brand presence.
• Skill Preservation & Innovation: Vocational training and apprenticeship programs
sustain artisanal skills across generations.
• Sustainability & Tech Integration: Italy continues to elevate its standing through
sustainable practices and technological advancement
Reference: https://www.statista.com/outlook/cmo/luxury-goods/luxury-leather-goods/italy, https://www.
bonafideresearch.com/product/6304189612/italy-leather-goods-market, The Italian footwear sector -
Assocalzaturifici 25Trade Watch January - March (Q4) FY25
4. Evolving Trends in India’s Leather and Footwear Exports
This section examines the trends in leather and footwear exports at both the
aggregate level (HS-2) and the disaggregate level (HS-4). Between 2004 and 2024,
raw leather exports have steadily declined, whereas footwear has emerged as the
dominant segment and articles of leather have gained importance. However, India’s
ability to expand its global market share has remained limited across categories.
At the aggregate level, between 2004 and 2024, India’s share in global leather and
footwear exports remained modest, at around 2%, with a notable increase in 2014.
India’s compound annual growth rate (CAGR) of 4.2% has been slightly below the
world average of 4.7%. Between 2004 and 2024, exports of raw hides, skins, and
leather (HS 41) declined both in India and globally, reflecting a contraction in the raw
leather trade
29
. The share of this category in India’s total leather and footwear exports
fell sharply from 25% in 2004 to just 8% in 2024, while the global share also dropped
from 22% to 5%. India’s CAGR of -1.5% is weaker than the global average of -2.5%,
indicating that world exports in this category are phasing out faster than those in
India. (Table 5)
Table 6: Leather and Footwear Exports: Trend Comparison (India vs World, 2004–2024)
Share in
India’s
total
leather
and
footwear
exports
Share in
World's
total
leather
and
footwear
exports
World
Demand
Catered
by India
Share in
India’s
total
leather
and
footwear
exports
Share in
World's
total
leather
and
footwear
exports
World
Demand
Catered
by India
Share in
India’s
total
leather
and
footwear
exports
Share in
World's
total
leather
and
footwear
exports
World
Demand
Catered
by India
CAGR
(India)
CAGR
(World)
Total $2.4 $118.8 2% $6.9 $253.8 3% $5.5 $297.7 2% 4.2% 4.7%
4411:: RRaaww hhiiddeess aanndd
sskkiinnss ((ootthheerr tthhaann
ffuurrsskkiinnss)) aanndd lleeaatthheerr
25%
($0.60)
22%
($26.6)
2.3%
20%
($1.36)
14%
($36.43)
3.7%
8%
($0.44)
5%
($15.93)
2.8% -1.5 -2.5%
4422:: AArrttiicclleess ooff lleeaatthheerr
42%
($1.0)
27%
($32.05)
3.4%
37%
($2.55)
30%
($76.04)
3.4%
46%
($2.55)
34%
($102.01)
2.5% 4.8% 6%
6644:: FFoooottwweeaarr,, ggaaiitteerrss
aanndd tthhee lliikkee;; ppaarrttss ooff
ssuucchh aarrttiicclleess
33%
($0.84)
51%
($60.12)
1.4%
43%
($2.99)
56%
($141.39)
2.1%
45%
($2.50)
60%
($179.78)
1.4% 5.6% 5.6%
HS Chapter
201420242004-242004
Note: Volume of exports is mentioned in brackets and is denoted in $ billion
Source: Authors Calculations & ITC Trade Map

In contrast, articles of leather (HS 42) have gained prominence. In India’s total leather
and footwear exports the share of HS 42 rose from 42% in 2004 to 46 % in 2024, in
line with the global increase from 27% to 34%. Although this reflects a shift toward
higher-value products, India’s growth rate of 4.8% fell short of the global CAGR of 6%,
reducing its share of global demand to 2.5%.
