India should make full use of its recently signed Free Trade Agreement (FTA) with the UK and work on securing better access to the European Union (EU) market to stay competitive in global trade, a new Niti Aayog report said on Monday.
The government’s policy think tank highlighted that India currently faces over 10% tariff disadvantages on key inputs compared to almost zero tariffs for countries like Vietnam and Italy. This gap, the report said, is hurting India’s leather and footwear exports and limiting its deeper participation in global value chains.
“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”
– Niti Aayog, Government of India
The report, part of the policy think tank’s “Trade Watch quarterly”, outlined several recommendations to boost exports.
These include expanding non-leather footwear exports, investing in R&D, design and branding, upgrading and bridging material gaps through domestic production of soles and moulds manufacturing clusters and infrastructure and adopting sustainable manufacturing practices.
The report also highlighted India’s leather and footwear sector, employing 4.4 million people (nearly half women) but accounting for under 2% of the global market. Tamil Nadu leads the sector, contributing 38% of output and 47% of leather exports.
Despite this, India’s global market share remains small at 1.8% of the $296 billion international leather and footwear trade.
“India’s footwear exports remain concentrated in leather products, while non-leather footwear exports are very low, despite strong global demand ($110 billion 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”
– Niti Aayog, Government of India
Meanwhile, India’s total trade in FY25 reached $1.73 trillion, up 6% year-on-year (y-o-y), with exports at $823 billion and imports at $908 billion, resulting in a trade deficit of about $85 billion.
In conclusion, the report emphasized that India must move quickly to modernize its leather and footwear manufacturing ecosystem. By focusing on sustainability, innovation and trade negotiations, India can unlock significant export potential and regain a stronger position in global markets.
