Need To Recalibrate India’s Export Strategy

Syllabus: GS3/Economy

Context

• India needs to recalibrate its export strategy including market diversification, diplomatic engagement, and on-ground business development to navigate rising global trade headwinds and maintain competitiveness.

Current Status of India’s Export

• Indian exports registered a positive growth of 4.77% in August 2025 in comparison to August 2024.
• Total exports grew 5.19% to reach USD 346.10 billion during April–August 2025.
• Merchandise export rose by 2.31% and Service Export surged by 8.65% in April-August 2025.
• India’s exports to Hong Kong, China, USA, Germany, Korea, UAE, Nepal, Belgium, Bangladesh, and Brazil have surged in April-August 2025 in comparison to April-August 2024.
• The Union Minister of Commerce and Industry emphasized that India’s export performance reflects the resilience of its economy and the competitiveness of its industries.
  • It reiterated India’s commitment to achieving the ambitious target of USD 2 trillion in exports by 2030.

India’s Export Performance: Sector Wise Trend

• Merchandise Exports: India’s merchandise exports rose to USD 35.2 billion in April 2024, up from USD 34.8 billion in April 2023.
• Non-Petroleum and Non-Gems & Jewellery Exports: These exports grew by 1.32%, reaching USD 26.11 billion, indicating a broad-based recovery across sectors.
• Services Exports: Estimated at USD 29.57 billion in April 2024, services exports also showed a positive trend, contributing to India’s robust trade performance.
• Rise of High-Tech & Value-Added Exports: The PLI scheme has accelerated advanced manufacturing. Electronics exports surged 32.47%, reaching USD 38.58 billion in FY 2024–25, making it the third-largest export category.
• Marine Export: Total marine exports remained positive, despite a 33% year-on-year decline in August and a 27% fall in September due to US tariffs.
  • It is because of quick market diversification to destinations such as China, Vietnam, Thailand, Japan, and Belgium.

Emerging Concerns & Headwinds For Indian Exports

• Slowing Down Export with US: The steep tariff hike by the United States has dented the competitiveness of Indian goods in its largest export market.
  • In October 2025, exports to the US declined by 8.5%.
• Climate Inaction and Regulatory Risks: According to a BCG report, India’s export-driven sectors, especially aluminium, iron, and steel, are increasingly vulnerable to international climate regulations.
  • The EU’s Carbon Border Adjustment Mechanism (CBAM) and similar policies could impose carbon tariffs on Indian exports, affecting profitability and market access.
• Geopolitical Uncertainty and Supply Chain Disruptions: Ongoing global conflicts and trade realignments are disrupting supply chains, increasing freight costs, and creating uncertainty in demand.
  • Exporters are struggling with volatile shipping routes and rising insurance premiums, particularly in the Red Sea and Suez Canal regions.
• Currency Volatility and Financial Strain: Fluctuations in the rupee and tightening global financial conditions are impacting export margins.
  • In response, the Reserve Bank of India has introduced relief measures such as extended credit periods and relaxed debt repayment norms to support exporters.
• Overdependence on Traditional Markets: India’s exports remain heavily reliant on a few key markets like the US and EU.
• High Logistics and Transaction Costs: India’s logistics cost stands at ~7.97% of GDP, higher than the global benchmark of 6–7%. This erodes price competitiveness compared to East Asian exporters.
• Non-Tariff Barriers (NTBs): Exporters face stringent SPS standards, certification requirements, and environmental norms.

Key Government Initiatives to Boost Exports

• Export Promotion Mission (EPM): It was approved by the Union Cabinet in November 2025, with an outlay of ₹25,060 crore for FY 2025–26 to FY 2030–31.
  • It aims to consolidate fragmented export schemes into a single, outcome-based framework.
  • Focuses on MSMEs, first-time exporters, and labor-intensive sectors, offering digital tools, market intelligence, and capacity-building support.
• Credit Guarantee Scheme for Exporters: It is designed to mitigate financial risks for exporters, especially small businesses.
  • It enhances access to affordable credit and strengthens exporters’ ability to fulfill international orders.
• Trade Facilitation and Infrastructure: The government has invested in port modernization, customs digitization, and the National Logistics Policy to reduce turnaround times and logistics costs.
  • Initiatives like ICEGATE and SEZ reforms aim to streamline export processes and improve ease of doing business.
• Other Efforts Fueling Growth:
  • Districts as Export Hubs: Promoting local industries and crafts for global markets.
  • Trade Agreements: Enhanced partnerships with the UAE (CEPA) and Australia (ECTA), and ongoing talks with the EU and UK, are opening new avenues.
  • Ease of Doing Business: Simplified customs procedures, single-window clearances, and paperless trade facilitation.
  • Export Credit Support: Expansion of EXIM Bank financing and risk coverage under ECGC.

Strategic Reorientation: What Needs To Focus?

• Investing in Global Logistics Corridors, including direct shipping routes to Latin America and West Africa for long-term competitiveness.
  • The recent shipbuilding package is a step forward, but enhanced budgetary allocation for the RoDTEP scheme is essential to keep Indian exports price-competitive.
• Enhancing Industrial Competitiveness: Indian exporters need to raise performance benchmarks by focusing on technology adoption and innovation, sustainability compliance, and branding and local market presence.
  • India needs to accelerate reforms to sustain and strengthen its global trade position with nations like Vietnam, Indonesia, Turkey, and Mexico intensifying their globalisation efforts.
• Expanding Beyond Traditional Markets: India needs to expand its trade footprint across West Asia, Africa, Latin America, and Southeast Asia to mitigate dependence on the US and Europe.
  • India’s proactive approach in negotiating new trade deals provides a strong foundation for diversification:
    • Concluded agreements: United Kingdom, EFTA
    • Near-finalisation: Oman, New Zealand
    • Ongoing negotiations: European Union, Chile, Peru, and GCC
  • These modern partnerships are expected to yield comprehensive benefits, including market access, investment flows, supply chain integration, and technology collaborations, unlike older Free Trade Agreements (FTAs).

Source: BL