29
This decline can be attributed to the rising concerns over declining prices particularly since the pandemic,
unsustainable practices of leather extraction in the supply chain particularly due to issues such as animal
cruelty and standards pertaining to extraction and disposal. Additionally, since small manufacturers dom-
inate, compliance has always been a challenge. (https://www.mckinsey.com/~/media/mckinsey/industries/
retail/our%20insights/state%20of%20fashion/2023/the-state-of-fashion-2023-holding-onto-growth-as-glob-
al-clouds-gathers-vf.pdf) 26Trade Watch January - March (Q4) FY25
Footwear (HS 64) has become the dominant category, rising from 33% of India’s
total leather and footwear exports in 2004 to 45% in 2024. Globally, too, footwear
strengthened its share from 51% to 60%. India’s CAGR of 5.6% matched the global
pace, but its share in world demand remained stagnant at 1.4%.
While global demand for raw leather skins has weakened, India is phasing it out at
a slower pace than the global levels. In the leather industry, India’s slower growth
relative to the global average has further eroded its market share. While India has
matched the global growth pace in footwear, its stagnant share in world demand
signals limited competitiveness. (Table 6)
At the aggregate level, India’s position has weakened, with its share in global leather
and footwear exports declining from USD 6.2 billion in 2015 to USD 5.5 billion in 2024.
During the same period, India’s share in world exports fell from 3% to 2%, even as
global exports expanded from USD 213 billion to USD 282 billion.
A similar pattern is seen at the disaggregate level, where India’s leather and footwear
exports are concentrated in HS 4202 and HS 6403. Together, these two categories
account for more than half of global import demand in the sector. India’s exports are
led by HS 6403, whose share rose to 33.2%, followed by HS 4202 at 29.1%, indicating
a shift toward value-added leather goods. Globally, however, HS 6403 lost ground,
dropping to 22.9% (–8.1%), while HS 4202 gained to 31.7% (+11.7%), pointing to a
reorientation in world demand. (Figure 18)
Figure 18: Change in India’s share in the World trade (2015-2024)
-15%
-10%
-5%
0%
5%
10%
15%
20%
0%
5%
10%
15%
20%
25%
30%
35%
4202: Trunks, suitcases, vanity cases, executive-cases,
briefcases, school satchels, spectacle cases, etc
6403: Footwear with outer soles of rubber, plastics,
leather or composition leather and uppers of leather
4201:Saddlery and harness for any animal
6404: Footwear with outer soles of rubber, plastics,
leather or composition leather and uppers of textile
materials
6406:Parts of footwear, incl. uppers whether or not
attached to soles other than outer soles
4112: Leather further prepared after tanning or crusting
6402: Footwear with outer soles and uppers of rubber
or plastics
4203: Articles of apparel and clothing accessories, of
leather or composition leather
4113:Leather further prepared after tanning or crusting
of goats, reptiles etc.
4107:Leather further prepared after tanning or crusting
of bovine animals
Product share in India's leather and footwear exports '15Product share in India's leather and footwear exports '24
Change in product share in India's leather and footwear exports (2015-2024) (RHS)Change in product share in World's leather and footwear exports (2015-2024) (RHS)
Source: ITC Trade Map
Notable divergences appear in other segments, as HS 6404 (footwear with textile
uppers) and HS 6402 (rubber/plastic footwear) expanded strongly in world trade. Still,
India’s shares in these segments remained stagnant or declined, indicating weaker
competitiveness in non-leather footwear. Similarly, HS 4203 (leather apparel) and
raw/prepared leather categories (HS 4107, HS 4112, HS 4113) lost weight in both India 27Trade Watch January - March (Q4) FY25
and world baskets, but the contraction was sharper for India, with HS 4107 falling
from 11% to 5.4% and HS 4113 from 5% to 1.4%. (Figure 18)
India has shifted toward value-added leather products and footwear in line with
global trends; however, its share of the world market remains stagnant. Growth
has matched, not exceeded, global expansion, highlighting the need for improved
competitiveness. Tamil Nadu, with hubs like Chennai, Ambur, Ranipet, and Vellore,
has become India’s leading exporter of footwear and leather products by leveraging
clustering strategies and supportive policies. Replicating such targeted approaches
in other key centres, such as Uttar Pradesh, Maharashtra, and Haryana could diversify
India’s export base. Strengthening these clusters with integrated infrastructure, skill
development, and policy incentives would not only boost competitiveness but also
accelerate India’s global market share in the sector.
Tamil Nadu’s Policy on the Leather and Footwear Industry
Traditionally, the state has been a frontrunner in the leather industry. In recent years, its
share in India’s leather and leather products exports has steadily increased, now accounting
for about 40%. It is the first state to have a separate policy for this sector, which was rolled
out in 2022 and is operational until 2026. The ecosystem that has helped the state become
the top exporter in India primarily follows the clustering approach.
