Lok Sabha Question No. 5031 (UNSTARRED), answered on 2025-04-01
Subject: Widening Trade Deficit
Ministry: COMMERCE AND INDUSTRY
Asked by: Dr. Kalyan Vaijinathrao Kale

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY (DEPARTMENT OF COMMERCE)

## LOK SABHA UNSTARRED QUESTION NO. 5031 ANSWERED ON 01/04/2025

## WIDENING TRADE DEFICIT

## 5031. DR. KALYAN VAIJINATHRAO KALE :

Will the Minister of COMMERCE AND INDUSTRY ( वाणिज्य एवं उद्योग मंत्री ) be pleased to state:

- (a) the steps being taken to address the widening trade deficit and the strategies for boosting exports in key sectors such as petroleum, gems and jewellery and chemicals, which have shown significant contractions;
- (b) whether  the  Government  has  conducted  an  assessment  of  the  impact  of  geopolitical tensions and logistical disruptions on export flows to markets like Europe, Africa and the CIS and if so, the measures being implemented to mitigate these challenges;
- (c) the progress made in Free Trade Agreement (FTA) negotiations with the UK, ASEAN and the  EU and the extent  to  which  these  agreements  aim  to  enhance  trade  opportunities  and reduce the trade imbalance; and
- (d) the  initiatives  being  undertaken  to  improve  the  export  performance  of  resilient  sectors such  as  electronics  goods  and  readymade  garments,  which  have  shown  growth  amidst  global challenges?

## ANSWER

## वाणिज्य एवं उद्योग मंत्रालय में राज्य मंत्री ( श्री णिणिन प्रसाद ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (SHRI JITIN PRASADA)

(a) The trade deficit in petroleum has been largely on account of decline in petroleum prices and subdued demand in certain European countries and Australia. While, the petroleum product exports have gone up in volume terms, the export value realisation has declined. The dependence of India on petroleum imports is to the tune of 88% of domestic demand and this has meant a sustained  trade  deficit  in  petroleum  products.  In  gems  and  jewellery  segment,  the  decline  in exports has been largely on account of reduction in discretionary spending in USA, UAE and

Hong Kong market. As far as chemicals are concerned, we have seen a decline of 12.41% during April to December, 2024 vis-à-vis corresponding period of last year. The steps being taken by the Government to boost exports from the country are at Annexure-I.

(b) The Government continuously monitors the impact of geopolitical tensions and logistical disruptions  on  export  flows.  Despite  prevailing  global  challenges,  India's  exports  to  the  CIS region  and  Europe  registered  a  growth  of  22.43%  and  3.14%  respectively  during  AprilDecember 2024 compared to the same period in the previous year. However, exports to certain African  countries,  including  Nigeria,  Togo,  South  Africa,  and  Namibia,  witnessed  a  decline, primarily due to restrictions on rice exports and a fall in petroleum product shipments.

To mitigate the  effects  of  such  disruptions,  the  Government  has  undertaken  various  measures including export diversification, strengthening of logistics infrastructure,  trade  facilitation, and support to exporters through schemes aimed at market development and access.

(c) India is actively engaged in Free Trade Agreement (FTA) negotiations with several key partners,  including  the  United  Kingdom  and  the  European  Union  (EU),  with  the  objective  of enhancing market access, diversifying export destinations, and addressing trade imbalances.

Negotiations with the United Kingdom were launched in January 2022, and 13 rounds have been completed.  Recent  discussions  in  February  2025  focused  on  a  range  of  areas  including  trade, technology, health, and green finance. The talks are aimed at reaching a balanced agreement that supports enhanced trade opportunities for both countries.

With  the  EU,  FTA  negotiations  resumed  in  June  2022,  and  ten  rounds  have  been  held  as  of March  2025.  The  agreement  is  expected  to  facilitate  greater  cooperation  in  trade,  mobility, digital transformation, and investment, thereby contributing to increased economic engagement between India and the EU.

Regarding ASEAN, India is currently undertaking a review of the ASEAN-India Trade in Goods Agreement (AITIGA), which came into force in 2010. Four rounds of review negotiations were held  in  2024.  The  review  seeks  to  make  the  agreement  more  effective,  equitable,  and  tradefacilitative.  India's  exports  to  ASEAN  have  nearly  doubled  since  the  agreement  was  signed, indicating the potential of such frameworks in strengthening trade ties.

