The Union Budget 2025-26 has ushered in a wave of optimism among exporters, reaffirming the government’s commitment to expanding India’s footprint in the international space. Export Promotion has been identified as one of the key priorities in this year’s budget. Aligned with the vision of Viksit Bharat, the budget has focused on strategic reforms and targeted interventions to position India as an emerging player in global trade.
There has been a cogent approach, with sector specific focus to achieve the long-term goals of Viksit Bharat. Given the target of USD 2 trillion exports by 2030, the budget provides a roadmap to reach that milestone. Setting up of Export Promotion Mission is a welcome step. The mission will focus on multiple parameters such as facilitation of easier access to credit, cross-border factoring support and providing assistance to MSMEs in overcoming non-tariff barriers in the international markets.
Another progressive measure in the budget is the proposal to develop ‘BharatTradeNet,’ – a much-needed unified digital platform for international trade. Intended to streamline trade documentation and financing solutions, this platform will complement the Unified Logistics Interface Platform and align with international best practices, making trade more seamless and efficient. Similarly, the move to develop a framework for states for promoting Global Capability Centres (GCCs) in tier-2 cities is a promising step. This initiative will expand economic opportunities in emerging cities by creating jobs, attracting investment, promote inclusivity by empowering smaller cities and encourage partnerships between state governments and private sector companies. Given that most states – except Gujarat (31%), Maharashtra (15%) and Tamil Nadu (10%) – have a limited share in exports, this initiative will play a crucial role in expanding India’s export base.
There has been a lot of sector-specific announcements in this budget, with a stark focus on increasing production and strengthening the manufacturing base, aiming to drive a sustained upswing in exports in these sectors.
- With an objective to enhance the global competitiveness of labour-intensive industries, the budget has outlaid strategies for select sectors to strengthen their presence in global markets. A dedicated scheme for the toys sector to develop clusters and a manufacturing ecosystem, along with a focus product scheme for footwear and leather, will create a strong pathway for these industries. Further, the relaxation in the export time period for handicraft products from six months to one years will provide greater flexibility to exporters and enhance global opportunities.
- The emphasis on agri and marine products reflects the government’s commitment to unlock the potential of niche sectors. An enabling framework for sustainable harnessing of fisheries from Indian Exclusive Economic Zone and High Seas, will strengthen India’s presence in global seafood markets. Likewise, the ‘Mission for Cotton Productivity’ paves the way for a transformative leap in yield, sustainability and the cultivation of extra-long staple cotton, essential for accelerated growth of the textiles sector.
- Similarly, to cater to the rising demand from advanced economies, the budget accords special focus to strengthening Makhana (Fox Nuts) production.
In the last year’s Union Budget, Finance Minister had announced a roadmap towards tariff rationalisation. This year’s budget has taken it forward. There have been several measures to rationalise the customs duty framework and address the challenge of inverted duty structure across different sectors. The budget has removed seven tariff rates, which are in addition to the tariff rates removed in the last year’s budget. This leaves India with now a simplified tariff structure with 8 slabs. Additionally, levying of single cess or surcharge will reduce complexities and foster a more business-friendly environment for the domestic industry. The rationalisation of duty structure has reduced India’s average customs duty rate from 11.65% to 10.66%, moving closer to ASEAN standards.
There have been some key changes in customs duty across varied sectors including electronics, automobiles, textiles and healthcare sector. Reductions in duties on marine products, chemicals, critical minerals, drugs and medicines, intermediate goods for textile, handicraft and leather products, as well as capital goods used in manufacturing lithium-ion batteries for EVs, inputs & parts of capital goods and motorcycles, will reduce input costs, deepen value addition and promote export competitiveness.
Other critical reforms in the budget include introduction of voluntary compliance to encourage transparency and the extension of the end-use of imported goods from six months to one year, which will provide greater operational flexibility to businesses. The Union Budget 2024-25 sets a steadfast course to propel India’s export momentum through astute policy measures. These changes come at a critical time as the US escalates its tariff measures, primarily targeting Mexico, Canada, and China. While the immediate focus is on these economies, the ripple effect could extend globally, impacting trade dynamics. India’s proactive tariff adjustments not only enhance its trade competitiveness but also position it strategically in the evolving global trade landscape, signalling stability and openness to key partners, including the US.
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