India's leather exports have continued their long decline, falling another 3% year-on-year in the five months ending September 2026, as surging shipping costs, domestic infrastructure bottlenecks, and rising artisan wages compound the sector's structural challenges . The data, reported by CNBC TV18 on 8 November 2026, shows exports at $4.75 billion in FY26, down from $5.9 billion a decade earlier, with the current fiscal year tracking toward a further contraction despite government duty reliefs and policy support announced in Budget 2026 .
The freight cost escalation is the most immediate pressure. Syed Hamid of Crest Container Lines told CNBC TV18 that freight from Nhava Sheva to New York has risen from $1,800 to $12,000 per forty-foot equivalent unit, while the Nhava Sheva–Jebel Ali lane has gone from $200 to $4,500 per FEU . These figures are consistent with the broader pattern we have documented across India's export corridors, where the West Asia conflict and the Hormuz disruption have driven rates to multiples of their pre-war levels. For leather exporters, where freight represents a significant share of the landed cost, such increases can render shipments commercially unviable rather than merely less profitable.
Transshipment delays add a second layer of uncertainty. Hamid noted that "there are also transhipment delays because we cannot always predict which vessel the shipment will get on" . This unpredictability is particularly damaging for leather goods, which often have tight delivery windows linked to fashion seasons and retail ordering cycles. When exporters cannot confirm which vessel will carry their cargo or when it will arrive, they cannot make credible delivery commitments to buyers, and repeated failures erode customer relationships.
Domestic infrastructure gaps compound the international logistics problems. Ashish Gupta, CFO of Rahman Industries, pointed to the absence of mother ship calls at Indian ports: "At present, mother ships can't dock in India, so vessels need to use other countries' ports. Our Vizhinjam port has the required depth. We must build infrastructure so that it can be used fully" . The implication is that India's transshipment dependence directly affects the competitiveness of export sectors like leather, because cargo must first move to a foreign hub before beginning its main ocean voyage.
The domestic connectivity dimension is equally relevant. For manufacturing units in Tier-2 and Tier-3 cities, the logistics chain begins well before the container reaches a port, and delays in moving goods from factories to ports, followed by waiting time before a vessel sails, add to both costs and delivery times . Gupta suggested that direct rail connectivity or better movement of goods from industrial areas to ports would reduce both costs and transit times, a recommendation that aligns with the gateway-coordination approach proposed in the FICCI-Kearney analysis.
Labour costs are rising alongside logistics costs. Sachin Shinde of Maruti Leather Crafts in Mumbai's Dharavi said the cost of hiring highly skilled artisans has increased by 30–40% due to dwindling availability, with some cases exceeding 50% depending on the skill required . This is a structural challenge that predates the current shipping crisis but is now compounding it, as the sector's traditional labour pools shrink and wage inflation erodes what remains of its cost competitiveness.
The demand environment offers little relief. Declining demand in Europe and cheaper alternatives like artificial leather have added to pricing pressure, according to the report . An October 2026 Ambit Asset Management report cited by CNBC TV18 noted that "footwear is the clearest case of capability lagging potential, consistent with India's 1.7% share of FTA-partner imports against 28.4% for China" . This suggests that India's leather sector is losing ground not only to freight costs but to competitors with better trade access and more developed supply chains.
For India's export policy, the leather sector illustrates the limits of duty relief and credit support when the underlying logistics and competitiveness problems are not addressed. Budget 2026 provided duty relief, more time to meet export obligations, and special outlays for credit and investment, but exports have continued to decline . The sector's trajectory will depend on whether the government can deliver on the infrastructure and connectivity improvements that exporters have identified as critical, and whether the freight cost environment improves as the Red Sea and Hormuz situations evolve. For the 4.4 million people employed in the industry, two in five of them women, the stakes are direct and material .