Sharp U.S. Tariff Escalation on Indian Goods
In a move that could severely shake India’s export sectors, including leather, the U.S. has raised tariffs to 50%. This encompasses an initial 25% “reciprocal tariff” followed by an additional 25% penalty tied to India’s continued crude oil imports from Russia, which took effect on August 27, 2025.
India’s Leather Exports: A Key Casualty
India’s leather industry, valued at approximately $4.1 billion in exports, is a labor-intensive and globally significant sector. Kolkata, in particular—home to hubs like Topsia and Bantala—employs hundreds of thousands and depends heavily on leather exports to sustain livelihoods.
Growing Competitive Pressures from Regional Rivals
Exporters warn that U.S. buyers may pivot to countries like Bangladesh, Vietnam, or Pakistan due to rising costs. Industry bodies like the Federation of Indian Export Organisations (FIEO) underscore the increased disadvantage for labor-intensive sectors like leather.
Strategic Shift: The ‘Made in Europe’ Option
To retain market access and sidestep prohibitive tariffs, Kolkata exporters are reportedly exploring the controversial option of labeling their products as “Made in Europe”.
Advocating Market Diversification
Experts advise exporters to expand into other regions—like Europe, Canada, Latin America, and ASEAN—to reduce reliance on the U.S. and foster resilience.
Government Response & Sectoral Support Measures
India’s trade leadership, led by Commerce Minister Piyush Goyal, is exploring sector-specific relief measures—such as tailored credit lines and relaxed lending norms—to support exporters severely impacted by tariff escalation.
Contextual Highlights
| Topic | Details |
|---|
| Tariff Background | U.S. imposed a 25% reciprocal tariff on August 1, followed by an additional 25% from August 27 due to India’s Russian oil imports. |
| Broader Export Challenge | Other affected sectors include textiles, gems & jewellery, chemicals, and footwear, with potential export declines estimated between 40–50%. |
| India’s Diversification Strategy | Expanding export targets beyond the U.S., hedging logistic risks, and pushing for favorable trade deals are key to navigating this crisis. |
In summary: The 50% U.S. tariff on Indian goods marks a pivotal threat to Kolkata’s leather exporters, prompting them to consider dramatic strategies like rebranding products as “Made in Europe.” While the government explores support mechanisms and trade diversification continues, the leather sector stands at a critical junction.