India's required 14.4% annual growth in exports to achieve the $2 trillion target by 2030 looks "daunting", especially with major partners such as the US and EU adopting aggressive trade policies, according to a senior government official.
Addressing a webinar, Santosh Sarangi, head of the Directorate General of Foreign Trade, said the high import tariffs, alongside non-tariff measures such as the US' Inflation Reduction Act and CHIPS Act, the UK's Advanced Manufacturing Plan and the EU's Green Deal, will impact the growth of India's exports. This is because such programs by advanced nations will narrow the export window.
Further, the lack of domestic manufacturing competitiveness, insufficient global value chain integration and technological disadvantages are also emerging as major strategic differentiators in growing exports.
In terms of costs, India's logistics costs stand at about 8.9% of GDP, against 5-6% in developed economies, which are a detriment for industries wanting to set up in India. Insufficient credit coverage for exporters is also an impediment to achieving the $2-trillion target, with export credit as a percentage of total merchandise export only at 28%.
"A total export credit requirement of $650 billion is needed for 2030, when $1 trillion in merchandise exports will have been touched," Sarangi said.
The demand for collateral, high interest rates, lack of an integrated framework for trade finance and no scheme for remission of duties for service exports is also hurting exporters.
US President Donald Trump's proposal to impose reciprocal tariffs from early April on countries, including India, is worrying exporters in sectors ranging from auto to agriculture. India Ratings estimates potential losses at about $2-7 billion in fiscal 2026.
After PM Modi's visit, Union Commerce and Industry Minister Piyush Goyal has headed out to Washington DC — his first such visit— to meet the freshly inducted Trump administration, amid talks for a year-end trade deal and a tariff rollout deadline looming.
During his visit between March 4-6, Goyal is likely to hold talks with US Trade Representative Jamieson Greer and US Commerce Secretary Howard Lutnick.
Goyal and his team of negotiators will likely skip any aggressive stance on retaliatory tariffs during initial talks with the Trump administration, and the discussions are expected to revolve around magnitude of reciprocal tariffs, as well as the proposed Bilateral Trade Agreement.
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