Rising input costs and a sharp escalation in freight and marine insurance premiums triggered by the Iran war are weighing on India’s leather and footwear sectors, squeezing margins and disrupting shipments as firms grapple with longer transit times and volatile logistics chains.

Exporters are affected by month-long disruptions, spiking costs by 20-30 per cent, which the international buyers are reluctant to share.

“Costs have risen across every stage of the production chain, from processing raw hides into finished leather to manufacturing end products. Moreover, the availability of some of the items is now scarce,” Ramesh Juneja, chairman of Council for Leather Exports (CLE), said.

Chemicals that are used in the tanning process have gone up in tandem with the rise in crude oil prices. The cost of items used in leather products — PVC, PU, EVA and TPU — have risen sharply too.

Export of shipments to Europe and the USA — two main export destinations for leather products — have also been hit with longer voyages, avoiding war-hit zones, adding to freight costs. Air freight prices has also gone up by two to three times, exporters claimed.

“We have written to the ministry of commerce seeking assistance in air freight subsidy, import duty relief,” Juneja said.

Mohammed Azhar, president of the Indian Leather Products Association (ILPA), said the industry was hoping that collateral-free loans, as extended during Covid, would be rolled out this time.

“We have booked the orders months back, but costs have gone up with the war. But buyers are unwilling to share,” he said.

The disruption in air travel via West Asia from Europe and the USA has also hit buyer visits, Azhar pointed out.