The Indian export sector is set to have maintained growth in the coming years despite uncertainties in global trade and tariff conditions. Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi underlines that the exporters need to adopt a pragmatic and strategic approach towards addressing the evolving nature of trade.
Commenting on the Sourcex India 2025 exhibition by the Federation of Indian Export Organisations (FIEO), Sarangi noted that the current state of international trade is full of enormous potential for India to shape its export business and enhance manufacturing competitiveness. He further said, "Despite uncertainty over trade and tariff, our exports are certain to increase in future years.".
The United States, under President Donald Trump, has applied a 25% tariff to auto imports starting from April 2, 2025. The move aims to encourage the manufacturing of cars in the US and is one of an escalating trade war against America's allies. The tariffs will be levied on finished vehicles as well as auto components, which have the potential to impact the global auto supply chain. citeturn0news58
In response, the Indian government is negotiating with the US to gain a significant trade agreement to avoid reciprocal tariffs of as much as 12% on primary Indian exports. Three rounds of cabinet-level talks have brought the two nations to the brink of an agreement, leaving the sole chief point of disagreement as the terms of agriculture, which is a politically sensitive issue in India. This agreement, which is being called a bilateral trade agreement and not a full Free Trade Agreement (FTA), may also have positive effects on other trade talks, such as Australia's stalled trade agreement with India.
India's Export Performance and Forecasts
In spite of international tariff uncertainties, India's export growth has remained resilient. As per the Export-Import Bank of India (Exim Bank), total merchandise exports from India are estimated to be worth USD 124.8 billion during the fourth quarter of FY2025 and will experience year-on-year growth of 3.64%. Non-oil exports are expected to be valued at USD 109.3 billion, which will register a year-on-year growth of 11.34%. citeturn0search6
However, the government's February economic report indicates that export growth has slowed in the current fiscal year due to uncertainty over global tariffs, trade risks, and impacted investments. India's exports posted zero growth from April to February compared to the corresponding period last year. Despite this, India maintains its growth forecast for the 2024/2025 fiscal year at 6.5%. citeturn0news56
Sectoral Impacts and Mitigation Strategies
The US reciprocal tariffs will be expected to target specific Indian export industries where tariff imbalances are the most significant. Main products and industries likely to face the maximum tariffs are:
- Apparel and Textiles
- Agricultural Products
- Auto Components
Understanding these impacts is critical for exporters to make the right plans.
In a bid to reverse the effect of such tariffs, India is considering reducing the tariffs on $23 billion worth of US imports. This is planning to reduce tariffs on over half of US goods and is counting on receiving relief from the tit-for-tat taxes. India's move comes following trade talks that were conducted in February during which Prime Minister Narendra Modi was in the US.
Apart from that, India is pursuing Free Trade Agreements (FTAs) with the UK, Canada, and the EU in order to spur trade and make the most of digital economy growth, which has the potential to add another $1 trillion to GDP by 2025. With increased export goals in manufacturing and services, India aims to offset the impact of US tariffs.
Economic Outlook and Growth Projections
India's economy is projected to grow at 6.6% in 2025, supported by strong private consumption and investment. Consumer price inflation is forecast to decelerate to 4.3%, staying within the 2-6% medium-term target range set by the Reserve Bank of India (RBI). citeturn0search3
However, the recent GDP growth figures of 5.4% year over year for the second quarter of fiscal year 2024-2025 caught markets off guard, being significantly below the RBI’s projection of 6.8%. Slower growth in the first half of the fiscal (6%) led the RBI to revise its annual projection to 6.6% (down from 7%).
Conclusion
Even with the challenges raised by global trade uncertainties and tariffs, India's export industry can anticipate steady development over the subsequent few years. India is confident to effectively master the changing tide of trade using strategic strategies, conducting proactive negotiating processes, as well as marketing export diversifications.
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