Relevance for UPSC: GS Paper III (Economy – External Sector), GS Paper II (Trade Diplomacy)
Source: The Hindu

Context

In a phase marked by rising protectionism, higher United States tariffs, and global supply-chain uncertainty, India’s exports have shown unexpected resilience. This has been enabled by a two-path export strategy:

1. Consolidating traditional trade partnerships with the European Union, Association of Southeast Asian Nations, West Asia, and China.
2. Expanding into new and emerging markets, especially within Europe and Asia.

This approach reflects a conscious move away from market concentration risk towards strategic diversification.

Key Export Trends

• Decline in exports to the United States in tariff-sensitive sectors such as gems and jewellery and cotton textiles.
• Overall export stability supported by rapid growth in:
  • Electronics and telecom instruments
  • Electrical and industrial machinery
  • Marine products and ready-made garments
• European Union economies—including Belgium, Germany, the Netherlands, Italy, and Spain—absorbed increased Indian exports.
• China re-emerged as a major buyer of marine products, indicating economic pragmatism over political frictions.

Structural Drivers Behind Export Resilience

• Product diversification: Shift from traditional goods to higher-value manufactured exports.
• Market diversification: Wider geographic reach reduces exposure to unilateral tariff actions.
• Exchange rate advantage: A competitive rupee supported export pricing.
• Global supply-chain realignment: The “China-plus-one” strategy favoured India as an alternative manufacturing base.

Policy and Institutional Support

The World Bank and International Monetary Fund highlight export diversification as key to resilience in emerging economies.

Key Constraints

• High logistics costs and infrastructure gaps.
• Non-tariff barriers and quality standards in developed markets.
• Limited export capacity of micro, small and medium enterprises.
• Continued product concentration risks in select sectors.

Way Forward

• Fast-track free trade agreements with the European Union and United Kingdom.
• Reduce logistics costs through National Logistics Policy and PM Gati Shakti.
• Scale export-oriented manufacturing and services exports.
• Strengthen micro, small and medium enterprise participation through credit, skilling, and standards support.

India’s two-path export strategy—deepening old partnerships while opening new markets—has reduced vulnerability to global trade shocks and upgraded the export basket.

One-Line Wrap: India’s export strategy is shifting from dependence to diversification in an uncertain global trade order.