Rethinking India’s export strategy

The recently imposed US tariffs on India are being viewed by some analysts as an opportunity for India to undertake holistic economic reforms. In this post, Sharmila Kantha contends that such reforms ought to be undertaken for their own sake rather than as a response to external pressures. She further argues that strategic competitiveness and a quantum jump in exports would require a comprehensive, dynamic and progressive strategy.

With the US imposing 25% tariffs on most Indian products and an additional 25% that kicked in from 27 August, India’s export competitiveness, or lack thereof, has come sharply into focus. The US accounts for about 20% of India’s total merchandise exports and some 55% of this could get affected by the new tariffs, mostly labour-intensive products.

While some analysts have stated that this is an opportunity for India to undertake holistic economic reform policies to drive competitiveness, such reform policies are an imperative for the country even without external pressures and must be undertaken for their own sake rather than as a response to unreasonable bully acts.

India’s merchandise export strategy over the years has not delivered the gains that could be expected from its rapidly growing large economy. While uncertainties in the global market discourage Indian manufacturers and exporters from exploring opportunities, the lack of a cohesive, well-considered, progressive set of policies to support them is a key drawback. Different Indian export policies appear from time to time to deal with a particular global challenge, but since they often come with a sunset clause or are frequently changed, their efficacy in adding to exporter confidence stands reduced.

India’s exports over the years

Since the turn of the millennium in 1999-2000 till 2011-12, the average pace of India’s export growth registered just over 19% per year, with double-digit rates for all years except the two crisis years of 2000-01 and 2009-10. Exports doubled in value in just five years to 2004-05 and then doubled again just in the following three years. Much of this derived from global GDP and trade growth in that period.

However, from 2012-13 to 2024-25, the average pace of export growth has fallen to just 3.6% per annum. Six of the 13 years witnessed negative growth rates, with the data for 2024-25 coming in at US$ 437.5 billion, up from US$ 300 billion in 2012-13. India’s share in global exports has also barely inched up in this period: it ranks 18^th in the world in export value, well behind its position as the 4^th largest global economy.

Figure 1. India’s good exports, 2012-13 to 2024-25, US$ million

Source: Statistical Appendix, Economic Survey of India, 2024-25, Table 6.1B.

Table 1. India’s share of world goods exports, 1990-2022, %

Year	Share
1990	0.5
2000	0.7
2005	1.0
2010	1.5
2015	1.6
2020	1.6
2022	1.8

Source: Statistical Appendix, Economic Survey of India, 2024-25, Table 6.5.

Export promotion policies

Export promotion has been a key focus in India’s economic strategy. According to the Ministry of Commerce and Industry, export promotion policies in place include the Foreign Trade Policy 2023, Interest Equalisation Scheme, Remission of Duties and Taxes on Exported Products (RoDTEP) and Rebate of State and Central Levies and Taxes (RoSCTL) schemes, District as Export Hubs, Trade Infrastructure for Exports Scheme (TIES), and Market Access Initiative (MAI).

Other policies mentioned include the National Logistics Policy and PM Gati Shakti, Production Linked Incentive (PLI) scheme, and policies for ease of doing business at the borders, e-commerce, and agricultural exports. Several other policies are also underway for export promotion such as Export Credit Guarantee, Special Economic Zones, Export Promotion Capital Goods (EPCG), Duty Drawback, Advance Authorisation, and others.

The Foreign Trade Policy 2023 focuses on four pillars, namely, incentive to remission, strengthening collaborations between exporters, states, districts, and Indian missions overseas, ease of doing business and digital trade facilitation, and emerging areas such as e-commerce and developing districts as export hubs. It also aims to make India into a merchanting hub, where goods can be transported from one country to another without touching the host country.

RoDTEP and introduced to make subsidies to exporters compliant with WTO (World Trade Organization) regulations, were allocated about Rs. 26,000 crores in the Union Budget for 2024-25. However, the schemes are temporary and are extended for a few months at a time. Refunds for Special Economic Zones, Export Oriented Units and Advance Authorisation holders were applicable till end of 2024 and then reinstated from 1 June 2025. Such temporary measures detract from policy stability and erode confidence. Further, the rebates are given in the form of scrips for paying customs duty, which in turn encourages imports rather than domestic procurement of inputs. Exporters have also expressed unhappiness about the rates offered. The scheme has disbursed about Rs. 58,000 crore since inception with a proposed outlay of about Rs. 18,000 crore for this year.