The policy broadly covers three segments, namely footwear, leather products and footwear
and leather design studios. It sets only two targets: attracting investments of ₹20,000
crore and creating 2,00,000 jobs in the footwear sector. Some major initiatives undertaken
by the state are as follows:
• Development of greenfield and brownfield clusters: For non-leather footwear, the
policy prioritises new clusters with plug-and-play facilities, supported by incentives for
designing, stitching, warehousing, and related units. In contrast, for leather, the focus is
on upgrading, consolidating, and scaling existing hubs like Chennai and Trichy.
• Attracting private investments through anchor investors: Tamil Nadu’s investment
promotion agency, guidance, engages with multiple agencies to strengthen ties with
potential investors in the footwear sector. Each investor is supported by a dedicated
facilitator who oversees clearances and operational issues post-production, enhancing
the state’s business-friendly image. Its External Engagement Cell also develops publicity
material in foreign languages, including Mandarin, Japanese, Korean, German, and
French, to ensure smooth communication with global investors.
• Skilling and Workforce Ecosystem: The state hosts several testing centres with
international collaborations, including FDDI, CLRI, and Intertek, which offer training
programs to build a skilled workforce. In addition, Industrial Training Institutes (ITIs)
provide training at shop-floor, managerial, and supervisory levels, ensuring a steady
talent pipeline for the sector.
Other incentives, such as capital subsidies, payroll subsidies, and land cost subsidies based
on predefined criteria, also helped in the creation of a comprehensive ecosystem.
5. Footwear Trade: India’s Performance and Tariff Disadvantage, 2024
The footwear market can be classified into two categories: leather and non-leather.
Demand is rising for non-leather footwear, particularly due to its flexibility, warmth,
support, waterproofing, and recyclability. Global demand for footwear has expanded
steadily between 2020 and 2024, dominated by non-leather footwear, with 61% the
world’s footwear export market, i.e. USD 110 bn of USD 179 bn, constituting non-leather
exports in 2024. Leather markets are being replaced by non-leather or synthetic 28Trade Watch January - March (Q4) FY25
footwear, with some estimates suggesting the demand in terms of volume to be
as high as 86%.
30
In 2024, the United States, Germany, France, and Italy collectively
accounted for approximately 30% of global footwear import demand.
Table 7: Leather vs non-leather Footwear Performance
Segment
India
Exports
CAGR
(2020-24)
World
Exports
CAGR
(2020-24)
India’s
Export
Share in
Global
Exports
2024
China’s
Export
Share in
Global
Exports
(2024)
Vietnam’s
Export
Share in
Global
Exports
(2024)
India
Imports
CAGR
(2020–24)
World
Imports
CAGR
(2020-24)
India’s
Import
Share in
Global
Imports
(2024)
China’s
Import
Share in
Global
Imports
(2024)
Vietnam’s
Import
Share in
Global
Imports
(2024)
Leather 7.8% 8.5%2.6% 14% 18%8.9% 6.2% 0.1% 4.7% 0.3%
Non-leather 4.6% 9.1%0.6% 38% 20%8.5% 7.3% 0.6% 3.3% 2.5%
Total
Footwear
6.9% 8.9%1.4% 29% 19%8.6% 6.9% 0.4% 3.8% 1.6%
Source: ITC Trade Map
In India, the exports of leather footwear have grown stronger at ~8% between 2020
and 2024, reaching USD 1.82 billion, whereas non-leather footwear exports have
grown at ~5%, reaching USD 0.68 billion. This is in contrast to the global market,
where non-leather footwear has experienced stronger growth and constitutes a
larger export market of USD 102 billion, as depicted in the table. Shares in the export
market have remained stagnant across the years, with non-leather at 1% in world
export demand and 3% in the leather market. (Table 7)
India has been unable to ramp up its exports in non-leather footwear due to its import
dependence on Vietnam and China for uppers, EVA/PU soles, moulds, speciality
fabrics, and chemicals. This can be seen through India’s strong import growth over
the past 4 years at ~8.5% for non-leather footwear, almost twice of the export growth.
