Indian exports under mounting pressure from US, EU trade policies

Indian exports are facing mounting pressure from aggressive trade policies by partners such as the United States and the European Union, a senior trade ministry official said on Tuesday.

Citing the US decision to raise import tariffs and initiatives like the CHIPS Act, Santosh Sarangi, head of the Directorate General of Foreign Trade (DGFT), said it was "high time India also looked at our trade and industrial policies comprehensively".

US President Donald Trump's proposal to impose reciprocal tariffs from early April on trading partners including India is worrying Indian exporters in sectors ranging from autos to agriculture, with Citi Research analysts estimating potential losses at about $7 billion a year.

Indian trade minister Piyush Goyal started on a trip to the United States on Monday to pursue trade talks, ahead of Trump's planned tariff measures.

Limited integration into global value chains, high import tariffs on raw materials, and technological disadvantages in certain manufacturing sectors are hurting India's export ambitions, Sarangi told business leaders in a virtual address.

"India needs an average growth of 14.4 per cent per annum to achieve the target of $2 trillion in overall exports by 2030/31," he said, calling the goal "daunting" given that overall goods and services exports have grown at an average of just 5.2 per cent annually over the past decade.

Total exports rose to $682.59 billion in the first ten months of 2024/25 fiscal year through January, up 7.2 per cent year-on-year, from $636.69 billion a year earlier, while imports hit $770 billion, leaving a trade deficit of $87.47 billion, commerce ministry data showed.

The European Union's carbon tax and growing use of protective non-tariff measures are also hurting Indian exports, Sarangi said.

"While exports are growing, India continues to experience a trade deficit, suggesting a need to boost export competitiveness and diversify export markets," he added.