Similarly, the Interest Equalisation Scheme for credit to exporters of specified goods and for MSME (micro, small and medium enterprises) exporters is extended for three months at a time, often on the very day that it expires, and is currently valid till 30 September 2025. The amount, which was capped at Rs. 10 crore per year for each registered exporter, was also reduced suddenly to Rs. 50 lakh in September 2025. A budget of about Rs. 13,000 crores was allocated for the concessional interest rates for 2024-25, but there is no allocation for the current year.

The concessions, which are meant to compensate for added logistics and other costs that Indian exporters have to bear, involve procedures that are often complex to undertake. Other schemes such as EPCG are likewise complicated and time-consuming.

Special Economic Zones, which have been successful in other export-oriented economies, continue to face challenges with the policy framework as yet not clear. They have suffered from inadequate infrastructure and changing regulations. An SEZ amendment bill is believed to be under process.

On the trade facilitation side, the Indian Customs Electronic Gateway (ICEGATE) has greatly improved processes by modernising filing, tracking, and documentation through a digital portal. However, much more needs to be done for smoother, faster and cheaper processes.

The Ministry of Commerce and Industry is to be credited for a continuous engagement with exporters, export promotion organisations, and industry associations over the years. Such a dialogue is valuable in obtaining feedback, but in general, detailed procedural and operational issues are brought out by the stakeholders rather than larger strategies to address markets and support exporters.

In its 2025-26 Budget, the government had announced an Export Promotion Mission, which is to be brought out shortly. However, budget allocations were reduced and no allocations were made for Interest Equalisation Scheme or export marketing under the Market Access Initiative. While the proposed contours of the mission laudably identify the areas where support is required, the outlay of Rs. 2,250 crore for this year is minimal.

A by Exim Bank of India highlights that only 1% of MSME registered on the Udyam portal are engaged in exports, and identifies various challenges faced by MSME exporters. Key among these are the absence of information on export opportunities, lack of relationship with foreign buyers, difficulties in marketing, and credit gaps.

Way forward

The national export endeavour must be greatly intensified at the current juncture with actions both domestically and externally. On the domestic side, apart from credit availability and cost of credit, a range of areas such as ease of doing business, reducing cost of doing business and creating export-specific infrastructure facilities need to be addressed. Building exporter capacity and common facilities at key industrial clusters along with information centres can be quickly undertaken to apprise manufacturers about overseas opportunities.

A key gap is the inability of exporters to align with global standards, certifications and delivery norms for which quality testing and certification centres that are easily accessible should be put in place. Multiple products such as electronics, automotives, agricultural goods, consumer durables, chemicals, garments, etc. face different kinds of norms and quality certifications in different markets. A standards portal has been established with the help of an industry organisation to provide information. Capacity-building, credit access, and more testing laboratories that are globally recognised would help exporters acquire required certifications, some of which can be quite expensive. The overall quality of export goods must be enhanced as well to build consumer confidence.

Marketing support emerges as an absolute imperative for exporters, and this needs a ‘boots-on-the-ground’ approach at major markets through dedicated marketing professionals. Most export-oriented countries have trade organisations that undertake intensive promotional efforts in other countries, reaching out to prospective buyers and supporting domestic players, particularly smaller enterprises. Indian industry should be encouraged to participate actively in high-profile global exhibitions and industry fairs for establishing the India brand and enhancing the country’s overall presence. Indian missions must be one-stop points of contact for bilateral trade issues with dedicated promotion as an integral part of their activities.

A future-looking export endeavour would need scenario analysis of emerging sectors, fast-growing markets, shifting supply chains, and new technologies and consumer habits. Dedicated export strategy groups can be established along with industry associations and think tanks for research, planning and monitoring of policy implementation and course correction, if required.

For too long, India has tinkered at the edges of export policies and strategic competitiveness issues have lost focus. The aim of quantum jump in exports needs attention across multiple dimensions through a coordinated governmental approach supported by industry. No economy in recent times has scaled the income ladder without a strong emphasis on exports and India is no exception, even during a time of global trade turmoil.

The views expressed in this post are solely those of the author and do not necessarily reflect those of the I4I Editorial Board.