Uzbekistan's leather industry is undergoing a structural transformation. A recent presidential decree targets leather and footwear exports to reach $150 million by 2027, up from $110 million in 2026. This represents a 36% increase, driven by a comprehensive policy package designed to shift the industry from raw material exports to finished product manufacturing.
Industry Bottlenecks and Policy Targets
Uzbekistan possesses abundant livestock resources, producing significant quantities of cattle and sheep hides and wool. However, the industry has long suffered from insufficient deep-processing capacity, resulting in low value-added products and substantial raw material exports. The new policy aims to extend the value chain—from selling hides to selling shoes.
Specific quantitative targets have been set: by 2027, finished leather output should reach 8 million square meters, and footwear production should exceed 115 million pairs. Achieving $150 million in exports from a base of $110 million in 2026 requires an additional $40 million in overseas revenue within two years—a challenging but achievable goal given the policy support.
Tax Breaks and Subsidies: Reducing Operating Costs
The new policy addresses costs directly. Tax exemptions on the purchase of leather and wool raw materials will remain in effect until July 2029. This three-year tax holiday reduces raw material costs for local tanneries, encouraging them to process hides domestically rather than exporting them raw.
Import subsidies for shoemaking molds and lasts are also included. For small and medium-sized shoe factories, upgrading equipment is critical for improving product quality, and the cost of imported components has often been a barrier. Additionally, retail rent compensation helps manufacturers establish market presence.
Industrial Parks and Infrastructure: Building Long-Term Competitiveness
Beyond short-term relief, the policy focuses on long-term industrial development. A dedicated management body for the leather and footwear industrial zone will be established, with a capital injection of $23 million to fund operations, investment attraction, and enterprise services, creating a cluster effect.
Environmental upgrades and talent development are also prioritized. Starting October 2026, government funds will be allocated for wastewater treatment facility upgrades, industrial park infrastructure improvements, and technical training programs. Upgraded wastewater treatment helps meet international environmental standards, a prerequisite for accessing markets like the EU and Japan. Training programs address the chronic shortage of skilled workers.
Implications for Global Supply Chains
Uzbekistan's leather policy is reshaping Central Asia's supply chain. For traditional processing countries like China, Turkey, and Italy, this signals a potential new competitor with raw material advantages and policy-driven price competitiveness.
However, it also presents opportunities for cross-border investors and traders. Uzbekistan's stable raw material supply, increasing policy support, and improving infrastructure make it one of Central Asia's most attractive destinations for leather and footwear investment. For tanneries needing stable hide supplies, setting up local processing facilities offers raw material tax exemptions and shields against global price volatility.