These  FTAs  aim  to  reduce  tariff  and  non-tariff  barriers,  simplify  procedures,  and  address structural issues to make Indian exports more competitive in partner markets.

(d) The  Government  is  implementing  various  schemes/initiatives  to  attract  and  incentivise large investments in the electronics value chain and promote exports under the National Policy on Electronics 2019 (NPE 2019) which aims to position India as a global hub for Electronics System  Design  and  Manufacturing  (ESDM)  by  encouraging  and  driving  capabilities  in  the country for developing core components, including chipsets, and creating an enabling environment  for  the  industry  to  compete  globally.  The  major  schemes/initiatives  include Production  Linked  Incentive  Scheme  (PLI)  for  Large  Scale  Electronics  Manufacturing  and

Production Linked Incentive Scheme (PLI) for IT Hardware for the development of robust and sustainable Semiconductor and Display ecosystem in the country.

The  Government  encourages  Indian  exporters  to  participate  in  the  exhibitions  and  provides grant-in-aid under Market Access Initiative (MAI) scheme wherein, regular bilateral institutional mechanism meetings are held with the Export Promotion Councils (EPCs) and Indian Missions abroad to explore new opportunities, identify and resolve trade issues, thereby increasing Indian exports.

Further, to promote  export  of textile sectors,  the  Government  is  implementing  various schemes/initiatives such as: (i) PM Mega Integrated Textile Regions and Apparel (PM MITRA) Parks  Scheme  meant  to  create  a  modern,  integrated,  world  class  textile  infrastructure;  (ii) Production  Linked  Incentive  (PLI)  Scheme  focusing  on  MMF  Fabric,  MMF  Apparel  and Technical  Textiles  to  boost  large  scale  manufacturing  and  enhancing  competitiveness;  (iii) SAMARTH -  Scheme  for  Capacity  Building  in  Textile  Sector  with  the  objective  providing demand driven,  placement  oriented,  skilling  program;  (iv)  Silk  Samagra-2  for  comprehensive development of sericulture value chain; (v) National Technical Textiles Mission was launched for a period of 2020-21 to 2025-26 focusing on Research Innovation & Development, Promotion and Market Development; (vi) National Handloom Development Program for end to end support for handloom sector. Ministry of Textiles is also implementing National Handicrafts Development  Programme  and  Comprehensive  Handicrafts  Cluster  Development  Scheme  for promotion of handicrafts.

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## Annexure-I

## Annexure referred to in reply of part (a) of Lok Sabha Unstarred Question No. 5031 for answer on 01 st April, 2025.

The Government has taken following steps to boost exports from the country:-

(i) The Foreign Trade Policy effective from April 1, 2023 is designed to integrate India more effectively into the global market, improve trade competitiveness, and establish the country as a reliable and trusted trade partner.

(ii) The  Directorate  General  of  Trade  Remedies  (DGTR)  actively  monitors  unfair  trade practices by foreign companies and recommend corrective remedial actions.

(iii) Production Linked Incentive (PLI) Schemes for 14 key sectors are under implementation to  enhance  India's  manufacturing  capabilities  and  exports.  The  Production  Linked  Incentive (PLI)  Scheme  is  positioning  India  as  a  key  player  in  the  global  value  chain  by  incentivizing manufacturing  in  high-growth  sectors  such  as  electronics,  pharmaceuticals,  and  renewable energy. The PLI scheme strengthens India's role in global supply chains, attracting significant FDI and integrating the country into critical production networks.

(iv) Assistance being provided through several schemes to promote exports, namely, Trade Infrastructure for Export Scheme (TIES) and Market Access Initiatives (MAI) Scheme.

(v) Establishment of 65 Export Facilitation Centres (EFCs) across the country with an aim to provide  requisite  mentoring  and  handholding  support  to  exporters  especially  MSMEs  in exporting their products and services to foreign markets.

(vi) The Interest Equalization Scheme on pre- and post-shipments of rupee export credit had also been extended to the MSME Sector up to December 31, 2024.

