At a time when India’s trade negotiations with the United States remain stalled, NITI Aayog Chief Executive Officer B V R Subrahmanyam has called for a decisive pivot toward Asia – including China – in the country’s trade strategy, along with stronger commercial linkages with neighbouring economies, media reported.
“Focus on Asia big time. There is no escaping that,” Subrahmanyam said during the launch of NITI Aayog’s Trade Watch quarterly report, which analysed India’s leather and footwear trade. “If you are not able to sell much to China, it’s pointless, because it’s an $18 trillion economy – you can’t avoid that. Good countries have trade surpluses with China. If you are competitive, they will buy our goods,” he remarked.
According to media, Subrahmanyam downplayed the short-term impact of Washington’s 25 per cent tariffs on Indian exports, saying they were unlikely to cause major disruptions until Christmas. However, he cautioned that “summer is going to be an issue” if both countries fail to reach a trade deal in time.
Reflecting on India’s lost opportunities, the NITI CEO said the country had “missed the bus” compared to rivals such as Vietnam when global supply chains and jobs were being relocated. He attributed this to India’s high tariff walls designed to protect large domestic players, which in turn reduced the competitiveness of labour-intensive sectors like footwear.
Subrahmanyam urged India to “reset and sharpen” its trade focus toward Asia, warning that failure to do so could push the country further behind. “It is very important for us to do so. The Asian harmonisation is worth a stringent import,” he said, as cited by the media.
He also underlined the need for balancing relations with both “difficult” and “friendly” neighbours, noting that while the US remains an essential trading partner, India must avoid overdependence and move towards a more balanced regional trade framework.
Regional Dominance of China
As noted, Subrahmanyam had earlier argued in favour of India joining both the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). However, Commerce Minister Piyush Goyal has consistently ruled out rejoining RCEP, from which India withdrew at the last moment in 2019.
In FY25, nearly 40 per cent of India’s exports were directed to other Asian economies – led by West Asia (21 per cent), ASEAN (8.9 per cent), North-East Asia (8 per cent), and South Asia (5.6 per cent). Despite Asia’s strong growth potential, this distribution underscores the limited diversification of India’s trade base.
External Affairs Minister S Jaishankar had also stressed on Sunday the importance of diversifying India’s trade engagements, observing that most of the country’s early FTAs were with ASEAN, thereby limiting further expansion potential. “Asia presents a pathway to strong economic growth,” he had said, according to Business Standard.
‘FTAs Could Bring Transparency’
Subrahmanyam told Business Standard that signing Free Trade Agreements (FTAs) with major export markets was essential to deepen India’s economic engagement. “FTAs like those with the EU will be driven by genuine market growth potential in the region. We are striving for understanding, not dependency,” he remarked.
On the US Trade Deal
Regarding prospects of a bilateral deal with Washington, Subrahmanyam said both sides remained committed to achieving a “mutually beneficial” pact. He added that despite punitive 50 per cent tariffs on Indian goods, no immediate disruption was likely. “Building a trade channel is difficult, and unwinding it is even more difficult. No impact will happen till Christmas,” he said, warning again that unresolved issues by next summer could become problematic.
“We are at a disadvantage… 50 per cent tariffs are a major cost factor. People are hopeful that if a trade deal comes through by November, then there will be no disruption,” media quoted him as saying.
Jaishankar, meanwhile, reiterated that any trade arrangement must respect India’s “bottom lines and red lines”, adding that both sides had yet to find a “landing ground” for talks.
‘India Missed the Bus’
According to NITI Aayog’s trade report highlighted that India’s tariff rate of around 10 per cent on leather and footwear inputs puts it at a disadvantage compared to countries like Vietnam and Turkey, which maintain much lower duties. This has made their exports to Western markets more competitive.
Between 2007-08 and 2020, India’s share in global exports slipped from 2.6 per cent to 1.8 per cent, while Vietnam’s rose from 1.7 per cent to 3.5 per cent during the same period. The report attributed Vietnam’s success to multiple rounds of tariff reductions and proactive integration with global value chains.
The report noted that the Aayog’s findings urge India to pursue market-access deals with the EU and the US, strengthen sectoral competitiveness, and ensure a level playing field. “If we don’t do this now, we’ll be left behind – not just in leather or footwear, but even in sectors like automotive,” Subrahmanyam warned.
He further emphasised that India must build a stronger manufacturing and services base, supported by a robust regulatory framework, to negotiate trade agreements from a position of strength.
Growth Momentum
Separately, cited economists saying that GDP growth likely remained strong in the second quarter, although private consumption slowed during July and August due to US tariff uncertainties. “Consumption remained subdued for a few months even after GST rate cuts. The positive impact of those will appear in the coming quarters,” said Madan Sabnavis, Chief Economist at Bank of Baroda.
