Understanding Export Bottlenecks in India: Key Challenges and Strategies

Export Bottlenecks in India: Challenges & Solutions

India's export landscape is currently facing significant challenges that affect its global trade performance. According to the Union Commerce and Industry Ministry, issues such as high US tariffs, rising raw material costs, a shortage of testing facilities, and limited shipping container availability have been highlighted as critical bottlenecks impacting exporters.

Key Issues Identified

During a recent Board of Trade meeting held on November 25, 2025, exporters voiced their concerns to Commerce and Industry Minister Piyush Goyal. The meeting underscored the urgent need to address these challenges to sustain export growth.

• High US Tariffs: The implementation of steep tariffs, reaching as high as 50%, has led to order cancellations and delayed payments, pushing exporters towards competitors like Bangladesh and Vietnam.
• Testing Facilities: A lack of local testing labs has forced exporters to send samples to distant states, leading to delays and increased costs.
• Shipping Container Shortages: Severe shortages of shipping containers have been reported, particularly affecting exporters in states like Assam.
• Cost of Raw Materials: Domestic raw material prices are reported to be 15-20% higher than international levels, adding pressure on profit margins.

Board of Trade (BoT)

The Board of Trade serves as a crucial advisory body, bringing together various stakeholders to shape India’s Foreign Trade Policy (FTP). Its composition includes government officials, trade experts, and representatives from export promotion councils and financial institutions.

Impact of US Tariffs

Trade negotiations between India and the US have stalled, impacting export dynamics. Despite efforts initiated after PM Modi’s visit to Washington, the inability to finalize a trade deal has left Indian exporters vulnerable to the high tariffs. For instance, sectors like gems and jewellery are experiencing significant order cancellations.

Sectoral Concerns

Specific sectors are feeling the pinch more acutely:

• Garments and Footwear: Labour-intensive sectors are at risk of losing market share due to competitive pricing from international rivals.
• Pharmaceuticals: While generic drugs are exempt, overall pharma exports have been negatively affected.
• Seafood Exports: A marked decline in exports to the US has also been reported.

Government Strategies for Improvement

In response to these challenges, the Indian government is actively seeking to diversify its export markets. In 2025, India signed free trade agreements with Oman, New Zealand, and the United Kingdom, aiming to reduce dependence on the US market.

Regulatory and Compliance Issues

Exporters have raised concerns about the application of Bureau of Indian Standards (BIS) norms, which complicate compliance, especially for exports to regions with differing standards. This adds to the regulatory burden faced by many industries.

Conclusion

Addressing the bottlenecks in India’s export sector is paramount for sustaining growth and competitiveness in the global market. Continued dialogue between the government and exporters will be essential to navigate these challenges effectively.

Frequently Asked Questions (FAQs)

Q1. What are the main challenges facing India's exports?
Answer: India's exports face challenges like high US tariffs, costlier raw materials, insufficient testing facilities, and a shortage of shipping containers. These factors hinder export growth and competitiveness.

Q2. How do US tariffs affect Indian exporters?
Answer: US tariffs have led to increased costs and order cancellations for Indian exporters, pushing them towards international competitors and impacting overall trade dynamics.

Q3. What measures is the Indian government taking to improve exports?
Answer: The Indian government is pursuing trade diversification by signing free trade agreements with countries like Oman, New Zealand, and the UK to reduce reliance on the US market.

Q4. Why are testing facilities important for exporters?
Answer: Testing facilities ensure products meet international quality standards. A lack of local labs leads to delays and increased costs, impacting timely exports.

Q5. What role does the Board of Trade play in India's export policy?
Answer: The Board of Trade advises on foreign trade policy and acts as a bridge between the government and exporters, addressing challenges and facilitating trade growth.

UPSC Practice MCQs

Question 1: What is a major challenge faced by Indian exporters due to US tariffs?
A) Increased shipping costs
B) Order cancellations
C) Higher raw material prices
D) Lack of testing facilities
Correct Answer: B

Question 2: What is the purpose of the Board of Trade in India?
A) To regulate tariffs
B) To advise on trade policy
C) To manage shipping logistics
D) To analyze market trends
Correct Answer: B

Question 3: Which sector has seen a decline in exports due to US tariffs?
A) Technology
B) Pharmaceuticals
C) Seafood
D) Textiles
Correct Answer: C