Exports likely to grow by 3% to $850 billion this fiscal: GTRI

India's ambition to become a major global economic power hinges significantly on its trade performance, particularly exports. The Global Trade Research Initiative (GTRI) projecting India's exports to reach USD 850 billion by the fiscal year 2025-26, with an expected 3% growth in the current fiscal, underscores this aspiration. This projection, while optimistic, comes with a stark recognition of the formidable headwinds facing global trade.

Historically, India's trade policy has evolved from a largely protectionist, import-substitution model post-independence to a more liberalized, export-oriented approach following the economic reforms of 1991. The early 2000s saw a renewed focus on integrating into global supply chains, culminating in initiatives like 'Make in India' launched in 2014, aimed at boosting domestic manufacturing and making India a global manufacturing hub. More recently, the 'Atmanirbhar Bharat Abhiyan' (Self-Reliant India Campaign) emphasizes domestic production while not shying away from global engagement, with exports being a crucial component for achieving scale and competitiveness.

However, the global economic landscape is fraught with challenges. Weakening global demand, a lingering effect of geopolitical tensions, supply chain disruptions, and inflationary pressures, directly impacts export potential. The rising tide of protectionism, characterized by trade barriers and 'buy national' policies in various countries, further complicates market access for Indian goods and services. This environment necessitates a nimble and strategic foreign trade policy.

A significant emerging challenge highlighted by GTRI is the advent of climate-linked trade barriers, such as the European Union's Carbon Border Adjustment Mechanism (CBAM). Set to be fully implemented by 2026, CBAM will impose a carbon price on certain carbon-intensive goods imported into the EU, based on their embedded emissions. This mechanism aims to prevent 'carbon leakage' (where production moves to countries with less stringent climate policies) and encourage cleaner industrial production globally. For India, a major exporter of steel, cement, fertilizers, and aluminium – sectors directly impacted by CBAM – this poses a substantial challenge. Indian industries will need to invest heavily in green technologies and processes to remain competitive in the EU market, a key trading partner.

Key stakeholders in this export drive include the Government of India (particularly the Ministry of Commerce & Industry and the Ministry of Finance), which formulates and implements trade policies, signs Free Trade Agreements (FTAs), and provides export incentives. The Reserve Bank of India manages foreign exchange reserves and influences exchange rates. Indian exporters, ranging from large corporations to Micro, Small, and Medium Enterprises (MSMEs), are at the forefront of this effort, needing support in terms of infrastructure, finance, and market access. Research bodies like GTRI play a crucial role in providing data-driven insights and policy recommendations. International bodies like the World Trade Organization (WTO) set global trade rules, though their effectiveness has been challenged in recent years.

This matters immensely for India. Strong export growth contributes significantly to India's Gross Domestic Product (GDP), creates employment opportunities across various sectors, improves the balance of payments, and boosts foreign exchange reserves, thereby strengthening the rupee. It also enhances India's global economic and geopolitical standing. Integration into global value chains (GVCs), facilitated by FTAs, can lead to technology transfer, efficiency gains, and diversification of export baskets.

From a constitutional perspective, trade and commerce are primarily subjects under the Union List (Entry 41 of the Seventh Schedule – 'Trade and Commerce with foreign countries; import and export across customs frontiers'). This empowers the Parliament to legislate on foreign trade matters. Furthermore, Directive Principles of State Policy (Article 38 and 39) implicitly guide the state to promote welfare and minimize inequalities, which can be achieved through robust economic policies, including those promoting sustainable and equitable trade. The government's Foreign Trade Policy (FTP), typically announced for five years, outlines the strategic framework for export promotion, leveraging schemes like the Production Linked Incentive (PLI) schemes to boost manufacturing and make Indian products globally competitive.

The GTRI's recommendation to review existing FTAs is critical. While FTAs can open new markets, their effectiveness depends on proper implementation, utilization rates, and addressing non-tariff barriers. India has recently concluded significant FTAs with the UAE (CEPA) and Australia (ECTA), and is in negotiations with the UK and the EU. A thorough review can identify bottlenecks, ensure mutual benefit, and align them with India's long-term export strategy. Future implications point towards a need for accelerated domestic reforms, investments in green technologies, skill development for industries facing new trade barriers, and proactive diplomacy to shape international trade rules and mitigate protectionist tendencies. India's journey to USD 1 trillion in merchandise exports and USD 2 trillion in overall exports by 2030, a stated government aim, will depend on its ability to navigate these complex global currents with strategic foresight and effective policy implementation.