‘Exporters need a predictable business environment’

The Federation of Indian Export Organisations (FIEO) acts as an interface between exporters and government agencies in India. In an interview with DH’s Gyanendra Keshri, the president of the apex body of the country’s trade promotion organisations, Ashwani Kumar, highlights the need for financial support and a predictable business environment for exporters to narrow the widening trade deficit.

What needs to be done to improve the competitiveness of Indian exports?

The urgent and immediate steps that need to be taken on the liquidity front are deeper interest subvention support, an extension of the interest equalisation scheme for at least five years and creating a predictable business environment for the exporters. Interest subvention and equalisation schemes help in reducing the cost of borrowings for exporters. The interest equalisation scheme, which was started in April 2015, is set to end this month. Besides, the government has put a cap of Rs 50 lakh. The imposition of this cap has hit many MSMEs, and they are unable to decide on orders due to the non-availability of further subvention. We demand the restoration of the interest equalisation scheme with a cap of Rs 10 crore for all MSMEs and 410 tariff lines for five years. Besides, the government should extend the RoDTEP (Remission of Duties and Taxes on Exported Products) benefits to all sectors of exports. We have also been urging for the early conclusion of the ongoing FTA negotiations with the UK, Peru, Oman, and the European Union.

What are your projections for India’s exports and imports this fiscal and for 2025-26?

The overall goods and services exports are expected to be in the range of $810-820 billion for this fiscal, while overall imports are expected to be in the range of $950-960 billion. In 2025-26, the overall export is likely to cross $850 billion, while imports may remain in the same range as in the current fiscal. A lot will depend on the global economic scenario.

India’s imports have increased to record highs in recent months while exports remain sluggish. Why?

Imports are rising as India's demand for goods has gone up, much more than the global average, and the country's economy is growing faster than the other global economies. Though the demand for Indian products has also increased, global economic uncertainties coupled with logistical challenges due to the ongoing Russia-Ukraine war and the crisis in the Red Sea due to conflict in the Gulf region have impacted India’s shipments, especially to Europe, Africa, CIS, and the Gulf region. Volatility in crude and metal prices has also played a key role in the declining value of India’s exports to some extent.

US President-elect Donald Trump has plans to impose high tariffs on imports from several countries, including India. Will it put further pressure on exports from India?

The US remains India’s largest trading partner, with bilateral trade reaching nearly $120 billion in FY24. Unlike China, India enjoys a favourable trade relationship with the US. The imposition of high tariffs on Chinese goods would benefit India. This we can say from the experience of Trump’s first term. The US-China tariff wars during Trump’s first term created new export opportunities for several countries. Mexico was the biggest beneficiary. India had also gained substantially. India’s exports to the US during that period had increased by $36.8 billion driven by electronics, pharmaceuticals, and engineering goods. However, high tariffs on US imports from India may impact our slowing exports. It is too early to predict though.