Exploring Exports Amid Global Uncertainty

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Exploring Exports Amid Global Uncertainty

Exploring Exports Amid Global Uncertainty

Articles
Jun 03,25

Exploring Exports Amid Global Uncertainty

As the global trade landscape reels from one disruption after another—from geopolitical tensions to climate-related crises—India’s manufacturing and export ambitions face a critical test. With the National Manufacturing Mission set to be formally launched in June 2025, India has articulated a bold vision: to scale its manufacturing sector to a $7.5 trillion economy by 2047. The mission rightly focuses on critical enablers such as reducing business costs, skilling the workforce, supporting MSMEs, promoting clean-tech, and addressing regional manufacturing imbalances. But can these aspirations withstand the current global storm?

The past two years have shown just how fragile global supply chains can be. The Red Sea crisis alone, caused by Houthi attacks on commercial vessels, has disrupted $6 billion in weekly trade, with supply chain lead times increasing by 35 per cent according to UNCTAD. Sectors like automotive and electronics—key to India’s export strategy—have been particularly hard-hit. Add to this the Panama Canal drought in 2023, which delayed shipments globally, and ongoing conflicts in Ukraine and the Middle East, and it's clear the world is navigating through trade turbulence.

Moreover, a shift toward localisation is emerging in several key markets, such as Southeast Asia and the Middle East, making market access increasingly difficult. Russia, once seen as a promising trade partner, remains restricted due to sanctions. And India’s own geopolitical tensions—such as the recent escalation with Pakistan—have further strained trade corridors.

Yet, within this adversity lies opportunity.

India’s domestic economy remains a strong foundation. As the world’s fastest-growing major economy, it fuels demand for capital goods, industrial machinery, and critical infrastructure inputs. The government’s robust push in sectors like mining, power, petrochemicals, and railways is laying the groundwork for industrial growth. Further, the recently signed India–UK Free Trade Agreement (FTA) promises to improve competitiveness in labour-intensive sectors such as textiles, footwear, and automobiles by eliminating current high tariffs.

India is negotiating preferential trade deals with EU and the US (the two major export destinations for Indian goods). Experts caution that India cannot afford to sign free trade agreements that compromise sensitive sectors or concede regulatory sovereignty. India must push back against one-sided trade demands, particularly those that jeopardise agriculture, pharmaceuticals, and MSMEs. FTAs should deliver “balanced, reciprocal gains”—not token access in exchange for sweeping concessions.

The outlook for India’s exports, then, is a cautious mix of optimism and realism. Engineering goods exports, for example, are expected to rise to $120 billion in FY26 from $116.7 billion in FY25—a modest but positive trend. To truly take off amid global uncertainty, India must act decisively: by investing in logistics and infrastructure, rationalising tariffs, improving ease of doing business, and ensuring policy predictability. India’s long-term competitiveness will depend not on external goodwill but internal reform.

As B V R Subrahmanyam, CEO, NITI Aayog notes, the blueprint for transformation is ready—now it's time for execution. Only with deep structural changes can India anchor itself as a reliable alternative to China and claim a larger share of global trade.