(vii) The Rebate of State and Central Levies and Taxes (RoSCTL) Scheme to promote labouroriented certain items of textiles sector export has been implemented since March 07, 2019.

(viii) Remission  of  Duties  and  Taxes  on  Exported  Products  (RoDTEP)  scheme  has  been implemented since January 01, 2021. The benefit of RoDTEP scheme had also been extended to sectors like steel, pharma and chemicals with effect from December 15, 2022 to enhance export competitiveness of these sectors. The benefits of the RoDTEP scheme have also been extended to exports from Domestic Tariff Area (DTA) units till September 30, 2025.

(ix) A Common Digital Platform for Certificate of Origin has been launched to facilitate trade and increase Free Trade Agreement (FTA) utilization by exporters.

(x) Districts as Export Hubs initiative had been launched by identifying products with export potential  in  each  district,  addressing  bottlenecks  for  exporting  these  products  and  supporting local exporters/manufacturers to generate employment in the district.

(xi) The  Government  has  launched  the  Trade  Connect  e-Platform  as  an  information  and intermediation  platform  for  international  trade  bringing  together  Indian  Missions  Abroad  and officials  from  Department  of  Commerce  and  other  organisations  to  provide  comprehensive services for both new and existing exporters.

(xii) Active  role of Indian missions  abroad  towards  promoting  India's  trade,  tourism, technology and investment goals has been enhanced.

(xiii) Regular  monitoring  of  export  performance  with  Commercial  Missions  abroad,  Export Promotion  Councils,  Commodity  Boards/  Authorities  and  Industry  Associations  and  taking corrective measures from time to time.

(xiv) The Government is also encouraging Vocal for Local Campaign by promoting awareness among  consumers  and  businesses  to  buy  Indian-made  products,  thereby  aiming  to  reduce demand for imported goods.

(xv) Agricultural  & Processed Food Products Export Development Authority (APEDA) has Central Sector specific scheme for Financial Assistance to facilitate the export of agri-products by providing assistance to exporters for augmenting export related infrastructure, participating in Buyer Seller Meets, etc.

(xvi) The APEDA is implementing the National Programme for Organic Production (NPOP). The  programme  involves  the  accreditation  of  Certification  Bodies,  standards  for  organic production, promotion of organic farming and marketing etc.

(xvii) The Marine Products Export Development Authority (MPEDA) provides assistance for upgrading  the  infrastructure  facilities  for  value  addition,  establishing  testing  laboratories, participating  in  international  trade  fairs,  and  providing  technical  assistance  for  aquaculture production meant for exports etc.

(xviii)  Quality Control Orders (QCOs) have been notified by Bureau of Indian Standards (BIS) for  improving  the  quality  of  Indian  products  and  to  prevent  import  of  substandard  goods  into Indian market.

(xix) The Department has awarded a Research & Development project to IIT- Madras in 202324 with an outlay of Rs. 242.96 Cr over 5 years to develop Chemical Vapour Deposition (CVD) and  High  Pressure  and  High  Temperature  (HPHT)  system.  This  would  make  technology available at affordable cost, increase employment and exports of Lab Grown Diamonds.

(xx) The  Department  has  introduced  Diamond  Imprest  Authorisation  (DIA)  Scheme  with effect from April 01, 2025 allowing duty-free import of Natural Cut and Polished Diamonds of less than 0.25 carat, with an obligation of value addition and export.

(xxi) Duty Free imports of Lab Grown Diamond Seeds have been extended for one more year in  the  Union  Budget  2025-26  to  reduce  input  costs  and  make  exports  competitive.  Further, applicability of Import of Goods at Concessional Rate (IGCR) on Lab Grown Diamond Seeds (LGD) has been removed in Union Budget 2025-26, for easy access of LGD seeds.

(xxii) The  Basic  Chemicals,  Cosmetics  &  Dyes  Export  Promotion  Council  (CHEMEXCIL), also  undertakes  various  initiatives  for  enhancing  exports  of  Organic  and  Inorganic  chemicals. These  include  organizing  Buyer-Seller  Meets  (BSMs),  Reverse  Buyer-Seller  Meets  (RBSMs), participation in trade fairs &  exhibitions in India and abroad, conducting awareness workshops/seminars on various chemical regulations and providing guidance and assistance to the members/exporters.

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