India’s export strategy: For decades, export policy was made in New Delhi. The Commerce Ministry negotiated trade agreements and announced incentives. State governments provided industrial land, roads and power, while local firms were expected to find foreign buyers. That division of work is being rewritten.
At the July meeting of the Board of Trade, the Centre asked states to set up export committees and review district performance every month. A 90-day drive will cover 120 districts across 27 states and Union territories under the Districts as Export Hubs programme. The Centre will support trade finance, certification, testing and overseas market access. State governments must deal with the constraints faced by firms on the ground.
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Districts as Export Hubs tests state capacity
Export competitiveness is local. Kannauj has perfume makers, Bhagalpur has silk weavers and Ludhiana has a large woollens and engineering base. Similar clusters produce spices, processed food, handicrafts and components across the country. Many barely appear in India’s export data.
The problem is not the absence of products. Small firms often lack access to accredited laboratories, working capital, freight services and buyers. A district plan that lists promising products without identifying these constraints will amount to little more than an official catalogue.
India’s total exports reached an estimated $860.09 billion in FY26, while imports rose to $979.4 billion. Merchandise exports were $441.78 billion, against goods imports of almost $775 billion. The government has now set a $1 trillion export target, comprising about $530 billion of merchandise and $470 billion of services. Goods exports will therefore have to rise by nearly a fifth from the FY26 level.
That increase cannot be secured through another round of incentives. Indian firms must be able to produce at the required price, obtain certificates accepted abroad and deliver orders within the buyer’s schedule. Most of these conditions depend on state departments, municipal infrastructure and local institutions.
The World Trade Organisation’s eighth review of India offers a more complicated picture than the usual account of high trade costs. It recorded lower customs release times and improvements in logistics. WTO members nevertheless criticised abrupt tariff changes, complex licensing, regulatory uncertainty and delays involving standards, factory inspections and certification. These costs arise after a trade agreement has been signed and often before a shipment reaches the port.
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India’s export strategy: State export promotion cannot follow one template
The DGFT wants State Export Promotion Committees to conduct monthly reviews of district performance. More committees can, however, create another reporting layer. Their value will depend on whether they can resolve a delayed licence, arrange a testing facility or press a bank to finance a confirmed export order.
State export strategies will also have to differ. Tamil Nadu’s priorities lie in electronics, automobiles and textiles. Gujarat has chemicals, pharmaceuticals and engineering goods. Uttar Pradesh has carpets, leather, sports goods and handicrafts. Assam and other northeastern states offer tea, spices and processed agricultural products. A common reporting format may be useful, but it cannot substitute for sector-specific work.
The state government is also closer to the weakest links in an industrial cluster. It knows whether a road becomes unusable during the monsoon, whether a laboratory is six hours away or whether a local producer loses orders because power supply is unreliable. The Commerce Ministry cannot fix such failures from Delhi.
District export plans should therefore identify named constraints, the department responsible and a date for resolution. Export value and the number of new exporters are better measures than the number of meetings held or products identified.
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MSME exports need more than tariff cuts
MSMEs account for roughly 30% of India’s GDP and about 45% of exports. Yet the cost of entering a foreign market remains high for a small firm. International certification can exceed the value of its first order. Banks may hesitate to finance an unfamiliar buyer. Rules of origin and customs documentation require expertise that the firm cannot employ permanently.
The Export Promotion Mission attempts to address some of these costs through trade finance and support for certification, freight, warehousing and market access. Its success will depend on whether firms in smaller centres can use it without hiring intermediaries to navigate the scheme.
India’s trade agreements have made this task more immediate. The India-UK agreement entered into force on July 15, giving nearly 99% of Indian exports zero-duty access to the British market. Negotiations on the India-EU agreement concluded in January. Lower tariffs will help exporters only when their products satisfy standards and their paperwork establishes eligibility for the concession.
New Delhi has completed much of the negotiating work. State governments must now turn local producers into regular exporters. India’s $1 trillion target will be settled in industrial clusters and district offices, not at the negotiating table.