Economic Survey 2025: India needs to focus on strategic reassessment and a forward-looking trade framework
Indian export sectors need to brace themselves for global trade policy shifts, warned Economic Survey 2025, presented by Finance Minister Nirmala Sitharaman on Friday in the Lok Sabha. With rapidly evolving global trade dynamics guided by gradual shifts towards greater protectionism, India needs to strengthen its competitiveness to get further integrate into global supply chains, highlighted the survey.
The report, prepared by the Chief Economic Advisor to the Finance Ministry, stated, “The country can focus on reducing trade-related costs and enhancing export facilitation to create a more vibrant export sector. This proactive approach will help India continue to thrive in an ever-changing global market.”
The shifting landscape of global trade policies and several protectionist measures adopted by some of the major economies, entail a strategic reassessment and a forward-looking trade framework by India. The country needs to prepare itself to align with these emerging trends and capitalise on its competitive advantages for strengthening its foothold in international markets and driving sustained economic expansion.
According to the Economic Survey, some of the key export sectors —including chemicals, machinery, textiles, and electronics—are likely to face headwinds. In the short term, diversification of export destinations will be critical, while the medium-term priority should be securing greater market share. Over the longer term, India needs to position itself as a pivotal player in high-value industries such as biotechnology and semiconductors.
“Over the long term, India must position itself as a strategic partner in high-value sectors like biotechnology and semiconductors,” mentioned the survey.
It also suggested that expanding strategic technology alliances—particularly in space, semiconductors, quantum computing, and advanced telecommunications—will be instrumental in deepening global trade partnerships and fostering innovation-led growth.
With Donald Trump coming to power in the USA, several countries have faced or are poised to face increased U.S. import tariffs as part of his "America First" trade policy. While India might not be the principal focus of the Don’s trade offensive, the nation has reasons to worry given its widening trade deficit—to $21.94 billion in December 2024, up from $18.76 billion a year earlier, driven by a 0.99% year-on-year contraction in merchandise exports.
In a contrarian trend, India’s exports have continued to slide despite the depreciation of its currency, with the service sector being the only exception. Owing to the robust performance of this sector (essentially IT and related services), the country’s exports registered a growth of 1% over the December 2023-24 period, masking the underwhelming performance of industrial verticals, including merchandise exports, which slumped by 1%, underscoring the impact of structural challenges in trade and raising concerns over India’s export-driven growth aspirations.