Multiple industry tallies show China as the dominant source of India’s footwear and
component imports.
31
When we compare the shares in the global export market for
2024 across India, China, and Vietnam, Vietnam dominates in leather, whereas China
dominates in non-leather footwear with a share of ~40%. Despite strong import
growth in footwear compared to the world import growth, India’s participation
remains limited in terms of its share in imports.
The local industry faces the challenge of limited capacity utilisation, a lack of
modernised training, leading to weak design-making capabilities, which is key for
non-leather footwear.
32
While countries like Vietnam has leveraged its collaboration
with Italy through initiatives such as the Italy–Vietnam Footwear Technology Centre
in Binh Duong
33
that provides access to advanced European machinery and product
development support, India has also taken steps to strengthen its position. Vietnam’s
integration of technology with a large, cost-competitive workforce has enabled it to
become a major production hub for sports, canvas, and leather shoes across markets
in the United States, Latin America, and Asia. In a similar direction, India’s recent
signing of the FTA with the United Kingdom offers new opportunities to expand its
footwear exports, particularly by addressing tariff disadvantages that had previously
constrained its competitiveness in key markets.
30
https://www.dcmsme.gov.in/white_paper/11.%20Advance%20Technologies%20in%20non-leather%20foot -
wear-Year%202.pdf
31
https://www.dcmsme.gov.in/white_paper/3.%20Whitepaper-Footwear%20Sector-Year%201.pdf
32
https://www.dcmsme.gov.in/tcsp/Program%20Overview/Agra_V2.pdf
33
https://www.worldfootwear.com/news/new-italy-vietnam-footwear-technology-centre/2588.html 29Trade Watch January - March (Q4) FY25
Impact of Input Tariffs on Footwear Competitiveness
India applies relatively higher tariffs on some of the key raw materials used in
footwear production, which increases the cost of inputs for domestic manufacturers.
For example, plastics (HS 3926) and vulcanised rubber sheets and plates (HS 4008)
are among the most critical inputs in footwear production, attract Indian tariffs of
around 10–10.2%, while Vietnam’s average tariffs on the same products are much
lower, ranging between 0–3%. In contrast, Italy also applies duties close to zero on
these materials. This makes the cost structure for Indian footwear producers less
favourable compared to competitors who benefit from cheaper access to imported
inputs.
Table 8: Cross-Country Comparison of Raw Material Tariffs for Footwear Production
Product
Top country
from which
India Imports
Share of
country in India
Import of the
Product (%)
Average tariff
applied by
India (%)
Share of country
in Vietnam’s
Import of the
Product (%)
Average tariff
applied by
Vietnam (%)
Share of
country in
Italy’s Import
of the Product
(%)
Average tariff
applied by
Italy (%)
3926 - Other articles of
plastics and articles of
other materials of
headings 39.01 to
39.14.
4008 - Plates, sheets,
strip, rods and profile
shapes, of vulcanised
rubber other than hard
rubber.
Source: ITC Trade Map
Both India and Vietnam rely significantly on China for sourcing raw materials. In the
case of vulcanised rubber sheets (HS 4008), about 34% of India’s imports come from
China, while Vietnam’s dependence is higher, at 56.7%. Similarly, for plastic articles
(HS 3926), 40.4% of India’s imports are from China, compared to 59% for Vietnam.
Despite this reliance on a common supplier, Vietnam applies near-zero tariffs on
these imports, ensuring that its manufacturers have access to inputs at competitive
prices. India’s higher tariffs, on the other hand, add to input costs even though the
sourcing pattern is broadly similar. (Table 8)
This difference in tariff treatment has implications for participation in global value
chains (GVCs). Vietnam’s relatively open import regime has enabled its footwear
sector to integrate more smoothly into international production networks, attract
investment, and expand its export base. India’s higher input costs, by contrast, limit
its ability to compete on both price and scale in the same international markets.
Reducing tariffs on critical raw materials could help Indian producers align more
closely with global competitors, while also encouraging greater integration into
international supply chains. By easing the cost burden on inputs, India would be
better placed to improve the competitiveness of its footwear exports and strengthen
its role in global trade. 30Trade Watch January - March (Q4) FY25
5. Industry Insights
34
on Strengthening India’s Leather and Footwear Sector
India’s leather and footwear industry has strong potential but is constrained by
challenges in raw materials, technology, skills, competitiveness, and market access.
