In its budget on Saturday, the government has gone all out to boost exports with a Rs2,250 crore Export Promotion Mission at a time when there is growing protectionism and increasing global uncertainty.

The mission will be set up with sectoral and ministerial targets, and will be driven jointly by the ministries of commerce, small and medium enterprises, and finance.

“It will facilitate easy access to export credit, cross-border factoring support, and support to MSMEs to tackle non-tariff measures in overseas markets,” Nirmala Sitharaman said in her budget speech.

Bharat Trade Net

The government will also set up a digital public infrastructure, dubbed Bharat Trade Net (BTN), “as a unified platform for trade documentation and financing solutions,” Sitharaman said.

The BTN will complement the Unified Logistics Interface Platform (ULIP) and will be aligned with international practices.

The ULIP is designed to streamline and integrate the various processes involved in logistics and supply chain management across different service providers and stakeholders.

The platform aims to improve efficiency, reduce costs, and enhance the transparency of logistics operations in India. The BTN will work alongside ULIP to further align India’s logistics sector with international practices, focusing on standardization and optimization.

Bharat Trade Net should be designed to share information automatically with relevant agencies for faster approvals, ideally within 2-5 hours, to streamline export documentation and reduce bureaucratic delays, Ajay Srivastava, founder and chairman of the Global Trade Research Initiative in New Delhi, said.

Srivastava also suggested a user-friendly online platform that would allow businesses to handle all compliance in one location, potentially enabling over 100,000 small firms to begin exporting within a year.

Srivastava also stressed on the need for a business-centric approach to government-business interfaces, rather than a department-centric one.

He proposed the creation of a National Trade Network (NTN) to centralize all export-import compliance processes. This unified system would replace the need for businesses to interact separately with customs, the Directorate General of Foreign Trade (DGFT), shipping companies, ports, and banks, he said.

Access to credit

On the export promotion mission’s goal to simplify and improve access to credit, especially for small and medium-sized enterprises (SMEs), Srivastava said, “A key question is whether the new provisions will cover only pre-shipment and post-shipment credit, which are short-term working capital loans, or it will extend credit for business expansion and machinery purchases. ”

He said a major industry concern is that the Interest Equalization Scheme (IES), which reduces borrowing costs for exporters, has only been extended by a few months.

Launched in 2015, the IES helps exporters by subsidizing the interest rates on pre-shipment and post-shipment export credit, effectively reducing their borrowing costs.

The scheme is designed to make Indian exports more competitive by aiding exporters in managing the financial costs associated with their business operations.

A five-year extension would have provided much-needed stability, Srivastava said, adding that introducing collateral-free loans for small exporters could have boosted their global competitiveness.

Integration into global value chain

The government aims to boost domestic manufacturing to integrate better with global supply chains. Sitharaman stated that specific sectors will be identified using objective criteria and that facilitation groups, including senior officers and industry representatives, will be established for certain products and supply chains.

She highlighted the significant opportunities related to Industry 4.0, which require advanced skills and talent, noting that Indian youth possess these qualities. The government plans to support the domestic electronic equipment industry to capitalize on this, benefiting the youth.

Srivastava emphasized that India’s deeper integration into the Global Value Chain necessitates a seamless flow of goods across customs and ports. He warned that delays could disrupt the entire production chain and result in exclusion from the network.

He pointed out that countries like China, Japan, South Korea, Thailand, and Malaysia have become leaders in high-tech manufacturing by investing in quality trade infrastructure, whereas India struggles with efficient operations at many ports and customs.

Revamp of investment treaties

Srivastava stressed that strong political leadership is crucial for the successful implementation of the Bharat Trade Net (BTN). He observed that in countries where similar systems have worked well, projects were typically led by the Prime Minister.

“In most countries where similar systems were successful, the Prime Minister directly led the project. Without high-level intervention, departmental priorities may slow down progress,” he said.

The finance minister announced that India signed bilateral investment treaties with the UAE and Uzbekistan in 2024, as proposed in the interim budget.

She said the current model BIT will be revamped to be more investor-friendly, in line with the philosophy of ‘first develop India.’

Srivastava noted that a modernized BIT framework should balance protecting India’s policy interests while giving foreign investors confidence in legal protections.

He criticized India’s previous rigid stance on investment treaties, which he said cost the country valuable foreign investments and created obstacles in international negotiations.

He recalled India’s decision to cancel 77 of its over 80 BITs by 2016 following adverse arbitration rulings in high-profile cases like Cairn Energy, Vodafone, and White Industries, describing it as an overreaction.

With India on the verge of becoming the third-largest economy and a global manufacturing hub, he argued that the government must adopt an investment regime that encourages, rather than discourages, investors.