Overview
- CRISIL projects a 13–14% drop in export volumes this fiscal, with export revenue falling 14–16% to $3.9–4.0 billion as high‑value finished goods to the US lose traction.
- Orders to US buyers have been cancelled or put on hold since late August and several tanneries and small manufacturers with heavy US exposure have shut operations.
- Operating profitability is set to compress, with exporters’ margins down 250–300 basis points and overall industry margins lower by 150–200 basis points, weakening credit metrics.
- The tariff regime rose to 50% with a 25% reciprocal duty in early August and an additional 25% punitive levy on August 27, leaving India at a disadvantage against suppliers facing roughly 15–20% US tariffs.
- Exporters are trying to re-route sales and outsource production while policy offsets such as the GST cut on leather goods and a UK free trade agreement are early-stage and unlikely to neutralize the near-term shock.