The Indian government’s proposed financial aid is designed to be more comprehensive than a standard Production Linked Incentive (PLI) scheme. While a previous footwear PLI was shelved during a policy revamp, this new “Value Chain Package” targets structural weaknesses that have long kept India behind competitors like Vietnam and China.
Why the Relief Package is Necessary
The footwear sector is currently reeling from a “dual-threat” scenario:
- The Tariff Shock: The 50% U.S. tariff has forced Indian exporters to offer steep discounts (up to 20%) to retain American buyers, crushing the margins of MSME component makers.
- Import Dependency: Despite being the world’s second-largest footwear producer, India relies heavily on China for essential inputs like soles, adhesives, and specialized resins. High duties on these raw materials have historically made domestic production uncompetitive.
Key Pillars of the $1B Package
According to officials from the Department for Promotion of Industry and Internal Trade (DPIIT), the package will focus on three critical areas:
1. Strengthening the Component Ecosystem
The government aims to incentivize the local manufacturing of shoe components. By providing benefits to investors in soles, uppers, and chemical additives, India hopes to reduce its $110 billion “non-leather” market deficit (where India’s current global share is just 0.6%).
2. Infrastructure and Design Studios
Building on the existing Indian Footwear and Leather Development Programme (IFLDP), the new package will fund:
- Plug-and-Play Parks: Reducing sourcing costs for MSMEs by up to 40%.
- Design Transformation: Setting up 10 national design studios to help Indian brands pivot from traditional leather to high-demand sports shoes and athleisure.
3. Export Diversification
With the U.S. market becoming volatile, the package aligns with India’s aggressive Free Trade Agreement (FTA) drive.
- Target Markets: The EU and UK are expected to offer duty concessions soon, helping absorb the additional capacity created by this stimulus.
Footwear Industry: At a Glance (2026)
| Metric | Current Status | 2030 Target |
| Global Production Share | 8–10% (#2 Globally) | 15%+ |
| Annual Domestic Consumption | 2 pairs per person | 3 pairs per person |
| U.S. Tariff Impact | 50% Penal Duty | N/A (Diversifying) |
| Key Clusters | Agra, Kanpur, Ambur, Chennai | Unified “Mega Clusters” |
Conclusion: A Pivot Toward “Atmanirbharta”
The $1 billion package is being viewed as a “make-or-break” intervention for the sector’s 2.2 million workers. By addressing the entire value chain—rather than just the finished product—the government is attempting to replicate the success of the electronics sector.16 For the industry, the goal is clear: transition from being a contract manufacturer to a global design hub that can withstand geopolitical shocks.
