India should lower tariffs and dismantle non-tariff barriers across the value chain, as opening its markets is critical to improving competitiveness in manufacturing, NITI Aayog CEO BVR Subrahmanyam said on Monday.
Stating that India lacks many manufacturing intermediates, he said the upcoming National Manufacturing Policy (NMP) is expected to address such issues. “Hopefully, the (NMP) will address a lot of these challenges. It will focus on clusters and aim at the best world-class ecosystem for trade,” the NITI CEO said, while launching ‘Trade Watch Quarterly’ for Q4FY25.
Major reforms expected
After GST 2.0, Subrahmanyam said another round of major reforms is expected before Diwali, with the Rajiv Gauba-led committee already having submitted their first set of reports on these measures. He, however, did not share details on the proposed reform measures. Former Cabinet secretary and NITI Aayog member Rajiv Gauba heads two panels to drive next-gen reforms and Viksit Bharat goals.
Subrahmanyam said he was hopeful that a trade agreement would be concluded between India and the US soon, before US tariffs really impact Indian exporters after November.
In a fresh round of talks last month, both sides are trying to complete discussions by the deadline of autumn or November. In its talks with the US, India is insisting on the removal of 25% additional duties imposed on India for buying Russian oil and bringing down the reciprocal tariffs below the current levels of 25%.
Subrahmanyam on US tariffs
“US tariffs have yet not impacted our trade as unwinding trade channels is difficult and these disruptions do not happen overnight,” Subrahmanyam said. “We foresee normal exports for Christmas and Spring, but Summers could be difficult if the trade deal between the two countries does not conclude by November.”
The US is India’s largest trading partner for the fourth consecutive year in 2024-25, with bilateral trade valued at $131.84 billion.
According to “Trade Watch Quarterly” for Q4FY25, India’s trade performance remained steady in the quarter, with total trade at $441 billion, up 2.2% on-year. Merchandise exports saw a modest contraction due to a decline in mineral fuels and organic chemicals, while sectors such as electrical machinery, pharmaceuticals, and cereals registered healthy growth.
It underscored the imperative of diversifying into high-demand global markets.
Imports rose marginally in Q4FY25, supported by higher demand for nuclear reactors, electrical machinery, and inorganic chemicals. Regionally, North America emerged as the strongest export market, growing by 25% and accounting for a quarter of India’s exports, while exports to the EU, GCC, and ASEAN moderated.
On the import side, the UAE overtook Russia as India’s second-largest supplier, driven by gold inflows under CEPA, while imports from China surged on strong demand for electronics.
India remains competitive in processed leathers and niche apparel, but its overall share in the $296 billion global market is modest at 1.8%. With global demand shifting rapidly towards non-leather and sustainable products, India faces both challenges and opportunities.
Strengthening MSMEs, investing in R&D, and aligning with green and design-driven value chains will be key to expanding India’s global footprint, according to the Trade Watch report.