India's Union Budget 2025-26, delivered by Finance Minister Nirmala Sitharaman on March 3, 2025, aims to position the country as a resilient player amid global trade fluctuations and economic adjustments among major economies. The budget is significant at this pivotal moment when countries like the United States, China, and the European Union are recalibring their trade policies, thereby influencing global market dynamics.
This latest budget seeks to boost India's export performance by introducing several targeted reforms and initiatives aimed at enhancing domestic manufacturing and optimizing import dependencies. Among its various provisions, the government has put forth incentives, such as tax benefits and subsidies, alongside the implementation of Production-Linked Incentive (PLI) schemes, which prioritize showcasing India's manufacturing capabilities on the global stage.
The budget has allocated ₹2,250 crore under the Export Promotion Mission with the goal of facilitating Indian businesses' entry and growth within international markets. Specifically, the pharmaceutical sector received ₹1,615 crore to solidify India’s global standing, reflecting the country’s strength within this industry, whereas ₹2,300 crore was designated for the Biotechnology Research, Innovation and Entrepreneurship Development (Bio-RIDE) program, which aims to expand biotech exports.
Simultaneously, the overarching strategy articulated within the budget focuses on managing imports to reduce the trade deficit. By raising import duties on luxury items and select raw materials, the government seeks to curb unnecessary imports and encourage local production. The strategy concomitantly extends to bolstering sectors such as pharmaceuticals, automobiles, and information technology to boost high-value exports.
Infrastructure development is fundamental to this budget. A substantial ₹1.70 lakh crore is designated for the National Highways Authority of India (NHAI) to improve roadway connections to ports, which is expected to facilitate quicker transport of export goods. This infrastructure boost, alongside ₹31,239 crore allocated for metro projects and ₹5,649 crore for border connectivity, is integral for streamlining trade operations.
Highlighting the considerable role of Micro, Small, and Medium Enterprises (MSMEs) within India's export ecosystem, the budget commits ₹9,000 crore to the Guarantee Emergency Credit Line (GECL) and additional funding for programs like the Prime Minister Employment Generation Programme (PMEGP). These financial safeguards are geared to support small businesses entering global markets and improving competitive positions abroad.
Add to this India's commitment to establishing strategic international partnerships through negotiating Free Trade Agreements (FTA) with entities such as the European Union, the UAE, the United Kingdom, and Australia. These agreements strive to open new market doors for Indian exports by facilitating reduced tariffs and increasing foreign investment within key industries.
While the budget reflects optimism about India's global trade prospects, the manufacturing sector's performance has experienced recent fluctuations. Notably, the HSBC India Manufacturing Purchasing Managers Index (PMI) dipped to 56.3 in February 2025 from 57.7 the previous month, indicating moderated growth within the sector but still remaining above the neutral mark of 50, which defines sector expansion. According to HSBC chief India economist Pranjul Bhandari, the manufacturing sector continues to benefit from strong global demand, improving purchasing activities, and increased employment levels.
Additional insights reveal, "Business conditions improved across all three monitored sub-sectors: consumer, intermediate and investment goods," as Bhandari underlined. With the manufacturing sector actively responding to new export orders, particularly from global markets, hopes remain high for continued job creation and business growth.
Examining specific sectors, the sugar industry presents compelling developments as well. Deepak Ballani, Director General of the Indian Sugar and Bio-Energy Manufacturers Association (ISMA), indicated on March 3, 2025, during reports about sugar exports, "We want to complete the exports for which the government has allowed us," referencing India’s 1 million tonne sugar export quota for the current marketing year. He reported significant strides have already been made, with projections for achieving this quota within just two months.
Ballani articulated the perspective on sugar market dynamics, addressing how India's ample stock—an anticipated 352 lakh tonnes for the next marketing season—is fostering favorable export conditions, even post-target completion. "Even after the 10 lakh tonne exports, we will still have higher closing stock," he emphasized, pointing out the comfort in overall sugar availability.
Overall, India's Union Budget 2025-26 establishes the country’s commitment to reshaping its export narrative by engaging with the realities of changing global economic conditions. The government's multifaceted approach of reform, investment, and partnership signifies its intent to transform India’s position within the global trade framework. Through cohesive strategies and proactive planning, India is set to not merely keep up with global trends but also aim for growth as it endeavors to become a more competitive international player.