States Challenges in Exports at the Board of Trade meeting

The Export Debate at the Board of Trade: A ₹7,295 Crore Gamble Amid Steep US Tariffs

On January 3, 2026, the Board of Trade meeting placed India's exports under the spotlight, with representatives from states and industry grappling with the fallout of steep US tariffs — as high as 50% — imposed on Indian exports after the failure to conclude a bilateral trade deal. Beyond the immediate sting of canceled orders and delayed payments, the larger worry haunting stakeholders is the risk of buyers shifting to competitors like Vietnam, Bangladesh, and China. This raises an unsparing question: how equipped are India's states and institutional mechanisms to tackle these headwinds?

The Policy Mechanism: Board of Trade and Government Proposals

The Board of Trade (BoT), reconstituted in 2019 by merging the Council for Trade Development and Promotion, is designed to provide state governments and UTs with an institutional platform to articulate their perspectives on trade policy. It serves as the Commerce Ministry's advisory body, tasked with crafting policy measures under the Foreign Trade Policy to catalyze India's exports.

This meeting comes at a time when the Union Budget 2025-26 has inaugurated two marquee initiatives: Export Promotion Mission (EPM) and a ₹7,295 crore Export Support Package. The EPM spans six years (FY 2025-26 to FY 2030-31), with targeted support for sectors including textiles, leather, and marine products — industries grappling with global tariff escalations. Meanwhile, the Export Support Package’s ₹5,181 crore interest subvention scheme and ₹2,114 crore collateral support are designed to improve credit access for struggling MSMEs, which contribute nearly 45% of India’s total exports. Taken together, these measures aim to shield India’s export-oriented industries, which employ over 45 million people and sustain 21% of GDP.

The Case For: Targeted Interventions to Build Resilience

Proponents argue that these initiatives, combined with advanced digital tools like Trade eConnect and the Trade Intelligence & Analytics (TIA) Portal, could lend Indian exporters the competitive heft needed in turbulent global markets. Early trade data for April-September 2025 suggests bright spots: exports of electronic goods surged by 41.94%, marine products grew by 17.40%, and rice exports rose 10.02%. These are significant: they not only bolster the current account balance but also demonstrate the capacity for diversification within India's export basket.

The government is also pushing geopolitical levers by expanding Free Trade Agreements (FTAs). Three FTAs signed in 2025 — with Oman, New Zealand, and the UK — opened access to newer markets. This focus on reducing barriers complements internal measures like non-tariff relief for MSMEs while creating long-term avenues for trade.

The Case Against: Structural Deficiencies and State-Level Woes

Critics point out that this optimistic narrative belies deeper fault lines. Costlier raw materials, shipping container shortages, and inadequate quality testing facilities remain unsolved. The institutional framework for state-level export facilitation is fragmented, with states often lacking export strategies aligned with the national framework. The irony here is stark: while the BoT offers states a consultative space, systemic disconnects between Central plans and state implementation persist.

Consider the ₹7,295 crore Export Support Package. While well-intentioned, questions loom over its efficacy. Interest subvention schemes may reduce exporters’ borrowing burden temporarily, but in the face of 50% US tariffs, the risk of order cancellations from India’s largest export destination cannot be offset by cheaper credit alone. Much hinges on operational efficiencies in initiatives like the TIA portal. If data integration across states falters — and that has historically been the case — the digital transformation agenda may result in superficial gains rather than a substantive boost to competitiveness.

Lessons from Vietnam: Export Diversification as Political Strategy

Vietnam provides a compelling contrast. Faced with escalating US-China trade tensions, Vietnam transformed itself into a high-efficiency manufacturing hub over the last decade, attracting enormous FDI and doubling down on export diversification. In textiles, it invested heavily in factory automation and logistics networks, enabling Vietnamese goods to fill gaps left by other players. Consequently, Vietnam has become India’s toughest competitor in sectors like electronics and garments.

Unlike India’s slow pace in digital integration, Vietnam's government aggressively linked export promotion with industrial corridors, creating a cohesive policy ecosystem. This underscores the need for India to go beyond piecemeal measures like subvention schemes and approach export competitiveness as a multidimensional strategy — encompassing infrastructure, logistics, trade facilitation, and fiscal policies.

Where Things Stand: Narrowing Down the Risks

The steep US tariffs expose structural limitations in India’s export strategy, particularly its over-reliance on select markets and weak negotiation leverage in global trade diplomacy. While the government’s fiscal measures and digital initiatives are well-positioned, the gap between strategy and execution remains the elephant in the room. Whether the Export Promotion Mission can genuinely insulate MSMEs — already battered by global tariffs — is still an open question.

At the state level, efforts to frame export-specific policies need urgent amplification. States like Uttar Pradesh and Tamil Nadu, already leading in textiles and leather exports, must scale their capabilities to meet global product standards and logistics demands. Without such granular efforts, India risks losing export orders not just to Vietnam or Bangladesh but even to smaller players entering niche markets.

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