India Announces 7 Billion Yuan Relief Plan to Save Shoe Factories Amid Tariff Impact

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The Indian central government recently announced that it is preparing to launch a $1 billion (approximately 7 billion yuan) bailout package to boost the country's footwear manufacturing industry.

The footwear manufacturing industry is currently impacted by a 50% tariff imposed by the United States on Indian exports.

Previously, the Ministry of Industry and Internal Trade had proposed an industry incentive linked to production, but it could not be implemented due to government policy adjustments.

Subsequently, the department developed a comprehensive scheme aimed at covering the entire value chain, from raw materials to inputs to finished products, offering incentives to investors in labor-intensive industries.

While the plan is not yet finalized, officials say discussions are in the late stages and an announcement will be made soon.

India is one of the world's leading footwear producers. Prior to shifts in the leather footwear market landscape, India was a significant player in the leather footwear industry.

With sneakers and casual athletic footwear dominating the market, China holds the leading position, and Vietnam is joining the competition with its large factories. While some Indian domestic companies have become contract manufacturers for foreign firms (especially those from Taiwan, China), US tariffs have disrupted this plan, as the industry was set to attract more investment.

Industry insiders stated that domestic manufacturers have complained about insufficient raw material capacity, leaving them with no choice but to import from China. Furthermore, the high tariff structure on raw materials for soles and other footwear components has undermined domestic production, leading to an increase in imports.

Regarding electronics, the central government is formulating a comprehensive scheme, which currently also covers components. This move comes as the Indian government seeks to boost domestic consumption and exports of footwear, aiming to integrate Indian businesses into global value chains.

Meanwhile, India is also actively advancing the signing of free trade agreements, with the EU and the UK likely to join soon. These markets are expected to provide tariff concessions for Indian goods, which will help channel the additional capacity likely to come online in the coming months.

The domestic footwear market is also expected to grow from the current average of about two pairs per year to three pairs, while the international standard is six to seven pairs per year.