Budget's duty reduction on leather imports to boost demand

The cost reduction in leather is likely to be passed on to end-s as footwear companies.

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26 Aug, 2025 12:21

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The government has reduced the customs duty on wet white, crust, and finished leather used in the manufacture of leather/synthetic footwear from 10 percent to zero. Leather is a key raw material for footwear manufacturers such as Bata India and Metro Brands, which have significant leather-based offerings (formal and office wear shoes). Leather as a raw material is mostly imported and the duty reduction is likely to reduce input costs for these companies. We expect about 5 percent reduction in leather footwear prices, considering that raw material forms about half of the overall costs.

The cost reduction is likely to be passed on to end-consumers as footwear companies are facing subdued SSSG (same store sales growth). Bata posted flattish sales in FY24, while Metro Brands sales growth has moderated to 10 percent YoY in the same period. Price reductions will boost demand and would be positive for these companies.