India’s Exports Under Threat from U.S. and EU Trade Policies
Indian exports are facing challenges due to stringent trade policies, particularly from the U.S. and EU. Officials emphasize the need to reassess trade strategies amid rising tariffs and potential losses. Achieving a $2 trillion export target by 2030/31 appears daunting given current growth rates. Overall, despite some growth, India struggles with a trade deficit and must enhance competitiveness and market diversification.
Indian exports are currently under significant pressure due to stringent trade policies imposed by major partners such as the United States and the European Union, according to a senior official from the trade ministry. Santosh Sarangi, head of the Directorate General of Foreign Trade (DGFT), emphasized the necessity for India to reevaluate its trade and industrial regulations comprehensively in light of the U.S. increasing import tariffs and efforts like the CHIPS Act.
The apprehension among Indian exporters is palpable, particularly in industries like automobiles and agriculture, stemming from President Trump’s intention to implement reciprocal tariffs from April. Analysts from Citi Research projected that these changes could result in losses amounting to approximately $7 billion annually for Indian exporters. Trade Minister Piyush Goyal started discussions with U.S. officials aimed at negotiating these challenges before the anticipated tariff measures take effect.
Sarangi pointed out that limited participation in global value chains, elevated import duties on raw materials, and technological lag in specific manufacturing sectors constitute significant barriers to India’s export growth. He noted that achieving a targeted $2 trillion in exports by 2030/31 requires an average annual growth rate of 14.4%, a substantial increase from the mere 5.2% growth experienced over the last decade.
According to commerce ministry data, India’s total exports reached $682.59 billion in the first ten months of the 2024/25 fiscal year, representing a 7.2% increase year-on-year. Meanwhile, imports soared to $770 billion, leading to a trade deficit of $87.47 billion. Furthermore, Sarangi highlighted that the European Union’s carbon tax and the rising prevalence of protective non-tariff measures are also detrimental to Indian export capabilities.
Sarangi concluded by asserting that despite the growth in exports, India continues to grapple with a trade deficit, indicating an urgent need to enhance export competitiveness and diversify into new markets to mitigate these ongoing challenges.
In summary, India’s exports are significantly challenged by the aggressive trade policies of the United States and the European Union. The country’s officials are advocating for a thorough reassessment of trade strategies, particularly in light of looming reciprocal tariffs and competitive disadvantages. To meet ambitious export targets, India must confront its structural trade deficiencies and expand its market reach.
Original Source: www.usnews.com
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