By Dhurjati Mukherjee
India’s trade outlook is a subject of much discussion due to the changing and uncertain geopolitical condition. The government is quite worried about the matter and has rightly decided to clear the Rs 25,000 crore Export Promotion Mission as well as the Rs 20,000 additional free collateral credit to support exporters grappling with global trade uncertainty.
Priority support has been identified to sectors such as textiles, leather, gems and jewellery, engineering goods and marine products hit by the US tariffs. The mission will be implemented through two sub-schemes – the Niryat Protsahan (Rs 10,400 crore) and Niryat Disha (Rs 14,659 crore). These measures are expected to help exporters get better access to credit and innovation finance tools while aiming to address the logistics cost disadvantage. Additionally, the support may help exporters tap new markets and deal with branding and warehousing issues overseas.
Experts believe that the country should not depend on any single country but need to cultivate diverse interests with various nations. Even in areas of energy, no single supplier, even Russia, should provide more than a quarter of crude imports. Also, no single foreign source, whether Moscow or Paris, should supply more than 25-30% of defence acquisitions. The same logic follows for electronics and related items with reference to China. Similarly, neither the US nor the EU should account for over a quarter of goods exports.
Meanwhile, the Trade and Economic Partnership (TEPA) with the European Free Trade Association – Switzerland, Norway, Iceland and Liechtenstein – that came into force from October is a new feature in India’s trade strategy. EFTA countries have pledged an investment of $100 billion over 15 years, the first such commitment in any trade pact in the world. The investment pledge is a quantum leap from the mere $11.9 billion FDI from these nations over the past 25 years, according to the Commerce Ministry. With India’s total FDI hitting $81 billion in 2024-25, a 14% surge, the real flow in the coming years would obviously be much higher due to the opportunities created by EFTA.
Union Commerce Minister Piyush Goyal recently pointed out that beyond FDI, labour-intensive exports such as textiles and gems and jewellery are expected to boom, generating waves of employment. It is understood that EFTA’s affluent consumers are greatly interested in our agro-products like tea and coffee as well as biscuits and confectionery, not to speak of quality rice and fruits such as grapes, mango etc. Fishermen may get opportunities of exporting frozen shrimp, prawn and squid though high quality will have to be ensured.
India is quite strong in the sphere of service exports that includes informational technology, digital solutions, consulting and fintech and these now exceed $340 billion and offset much of the country’s oil bill. If both dependence on any country is reduced, no threat could affect its trade. Future risks lie in clean energy, rare earths, critical minerals and semiconductors. China’s restrictions on rare earths are well-known and it is understood that the country is exploring tie-ups with Russia for rare earth processing.
By expanding trade with Europe, Africa, Gulf, Asean and Latin America and strengthening value chains within South Asia not just expands influence but also develops the country’s image. The diversification of trade, both in matters of exports and imports, should be the target and experts believe that it may not be difficult to achieve this within a year or so. It goes without saying that diversification is imperative as it fits India’s national interest.
Another region is the ASEAN circuit and India has the capability to reinforce its Indo-Pacific presence, reinvigorate trade and strategic ties in the region and recalibrate equations with key players in the increasingly multipolar Asia. Meanwhile, there are shared anxieties over China’s assertiveness in the South China Sea and the ASEAN states see value in India’s quiet capacity building support and non-provocative naval presence. India ASEAN trade reached $123 billion in 2024-25 with ASEAN exporting $84.2 billion and India exporting $39 billion with the trade balance remaining tilted. In 2022-23, cumulative foreign direct investment from ASEAN to India was $156 billion and $56 billion from India into it during the same period.
There are indications that India will reiterate the importance of progress on the India-Myanmar-Thailand trilateral highway and the Kaladan transport corridor – infrastructure programmes that have faced delays due to political instability. Digital connectivity and cross-border fintech have seen modest gains and India is expected to benefit from a diplomacy of equilibrium in the region. Thus, India’s role as a steady partner becomes valuable to ASEAN countries and other regional actors such as Japan and Australia.
While efforts must be made to gear up exports to nations, which have henceforth not been the focus of attention in a big way, there are reports of Indian markets also consuming more than in previous years. Mention may be made here of leather and leather goods exports which are bracing for a 5-8% decline in exports in FY26, weighed down by the steep US tariff measures and weak global trade environment.
However, it is understood that Indian products are still preferred over exports from Vietnam. While a buoyant domestic market is expected to soften the impact and keep overall turnover steady, according to members of the Indian Leather Products Association (ILPA), there should be sustained efforts to offset the decline by finding new markets as well as pushing products in traditional markets with new designs.
The recent India and US defence framework agreement aimed at joint design and manufacture state-of-the-art weapons, systems and deepen intelligence is no doubt a positive indicator. As the agreement reflects the long-term commitments of both countries in furthering bilateral relationships, the US should also reciprocate on the tariff issue and reduce it to reasonable levels. There are expectations that there may be 20-25% reduction in tariffs by the US as India has agreed to reduce purchase of Russian oil. If this happens, the prospects of India’s trade brighten, which experts are rather optimistic about. Moreover, all eyes are also focused on the ongoing talks with the European Union as well.
Considering current trends, there is reason to have high hopes about the prospects of India’s trade. However, there is need to put a check on the country’s products and stress on quality upgradation to gain acceptability in overseas markets. But the going seems to be tough as US President Trump seems to favour China for rare earths and has reduced overall tariffs to 47%, which is below that of India’s rate. Exporters are aware of the changing situation and need to stress on quality and innovative product design and manufacturing, which will gain credence over time.—INFA
(Copyright, India News & Feature Alliance)
New Delhi
17 November 2025
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