India's exporters, already grappling with significant challenges, are pinning high hopes on the upcoming Union Budget 2026 for meaningful relief. The sector has been severely impacted by U.S. President Donald Trump's imposition of up to 50% tariffs on Indian goods, affecting key areas such as textiles, leather, footwear, gems and jewellery, engineering goods, and pharmaceuticals. These measures have created an unpredictable environment, threatening millions of jobs—particularly in labor-intensive clusters like Tirupur in South India, where over a million workers, many women, supply American brands.

While the government has responded with initiatives like extended export credit (over ₹4,000 crore in recent support), assistance for exploring new markets (at least 40 additional ones tapped), and ongoing Free Trade Agreement (FTA) negotiations—including major deals with the UK, Australia, UAE, and the anticipated "mother of all deals" with the EU—the industry argues these steps form only part of the solution. Exporters are calling for deeper structural reforms to enhance competitiveness, ease liquidity pressures, and reduce operational hurdles.

A core demand centers on simplifying India's complex customs duty structure, currently comprising eight slabs. Exporters advocate consolidating this into a more predictable four- or five-tier (or even fewer) system to lower compliance costs, minimize uncertainty at ports, and boost ease of doing business and global competitiveness. They also seek lower import duties on critical raw materials, such as synthetic fibers and chemicals, ensuring these inputs remain cheaper than finished goods to strengthen domestic value-added manufacturing and exports.

Liquidity remains a major pain point, with delayed refunds choking working capital—especially for MSME exporters. The industry expects the budget to mandate fully automated refunds within a strict three-day timeline, easing financial stress. Additional proposals include viability gap funding for Indian shipping lines to reduce dependence on foreign carriers, which has inflated freight costs and eroded reliability, and stricter mandatory timelines for granting Authorized Economic Operator (AEO) status to speed up trade facilitation benefits.

Innovation and global branding are also priorities. Exporters want the restoration and extension of a 200% weighted tax deduction for in-house R&D, including to MSMEs and LLPs, to encourage moving up the value chain. MSMEs specifically seek a similar 200% tax reduction on overseas branding and marketing expenses, as participation in global trade fairs is costly yet essential for scaling Indian brands internationally.

A senior economist, acknowledged the severe impact of Trump's escalating tariffs (from 25% threats to 50% impositions), affecting $40-50 billion in exports across multiple sectors. He supported much of the wish list as realistic and creative, noting government efforts like FTAs and market diversification, but cautioned against overly generous incentives that could invite misuse or tax evasion. He emphasized that budget announcements are not a one-off event, with ongoing decisions via bodies like the CCEA providing further support.

A former senior official of the commerce department stressed adherence to WTO rules amid U.S. protectionism, which he called an aberration. He urged prioritizing labor-intensive sectors like textiles, apparel, leather, and gems/jewellery, while supporting faster refunds, credit facilitation through institutions like Exim Bank and ECGC, and ensuring measures remain fiscally viable. He noted that pre-budget packages have already helped offset some U.S. market losses through new destinations, with FTAs (like those with UAE and Australia) yielding benefits, though others await ratification.

President of a key industry body, highlighted how MSMEs face handicaps outside factory gates—logistics, high cost of funds, and policy unpredictability—despite being competitive once goods are produced. He pointed to inverted duty structures (e.g., higher duties on inputs like viscose staple fiber or isopropyl alcohol compared to finished goods) that punish domestic manufacturers. He called for balanced protection, improved logistics (ports, coal chains, connectivity), fiscal predictability, policy continuity, and aggressive FTA leverage through a dedicated "war room" in the Commerce Ministry to prevent past losses seen in deals with Japan, Korea, and ASEAN.

Another economist speaking from Indonesia, agreed on the need for government support but emphasized long-term competitiveness without abandoning manufacturing. Drawing from East Asian miracles, she advocated subsidies tied to job creation, raw materials, and infrastructure rather than just production. She stressed deregulation (especially burdensome land-use setbacks for MSMEs), investment in renewable energy to lower power costs (a major expense), and market diversification with targeted government aid for marketing. She warned against following paths where countries gave up manufacturing for services or agriculture.

As the budget approaches, exporters and stakeholders remain cautiously optimistic, hoping for announcements that address both immediate pain from global headwinds and structural reforms to build resilience. The discussion underscores a consensus: while diversification and FTAs offer promise, targeted fiscal and policy support is crucial to safeguard jobs, boost value-added exports, and position India competitively in a turbulent global trade landscape.