The following section summarizes the recommendations and key inputs provided
by industry experts:
i. Bridging the Credit Gap in India’s Leather and Footwear MSMEs: India’s
leather and footwear industry, largely MSME-driven, faces a significant credit
gap, with formal bank lending to the sector at only ₹1.3 lakh crore (≈USD 15.6
billion) as of March 2025.
35
This overall estimated gap for MSME stands at ₹30
lakh crore
36
, leaving micro and small enterprises especially under-financed.
37

The challenge has intensified in 2025 with decelerating bank lending growth,
expiry of the Interest Equalisation Scheme (which had lowered export
borrowing costs), and policy programs like the Indian Footwear & Leather
Development Programme
38
(IFLDP) with a ₹1700 crore outlay, focusing on
infrastructure, skilling, and technology but not addressing working-capital
needs. Bridging the credit gap requires reinstating interest subvention,
expanding guarantee-backed credit lines, integrating digital supply-chain
finance into schemes, and introducing MSME-focused credit guarantee cards
for collateral-free working capital.
ii. Addressing Skill, Machinery, and Material Gaps: Despite expanded initiatives
by the Leather Sector Skill Council and CSIR-CLRI (through RPL certifications
and short-term courses), much of the workforce remains under-trained or
informal, with only ~15% of manufacturing units organized and likely semi-
or fully mechanized; the rest about 85% operate as informal or cottage-level
setups, limiting consistency and quality
39
. High capital outlay and dependence
on imported specialised machinery further constrain broader technology
adoption. Global examples such as China’s Shiling cluster illustrate how
vocational training, automation, and proximity to raw material suppliers boost
efficiency and trade linkages, while Italy’s Santa Croce sull’Arno
40
and Marche
regions showcase how skilled labour, sustainable manufacturing, and dense
supplier networks foster high-quality production and globally competitive,
innovation-driven clusters. Addressing these gaps requires scaling
apprenticeship-linked skilling, channelling blended finance into machinery
upgrades and domestic equipment manufacturing, and enhancing raw-
material production and processing to align export growth with reliable local
supply.
34
A stakeholder knowledge-sharing session was held to gather industry insights on challenges and strate-
gies for boosting India’s global competitiveness in leather and footwear.
35
https://www.ceicdata.com/en/india/scheduled-commercial-banks-credit-outstanding-by-sector/scb-cred-
it-outstanding-non-food-industry-leather-and-leather-products#:~:text=Home%20%3E%20Countries/
Regions%20%3E%20India,:%20Gross%20Outstanding:%20by%20Sector.
36
https://www.sidbi.in/uploads/Understanding_Indian_MSME_sector_Progress_and_Challenges_13_05_25_
Final.pdf
37
Small footwear units in clusters like Agra, Kanpur, and Vellore remain reliant on informal credit due to
collateral constraints, weak guarantee mechanisms, and limited recognition under the Insolvency and
Bankruptcy Code which restrict access to formal finance.
38
https://www.pib.gov.in/PressReleaseIframePage.aspx
39
https://www.pib.gov.in/PressReleasePage.aspx
40
https://www.unido.org/sites/default/files/2013-11/Cluster_Twinning_Final_0.pdf 31Trade Watch January - March (Q4) FY25
iii. Adopt Vertical (Multi-Storey) Industrial Complexes to Address Fragmentation
and Infrastructure Gaps: India’s leather and footwear sector is dominated by
MSMEs that face constraints of scale, finance, and regulatory burdens, with
only a few firms like Hidesign successfully overcoming them. In clusters such
as Agra, fragmented raw material sourcing can raise costs by up to 40% and
delay production, underscoring the need for integrated infrastructure. Scaling
also remains risky as crossing regulatory thresholds adds high fixed costs
that many firms cannot bear. Developing multi-storey industrial complexes
and cluster-based models with shared facilities can reduce costs, improve
efficiency, and ease compliance pressures. Global examples from Hong
Kong and China show the benefits of vertically integrated ecosystems, while
initiatives like Uttar Pradesh’s flatted factory complexes point to a pathway for
modernising Indian clusters and boosting global competitiveness.
iv. Development of Plug-and-Play Parks: MSMEs in leather and footwear face
high entry barriers from capital-intensive infrastructure, regulatory delays,
and limited compliance facilities, hampering scale and exports. Plug-and-
play parks address these challenges by offering ready-built factory shells with
utilities, testing labs, and design support, reducing costs and setup time.
