In response to increasing global trade uncertainties, particularly the recent imposition of a 50% tariff by the United States on Indian goods effective August 27, India is formulating a multi-pronged strategy to boost exports and cushion the impact of these tariffs. The central element of this strategy is the proposed Export Promotion Mission, which is expected to be presented to the Union Cabinet for approval soon.

The Export Promotion Mission, first announced in the Union Budget, is anticipated to provide approximately Rs 25,000 crore (US$3 Billion) in support measures to exporters over six financial years, from 2025 to 2031. This initiative aims to offer financial assistance and protection to domestic firms, enabling them to remain competitive amidst global trade challenges. The scheme is designed to be flexible, allowing resources to be shifted between sectors as needed to address the volatile global trade environment.

Beyond the Export Promotion Mission, India is actively exploring alternative markets to diversify its export destinations. The government has identified 40 key markets, including the UK, Japan, South Korea, Germany, France, and others, to boost textile exports. This diversification strategy seeks to position India as a reliable supplier of sustainable textiles. Complementary measures include proactive trade diversification, targeted export promotion, and supply-side strengthening in electronics and high-value sectors. The government has already signed free trade agreements with Australia, the UAE, Mauritius, the UK, and the European Free Trade Association (EFTA) bloc.

To mitigate the impact of the tariffs, the Indian government is also focused on internal reforms to strengthen the domestic economy. These reforms include streamlining the Goods and Services Tax (GST) to boost spending and encouraging citizens to prioritize purchasing domestically made goods. Furthermore, the government is exploring ways to reduce the tariff shock in affected sectors like chemicals and jewelry.

Experts suggest that while strategic trade ties can provide some cushion, internal reforms are crucial for India to withstand the shock of increased tariffs. These reforms should focus on boosting domestic consumption and creating quality jobs to ensure long-term resilience. The government is also urged to expedite the rollout of the Export Promotion Mission to address liquidity concerns and support export diversification.

The recent increase in US tariffs on Indian goods, which some view as a pressure tactic, has raised concerns among Indian exporters, who fear potential cancellations of US orders. The tariffs, which include a 50% duty on certain goods and additional tariffs as a penalty for purchasing Russian oil, are expected to impact various sectors, including textiles, shrimp, diamonds, and auto components. However, some sectors, such as pharmaceuticals, electronics, and petroleum products, are exempt from the tariffs.

Despite the challenges posed by the tariffs, India is determined to pursue a path of self-reliance and strengthen its trade alliances with other nations. The government is actively engaging with various countries to explore joint strategies and ensure smoother technology and supply chain collaborations. By implementing these measures, India aims to sustain its trade trajectory and provide a buffer for its exporters in the face of global trade uncertainties.