International Trade And Competitiveness Of Indian Businesses: Opportunities And Challenges
Keywords:
International trade; Export competitiveness; Revealed comparative advantage; Global value chains; Non-tariff barriers; Free trade agreements; Indian businessesAbstract
International trade has become the principal channel through which Indian businesses access demand, technology
and scale, yet competitiveness remains uneven across sectors and firms. This paper empirically examines the
opportunities and challenges shaping the international competitiveness of Indian businesses between 2015–16
and 2024–25. It integrates ten years of secondary trade, investment and value-chain data with a survey of 300
exporting firms in manufacturing and services. Competitiveness is measured using revealed comparative
advantage (RCA), compound annual growth rates, a constant-market-share decomposition, and global value
chain (GVC) participation indices, supported by correlation and regression analysis. Total exports of goods and
services reached US$ 825 billion in 2024–25, but growth has narrowed around engineering goods, electronics,
pharmaceuticals and services, while textiles, gems and jewellery stagnate. RCA confirms advantage in gems and
jewellery, marine products, pharmaceuticals and chemicals, a marginal advantage in petroleum and agriculture,
and a persistent deficit in electronics. Services exports contributed almost the entire incremental growth of 2024
25 even as the merchandise deficit widened to US$ 282.8 billion. Firm-level evidence shows that non-tariff
barriers, tariff escalation, logistics costs, finance and skills shortages are the dominant constraints, whereas free
trade agreements, digital commerce, services offshoring and production-linked incentives are the strongest
perceived opportunities. The analysis links macro trade outcomes to firm-level strategy. The study concludes that
competitiveness is shifting from cost-based to capability-based advantage, and recommends tariff rationalisation,
standards harmonisation, logistics reform, export credit deepening and GVC-oriented industrial policy that
connects these findings to the opportunities and challenges identified throughout the analysis.
