India is setting its sights on an ambitious export target of $1 trillion by the end of the fiscal year 2025-26, a significant jump from the record $824.9 billion achieved in 2024-25. This audacious goal, as articulated by S.C. Ralhan, president of the Federation of Indian Export Organizations (FIEO), hinges heavily on the aggressive pursuit of strategic trade agreements and a proactive approach to global trade dynamics.

India’s export growth in the past fiscal year, a 6.01 per cent increase, was fueled by a robust 13.6 per cent surge in services exports, reaching $387.5 billion, and a solid performance in merchandise exports at $437.4 billion. For the current fiscal year, Ralhan projects merchandise exports to hit $525-535 billion (a 12 per cent growth) and services exports to reach $465-475 billion (a 20 per cent growth), signaling a strong turnaround after a brief slowdown.

“Order books have started filling up again after a slow 1-2 month phase. Exporters are feeling confident,” Ralhan noted, highlighting early positive trends.

Trade Deals as a Catalyst for Growth

A major catalyst for achieving the $1 trillion target, according to Ralhan, lies in the finalization of key bilateral trade agreements. He expressed optimism about the imminent signing of an India-US Bilateral Trade Agreement (BTA), possibly as early as next month. “We are hopeful of a zero-tariff regime under the BTA. Even if tariffs stay at 10 per cent, that’s still a win for us. Indian exporters will be comfortable operating under that structure,” he stated, underscoring the potential for increased market access and reduced trade barriers.

Furthermore, Ralhan pointed to the benefits Indian exporters are already experiencing from easing trade tensions between the US and China. “China still faces about 75 per cent tariffs in some categories like auto components. India has only 25 per cent, and that’s making us more competitive. Orders are starting to flow in,” he explained, showcasing how global trade realignments can create opportunities for Indian goods.

Navigating a Protectionist Landscape

While optimism abounds, the global trade landscape is becoming increasingly complex. Ralhan highlighted a resurgence of protectionist policies, characterized by heightened tariffs and Non-Tariff Barriers (NTBs). He noted that import restrictions among G20 economies have soared by 75 per cent since 2016, with the U.S. escalating its average effective tariff rate to an estimated 27 per cent in early 2025.

Of particular concern are the European Union’s new regulations, including the EU Deforestation Regulation (EUDR), Carbon Border Adjustment Mechanism (CBAM), and Eco Design Sustainable Product Regulation (ESPR), all set to come into force from January 1, 2026. The ESPR framework, in particular, will necessitate a Digital Product Passport (DPP), requiring comprehensive traceability of a product’s entire lifecycle for goods sold in the EU.

“The DPP is not just a regulatory requirement—it’s a shift towards sustainable, transparent, and digital trade,” Ralhan emphasized. While acknowledging the potential challenges, such as increased compliance burden and the need for significant investment in digital integration for MSMEs, he views it as an opportunity for India to “upgrade manufacturing processes, embrace green technologies, and increase global trust in Indian products.”

FIEO is urging the government to establish sector-specific task forces to develop compliance roadmaps for these new EU regulations and create a national framework to help exporters efficiently generate DPPs. They also advocate for financial assistance and capacity-building programs for MSMEs to adapt to these evolving standards.

Government Support and Policy Consistency

In a move to bolster export competitiveness, the government on May 26 announced the restoration of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme from June 1, 2025. This benefit will again be available to exports by Advance Authorization (AA) holders, Export-Oriented Units (EOUs), and Special Economic Zone (SEZ) units, a relief after a temporary suspension between February 5 and May 31, 2025.

The government has allocated ₹18,233 crore for the RoDTEP scheme for FY 2025-26, highlighting its significant role in supporting India’s merchandise exports. The scheme, initiated in 2021, reimburses exporters for embedded duties, taxes, or levies not covered by other schemes, aiming to provide a level playing field in global markets.

However, Ajay Srivastava of the Global Trade Research Initiative (GTRI) voiced concerns about the government’s “stop-and-start approach” to RoDTEP. While welcoming the reinstatement, he argued that “its repeated withdrawal for AA holders, EOUs, and SEZs creates serious uncertainty.” Srivastava urged the government to ensure “uninterrupted RoDTEP coverage for at least five years” to position India as a stable and competitive export hub.

To achieve the ambitious $1 trillion export target, India’s strategy will need to effectively balance the opportunities presented by new trade agreements with the challenges posed by rising protectionism and evolving international trade regulations, all while ensuring consistent and reliable domestic support mechanisms for its exporters. 

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