Troubles ahead?
India is expected to end the current fiscal after setting a new annual record in supplies to the world – combining merchandise and services. This was reiterated by Piyush Goyal, Union minister for commerce, in a recent function. “My estimate is that we will cross $800 billion in exports, another record given the world situation,” he remarked. In the previous fiscal, the total value of exports had stood at $778 billion, which had almost meant a flat growth over the previous year’s level.
Some monthly dip notwithstanding since April this year, the overall trade growth till November (data released last month) shows an overall positive momentum. During the period, India’s exports are estimated at $536 billion, which marks a growth of 7.61 per cent, against $4,498 billion global supplies in the same period last year. And the upswing witnessed in the current season is mainly driven by a modest jump in services exports – about $252 billion, against $220 billion achieved during April-November of the corresponding period last year. “India’s total exports, including merchandise and services, were projected to surpass $814 billion in 2024, a 5.58 per cent increase from 2023,” affirms Ajay Srivastava, founder, Global Trade Research Initiative (GTRI), an international trade think tank. “Services exports will rise by 10.31 per cent to $372.3 billion, while merchandise exports will grow modestly by 2.34 per cent to $441.5 billion. We expect these growth trends to continue in 2025.” Emerging sectors like machinery and electronics are gaining traction. Machinery exports rose from 3.8 per cent in 2014 to 6.9 per cent in 2024, while electronics exports increased from 3.3 per cent to 7.9 per cent. However, traditional sectors like textiles and garments saw their share drop from 21 per cent in 2004 to 8 per cent in 2024, while gems & jewellery exports fell from 16.9 per cent to 7.5 per cent.
The positive trends which India is witnessing is in some way reflection of a modest scale upturn in global trade. The World Trade Organization (WTO) expects global trade to grow by 3.3 per cent in 2025, signalling recovery from previous slowdowns. However, in the near run, there are apprehensions of some serious hurdles that includes an aggressive stance of President Donald Trump via tariff barriers.
India at the receiving end
Of course, the major ire could be against China, against which he had waged a tariff war during his first term (furthered by the outgoing President Biden), there are other countries, including India, which may see being positioned at the receiving end more pointedly than the past. “Challenges in 2025 include slow global recovery, the Russia-Ukraine war, the Israel-Hamas conflict and Red Sea shipping disruptions,” observes Srivastava. “President-elect Trump’s proposed tariffs on Indian goods and EU’s Carbon Border Adjustment Mechanism (CBAM) could raise export costs”.
According to a global trade analysis paper released by UN Trade & Development (UNCTAD) last month, if Trump immediately gets into the action on his tariff plans, the countries which are likely to bear the brunt are those with clear trade surpluses with the US. This includes China (about $280 billion trade surplus), India ($45 billion), the European Union ($205 billion) and Vietnam ($105 billion). “Other nations with trade surpluses, such as Canada ($70 billion), Japan ($70 billion), Mexico ($150 billion) and the Republic of Korea ($50 billion) may also face some risks, despite imposing relatively lower tariffs on US imports or having established trade agreements with the country. The US dollar’s uncertain trajectory and US macro-economic policy changes add to global trade concerns,” the paper underlines.
Like many other pockets in the world, the signals from the US, which will have a global bearing, have also led Indian trade fraternity members to keep their fingers crossed. “The engineering exports have been on the rise but there is a need to stay cautious. The US is one of the most important markets for the Indian engineering industry,” says Pankaj Chadha, chairman, EEPC India.
Trade body FIEO, meanwhile, in its pre-budget paper, has strongly recommended tapping the opportunities in sectors where Indian supplies have a scope to further expand in the US. “The US intending to impose higher tariffs on China can create a significant opportunity for Indian exports, particularly in sectors where China has previously been a dominant supplier. As per our study, we can get an additional export of about $25 billion due to tariff war in sectors such as electronics & electricals, automotive parts & components, organic chemicals, apparel & textiles, footwear, furniture & home decor, toys, etc,” says its wish list, which also have to a host of other items to navigate the possible near-to-medium run hurdles successfully. These include creating a dedicated marketing scheme to focus on the US market, providing R&D support to industry and expediting the process of setting up our own global shipping line. Fraternity members are also asking to set afoot urgent measures to arrest the steep decline in traditional strongholds like textiles and garments, while looking for ways and means to respond to a reversal in gems and jewellery exports, which seems to be an early stage evolving story.