Uttar Pradesh’s Export Strategy to Offset U.S. Tariffs

Context:

• The imposition of 50% import tariffs by the United States on key Indian exports has significantly impacted export-oriented clusters in Uttar Pradesh, particularly carpets, textiles, leather goods, and handicrafts.

• In response, Uttar Pradesh has unveiled its Export Promotion Policy 2025–30, aiming to mitigate tariff shocks, diversify markets, and strengthen export competitiveness.

Key Highlights:

Impact of U.S. Tariffs

• U.S. tariffs have made exports from U.P.’s key sectors up to 33% costlier, leading to:

  • Reduced export orders

  • Production slowdowns

  • Income stress for MSMEs and artisans

• Tariffs, effective from August 27, 2025, threaten nearly $6.5 billion worth of trade.

• Inland exporters face additional challenges due to:

  • High logistics and shipping costs

  • Lack of direct port access, compared to coastal competitors like Vietnam and Mexico.

Export Promotion Policy 2025–30

• The policy provides a comprehensive support framework to exporters affected by global trade barriers.

• Key features include:

  • Performance-linked export grants up to ₹20 lakh per exporter per year.

  • Capital subsidy of 40% for export-oriented projects.

  • Interest subvention to reduce credit costs.

  • 75% freight reimbursement, easing logistics burdens for inland exporters.

  • Promotion of virtual trade fairs to access markets in Europe and Asia, reducing dependence on the U.S.

Market Diversification and Trade Strategy

• Focus on trade diversification to reduce over-reliance on a single market.

• Encouragement to explore:

  • European Union

  • East and Southeast Asian markets

• Virtual platforms and enhanced marketing assistance aim to connect small exporters with global buyers.

Role of ODOP Scheme

• The One District One Product (ODOP) remains central to the strategy.

• Covers 75 districts, each specialising in a unique product.

• Benefits include:

  • Empowerment of artisans and MSMEs

  • Preservation of traditional skills

  • Promotion of inclusive and regionally balanced growth

Infrastructure and Logistics Push

• Development of new logistics parks and air cargo facilities, especially in:

  • Bundelkhand region

• Key hubs identified:

  • Bharat Mandapam

  • Jewar International Airport

• Objective is to:

  • Reduce transport time and cost

  • Improve supply chain efficiency

  • Enhance export reliability

Investment and Long-Term Vision

• A ₹1 trillion global investment plan aims to:

  • Modernise export infrastructure

  • Attract global buyers

  • Upgrade technology and quality standards

• The approach reflects sub-national trade diplomacy, where states complement national trade policy.

Broader Significance

• Demonstrates how states can respond proactively to external trade shocks.

• Highlights the importance of:

  • Export subsidies and incentives

  • Logistics-led competitiveness

  • MSME-centric export growth

• Aligns with India’s broader goal of export resilience amid global protectionism.

UPSC Relevance (GS-wise):

• GS Paper 3 – Indian Economy

  • Prelims:

    • Export subsidies, PLI, trade diversification, MSME exports.

  • Mains:

    • Impact of protectionism on Indian exports.

    • Role of state-level policies in boosting exports and employment.

• GS Paper 2 – International Relations

  • Prelims:

    • Tariffs, bilateral trade barriers.

  • Mains:

    • Sub-national responses to global trade challenges.

    • Need for market diversification in India’s trade strategy.