Pressure on India’s exports as the US and EU tighten trade regulations

According to Directorate General of Foreign Trade (DGFT) , India’s exports are facing heightened challenges owing to aggressive trade policies from partners like the US and the European Union (EU). DGFT pointed to the increased import tariffs by the US and policies like the CHIPS Act, which support local manufacturing. He said that India needs to rethink its trade and industrial policies to stay competitive.

High import tariffs on raw materials, technological disadvantages in some manufacturing sectors and India’s limited participation in global supply chains have affected the country’s export growth.

US President Donald Trump’s plan to impose reciprocal tariffs from April is a major concern for Indian exporters, particularly in sectors like automobiles, agriculture, and manufacturing. According to Citi Research analysts, these tariffs could result in losses amounting to nearly $7 billion annually for Indian businesses. It must be mentioned that India’s trade minister, Piyush Goyal, has travelled to the US for trade talks ahead of the planned tariff changes.

India’s total exports stood at $682.59 billion for the period between April 2024 to January 2025, up 7.2% from the previous year. On the other hand, the country’s imports were recorded at $770 billion for the same period, thereby resulting in a trade deficit amounting to $87.47 billion. Moreover, the EU’s carbon tax and increasing reliance on protective non-tariff measures are adding challenges for Indian exporters.  

As a result, despite export growth, India still witnesses a trade deficit, signalling a need to expand market reach and improve competitiveness.