HS Code Guide · EPM Subvention
HS Code 420221 Meaning — Handbags, leather outer surface: Global Trade, India & Factoring Guide
HS 420221 covers handbags, leather outer surface. This guide explains what the code includes, its global trade, India's position, how GIFT City helps factor it, and whether MSME factoring qualifies for the 2.75% interest subvention.
What this HS code covers
HS 420221 sits in 42 — Leather & articles of leather. Official tariff description: “Cases and containers; handbags (whether or not with shoulder strap and including those without handle), with outer surface of leather or of composition leather” In plain terms, it covers handbags, leather outer surface. Classification decides duty and documents; this 6-digit line is in the DGFT positive list (Trade Notice 25/2025-26 Annex V), so MSME factoring under it qualifies for the 2.75% subvention — details below.
What is HS 420221?
HS 420221 covers leather handbags — shoulder, tote or handle-less, outer surface leather/composition leather. Not textile/plastic (420222) or other materials.
Official description: Cases and containers; handbags (whether or not with shoulder strap and including those without handle), with outer surface of leather or of composition leather
What HS 420221 does in trade
- Distinguishes genuine leather handbags from imitation — duty, brand and factoring risk differ.
- Is eligible — leather goods are in the positive list, so MSME handbag factoring qualifies for 2.75%.
- Captures a high-value, brand-driven MSME export where 60–120 day open-account terms are common with EU/US retailers.
Global perspective — where HS 420221 moves
Global leather handbag trade is brand-driven, with Italy and France leading luxury, China/Vietnam leading volume. Compliance (REACH, LWG) matters.
| Top global exporters | Top global importers |
|---|---|
| Italy | United States |
| China | Hong Kong |
| France | Japan |
| Vietnam | Germany |
| India | United Kingdom |
India's stance on HS 420221
India (Kolkata, Kanpur, Chennai) is a top-5 leather goods exporter — CLE registers exporters. US and EU are core buyers; MSMEs often supply private label.
Export docs to watch
Leather needs CLE RCMC, and for EU/US REACH compliance. Grade and leather type must match invoice.
GIFT City — factoring HS 420221 in foreign currency
Handbags are EUR/USD open-account — GIFT City FC factoring retains 2.75% for long-tenor retail terms.
Trad can route eligible invoices via an IFSCA-regulated IBU or Finance Company/Finance Unit undertaking factoring in GIFT City. The 2.75% subvention is identical whether you factor via India (RBI-regulated) or GIFT City (IFSCA-regulated) — the choice is about currency, banking relationship and buyer location, not the benefit rate.
Common financing stack for this HS
Factoring advances 70–90% in 24–48 hours after invoice verification; balance minus discount/fees on buyer payment. Works alongside packing credit — factoring covers the post-shipment open-account gap.
MSME subvention — is HS 420221 eligible for 2.75%?
Yes — HS 420221 is in the positive list (Trade Notice 25/2025-26 Annex V). MSMEs involved in international value chains with a valid active IEC (not in DEL) and valid Udyam can claim 2.75% per annum on the factoring interest cost element when factoring via an RBI/IFSCA-regulated entity.
| Check | For HS 420221 |
|---|---|
| In positive list (HS-6) | Yes — 420221 listed in Annex V |
| Benefit | 2.75% p.a. on interest cost element |
| Annual cap | ₹50 lakh per MSME per FY |
| Valid from | Prospectively from 20 Feb 2026 |
| Need UIN per factor? | Yes — declaration of intent before factoring, valid till FY-end |
| Eligible factors | RBI-regulated (AD bank / factoring NBFC) or IFSCA-regulated (GIFT IBU/FC) |
| Not covered | Deemed exports (FTP Ch.7) & exports to SEZs |
Eight-digit HS? Use first 6 digits
Eligibility is at HS-6. If your 8-digit HS (e.g. 42022110) starts with 420221, it inherits this eligibility. Verify on the HS checker — enter 6 or 8 digits.
Check HS 420221 — free
Verify any 6 or 8-digit HS against the DGFT positive list and see the 2.75% factoring eligibility in seconds.
Open HS checkerFrequently asked questions
What is HS 420221 — Handbags, leather outer surface?
HS 420221 covers leather handbags — shoulder, tote or handle-less, outer surface leather/composition leather. Not textile/plastic (420222) or other materials.
Is HS 420221 eligible for the 2.75% interest subvention?
Yes. HS 420221 is in the DGFT positive list (Trade Notice 25/2025-26 Annex V, 4139 HS-6 lines). MSMEs factoring exports under this line via RBI/IFSCA-regulated factors can claim 2.75% per annum on the interest cost element, capped at ₹50 lakh per MSME per year, prospectively from 20 Feb 2026. Requires valid IEC (not in DEL), valid Udyam, and a UIN per factor obtained before factoring.
Who can claim the 2.75% for HS 420221 and how?
MSMEs (as defined by Ministry of MSME) with active IEC and Udyam, factoring eligible exports of HS 420221 via RBI/IFSCA-regulated entities. File a declaration of intent on the DGFT portal to get a UIN per factor (valid till FY-end), factor the invoice, the factor files monthly IEC-wise claims; subvention is credited to your IEC-linked bank account.
Can HS 420221 be factored via GIFT City?
Yes. IBUs and Finance Companies/Finance Units undertaking factoring in GIFT City (IFSCA-regulated) are eligible financial institutions under IFSCA circular 19 Mar 2026 and must extend the 2.75% benefit. Useful for USD/EUR receivables where you want foreign-currency factoring.
What does factoring for HS 420221 cost after subvention?
Indicatively, factoring discount/interest is priced commercially (often 8–12% p.a. depending on buyer, tenor, currency) plus factoring fee ~0.5–3% ⚠️. The 2.75% offsets only the interest element — e.g. a 9% interest cost becomes ~6.25% effective on that element if eligible. Fees/insurance/FX remain. Compare all-in cost.
Related HS codes
Compare HS 420221 with other MSME-export lines in the same chapter or family.
See all codes on the HS code guides hub, or read the 2.75% subvention deep-dive.