India should lower tariffs and dismantle non-tariff barriers across the value chain, as opening its markets is critical to improving competitiveness in manufacturing, NITI Aayog CEO BVR Subrahmanyam said on Monday. Stating that India lacks many manufacturing intermediates, he said the upcoming National Manufacturing Policy (NMP) is expected to address such issues. “Hopefully, the (NMP) will address a lot of these challenges. It will focus on clusters and aim at the best world-class ecosystem for trade,” the NITI CEO said, while launching the Trade Watch Quarterly for Q4FY25. After GST 2.0, Subrahmanyam said another round of major reforms is expected before Diwali, with the Rajiv Gauba-led committee having already submitted its first set of reports on these measures. Former Cabinet Secretary and NITI Aayog member Rajiv Gauba heads two panels to drive next-gen reforms and the Viksit Bharat goals. Subrahmanyam said he was hopeful that a trade agreement would be concluded between India and the US soon, before American tariffs actually impact Indian exporters after November. “US tariffs have not yet impacted our trade, as unwinding trade channels is difficult and these disruptions do not happen overnight,” Subrahmanyam said. “We foresee normal exports for Christmas and spring, but summer could be difficult if the trade deal between the two countries does not conclude by November.” According to Trade Watch Quarterly for Q4FY25, the implementation of the Quality Control Order (QCO) requires manufacturers to obtain a BIS hallmark and a licence for input items. While this strengthens product quality standards, it risks disproportionately impacting smaller units, which may be unable to source components only from approved suppliers, the report said. “To avoid closures and support industry continuity, the QCO should be implemented in phases with simpler compliance requirements and wider acceptance of accredited testing reports,” according to the report. “Exemptions should particularly apply to inputs used in mass-market footwear, such as canvas shoes and rubber slippers. At the same time, stricter checks are needed on imports rerouted through FTAs such as those with ASEAN and SAFTA partners to ensure adherence to rules-of-origin norms, as these trade routes are often used to channel Chinese imports,” the NITI Aayog report said. India needs to strengthen skilling and technology adoption by expanding apprenticeship-based training, promoting R&D for design innovation, and bridging material gaps through domestic production of soles, moulds, and synthetic uppers. There’s a need to modernise fragmented MSME clusters by developing vertical industrial complexes and plug-and-play parks offering shared testing, compliance, logistics, and machinery access to cut costs and boost competitiveness, the report said. The NITI Aayog Trade Watch report said the challenge has intensified in 2025 with decelerating bank lending growth and the expiry of the Interest Equalisation Scheme, which had lowered export borrowing costs. Policy programmes such as the Indian Footwear & Leather Development Programme (IFLDP), with an outlay of Rs 1,700 crore, focus on infrastructure, skilling, and technology, but do not address working capital needs, the report said. Highlighting the challenges these units face while importing raw materials, the report said in clusters such as Agra, fragmented raw material sourcing can raise costs by up to 40 per cent and delay production. The think tank added that India’s higher tariffs on raw materials compared with its competitors worsen the problem. The think tank said that footwear manufacturers have limited exposure to international market fairs and often end up replicating existing trends rather than innovating. To boost competitiveness, it recommended the establishment of dedicated R&D units in the footwear sector to drive industry — academia collaboration and strengthen market research, enabling innovation, alignment with global trends, and deeper integration into international markets.