Under the IFLDP, initiatives like the Mega Leather Footwear and Accessories
Cluster Development (MLFACD) promote such models. Kanpur’s upcoming
UPSIDA-led Footwear Park exemplifies this approach by adopting a plug-and-
play model with ready infrastructure, including electricity, water, sewerage,
and factory sheds.
v. Balancing Quality Control Order (QCO) Implementation with Fair Import
Controls: The implementation of QCO requires manufacturers to obtain a BIS
hallmark and license for input items. While this strengthens product quality
standards, it risks disproportionately impacting smaller units, which may be
unable to source components only from approved suppliers. To avoid closures
and support industry continuity, the QCO should be implemented in phases
with simpler compliance requirements and wider acceptance of accredited
testing reports. Exemptions should particularly apply to inputs used in mass-
market footwear, such as canvas shoes and rubber slippers. At the same time,
stricter checks are needed on imports rerouted through FTAs such as the
ASEAN and SAFTA partners to ensure adherence to rules of origin norms, as
these trade routes are often used to channel Chinese imports.
41
vi. Strengthening R&D and Market Alignment in Footwear: Footwear
manufacturers have limited exposure to international market fairs and
often end up replicating existing trends rather than innovating. To boost
competitiveness, dedicated R&D units in the footwear sector should be
established to drive industry–academia collaboration and strengthen market
research, enabling innovation, alignment with global trends, and deeper
integration into international markets.
41
https://gtri.co.in/DisplayFlagshipReports.aspx?ID=28 32Trade Watch January - March (Q4) FY25
6. Way Forward
The analysis highlights a steady but under-leveraged trajectory for India’s leather
and footwear exports. Despite having competitive advantages in select leather
goods and processed leathers, India has not leveraged these strengths to achieve
higher global market shares. The industry continues to trail global leaders due to
structural gaps in productivity, technology adoption, integration into global value
chains, and limited success in scaling non-leather footwear, which now dominates
global demand. While clusters like Tamil Nadu illustrate how targeted industrial
support can drive sectoral growth, the overall export basket remains mismatched
with evolving global trends. Moving forward, aligning the sector with sustainability,
product innovation, and cost competitiveness will be critical for India to regain
momentum and strengthen its position in the global value chain. The following
priority actions are recommended:
a. Boost Non-Leather Footwear Exports: Target capacity expansion in the USD
110 billion global non-leather market, where India holds only a 1% share, by
incentivising domestic input production and reducing reliance on imports.
b. R&D, Design, and Branding Push: Establish cluster-based R&D hubs with
industry–academia tie-ups to innovate beyond mid-range segments and
increase global share in footwear (currently just 1.4% of world demand).
c. Cluster and Infrastructure Modernisation: Scale the model of Tamil Nadu,
which contributes 47% of India’s leather exports, by replicating plug-and-play
parks and vertical complexes in hubs like Agra and Kanpur to cut raw material
sourcing costs (currently up to 40% higher for fragmented MSMEs).
d. Maximise Market Access via FTAs: Leverage the recently signed UK FTA
and negotiate EU access to overcome tariff disadvantages of 10%+ on inputs
compared to near-zero tariffs for Vietnam and Italy, enabling deeper integration
into global value chains.
e. Adopt Sustainable Manufacturing and Compliance Leadership: Position eco-
leather and compliant tanning as growth levers aligned to EU norms, where
premium markets demand traceability. This is essential to transform India’s
RCA strengths into higher export shares. 33Trade Watch January - March (Q4) FY25
C.
POLICY
HIGHLIGHTS 34Trade Watch January - March (Q4) FY25
C. Policy Highlights
1. Global Trade–Related Policy Updates
a. Adjusted Reciprocal Tariffs announced by the US: A new Executive Order,
effective August 7th, 2025, modifying tariff measures first imposed through
Executive Order 14257 on April 2, 2025, was passed. Citing large and persistent
U.S. trade deficits as a national emergency, the order modifies reciprocal ad
valorem duties on goods from a wide range of trading partners. The order
also sets penalties for transhipped goods to evade tariffs and directs U.S.
agencies to monitor compliance, publish circumvention lists, and recommend
further action if partners retaliate or fail to align with U.S. trade and security
commitments on July 31, 2025.
