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Informist, Friday, Apr. 17, 2026

MUMBAI – The Federation of Indian Export Organisations has urged the government to raise the cap on interest subvention for exporters and introduce production-linked incentive schemes for the electronics sector, warning that existing support measures are inadequate amid rising global trade disruptions.

The federation's Chief Executive Officer Ajay Sahai said the current interest relief cap of INR 5 million is "grossly inadequate" given stretched payment cycles and higher working capital requirements due to logistical disruptions, particularly in West Asia. Exporters are also seeking additional liquidity support as freight costs to some West Asian destinations have surged 300–400% due to the ongoing conflict in the region.

The CEO said geopolitical tensions in West Asia led to a sharp decline in exports in March, with shipments to the region falling about 51% and dragging down overall merchandise exports. However, much of the March shipments are expected to spill over into April due to disrupted shipping routes and delays, he said. 

On the macro front, the export body expects India's current account deficit to widen significantly to around 2% of GDP in FY27 from about 0.5% currently, citing pressures from slowing foreign inflows, moderating remittances, and persistent trade imbalances. Despite this, Sahai said the deficit remains within manageable levels.

At the same time, Sahai highlighted that India is losing market share in labour-intensive sectors such as apparel, leather, and gems and jewellery, as more cost-efficient economies gain ground. In contrast, technology-driven sectors like electronics, engineering goods, and pharmaceuticals are showing resilience and growth.

The services sector, particularly global capability centres, are emerging as a key driver, Sahai said. The federation expects capacity centre exports to more than double to over $100 billion by 2030, up from around $52 billion currently.

On trade policy, the export body expressed optimism over upcoming free trade agreements, with the proposed pact with Oman likely to be operational by Jun. 1, while the UK free trade agreement could come into force by mid-May. These agreements are expected to support exports in key sectors and help India regain lost market share.

Structural concerns on the import side were also flagged, particularly India's heavy dependence on energy and gold imports, which continue to exert pressure on the trade balance. Electronics imports remain elevated as well, underscoring the need for deeper domestic manufacturing through incentive schemes.

Despite these challenges, the CEO said global supply chain realignment under the "China plus one" strategy continues to benefit India, with multinational companies increasingly diversifying sourcing away from China. On currency movements, Sahai noted that the depreciation of the rupee has provided some cushion to exporters, particularly in sectors with low import intensity. However, the benefit is limited in segments like electronics and gems and jewellery, where import dependence remains high.  End

Reported by Kabir Sharma and Shruti Nair

Edited by Deepshikha Bhardwaj

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