An additional ad valorem duty of 25%, a penal charge for India’s import of
Russian crude oil or petroleum products came into effect on August 27, 2025. It
would apply in addition to the duty imposed on April 2nd 2025. India now faces
a tariff of 50% on all goods except those exempted in annexure II to Executive
Order 14257 of April 2, 2025.
2. India’s Trade Policy Developments
a. India hosts the 10th review meeting with ASEAN on merchandise trade:
Held between 10–14 August 2025, focused on the ongoing review to enhance
trade facilitation, market access, and effectiveness of the pact. Seven sub-
committees discussed issues ranging from customs procedures and rules of
origin to SPS and trade remedies. With ASEAN accounting for 11% of India’s
global trade and bilateral trade at USD 123 billion in 2024–25, the review aims
to strengthen economic ties further. The next meeting is scheduled between
6–7 October 2025 in Jakarta.
b. India and Eurasian Economic Union launch FTA negotiations: India and the
Eurasian Economic Union (EAEU), comprising Armenia, Belarus, Kazakhstan,
Kyrgyz Republic, and Russia, have signed the Terms of Reference (ToR) in
Moscow to launch negotiations for a Free Trade Agreement (FTA). With
bilateral trade reaching USD 69 billion in 2024, the proposed pact aims to
boost Indian exports, diversify market access, support MSMEs, and enhance
competitiveness. The ToR provides the framework for negotiations, with both
sides committed to an early conclusion and building a long-term economic
partnership.
3. Commodity Price Trends (Jun 2024-25)
The All-Commodity Index showed a mild downward trend from June 2024
(166.79) to a low in May 2025 (160.92), before recovering slightly in June 2025
(165.79). Food prices remained relatively stable but showed a mild declining
trend. From June 2024 (130.26), the index slightly fell to 124.84 by June 2025. The
decline was sharper after February 2025, due to improved global food supply
conditions and a easing of input costs, such as fertilisers and energy. Coal
prices remained elevated in the first half of the period, with a temporary peak
in August 2024 (197.07), followed by a steady decline to March 2025 (142.53).
This trend likely reflects reduced winter demand and substitution effects as 35Trade Watch January - March (Q4) FY25
renewable energy penetration increases. A modest recovery by June 2025
(146.02) may reflect seasonal industrial demand or supply tightening. Similarly,
the crude oil index also depicts a declining trend due to the rapid adoption of
electric vehicles in China, the world’s largest automobile market, where more
than 40% of new cars purchased last year were either battery-powered or
hybrid vehicles.
42
(Figure 19)
Figure 19: Price indices across key commodity indices
100
120
140
160
180
200
220
240
260
280
All commodity index APSP crude oil($/bbl) Food index
Coal indexMetal indexPrecious Metals Index
Source: IMF
Precious metals have also shown consistent and strong appreciation throughout the
year, rising from 181.55 (June 2024) to 257.29 (June 2025) due to increased purchases
of gold. This suggests rising safe-haven demand, due to elevated geopolitical
uncertainty.
42
https://www.worldbank.org/en/news/press-release/2025/04/29/commodity-markets-out -
look-april-2025-press-release 36Trade Watch January - March (Q4) FY25
Contributors
Pravakar SahooProgramme Director, NITI Aayog
Amit VermaDirector, NITI Aayog
Jyotika NagvanshiDeputy Director, NITI Aayog
Mala ParasharConsultant-I, NITI Aayog
Pooja TeotiaConsultant-I, NITI Aayog
Apica SharmaConsultant-I, NITI Aayog
Abhilasha MandaConsultant-I, NITI Aayog
Shreya AnuraktiConsultant-I, NITI Aayog
Salome Sara PhilipsYoung Professional, NITI Aayog
Riya JindalYoung Professional, NITI Aayog
Kavya RaoYoung Professional, NITI Aayog
Nikita GondolayYoung Professional, NITI Aayog
Kruthi RajYoung Professional, NITI Aayog Notes 39Trade Watch January - March (Q4) FY25