The country’s exports have demonstrated steady performance in FY26. The total merchandise and services exports for the April-December 2025 period were estimated at USD 634.26 billion, up 4.33% from USD 607.93 billion in the same period last year. Expectations in certain quarters are currently building up. Trade expects the cumulative exports to grow to US$1 trillion in FY27. The ongoing negotiations for an interim trade agreement with the US, which are expected to be finalised soon, the India–EU free trade agreement, likely to be implemented by the end of this year, and the UK FTA, expected to come into force by April 2026, are all anticipated to boost India’s export sector.
To explore the nation’s full export potential, the Union Budget 2026‑27 places international trade at the heart of India’s growth agenda. Recognising exports as a critical driver of job creation, industrial advancement, and foreign exchange generation, the Budget introduces targeted measures across manufacturing, services, Special Economic Zones (SEZs), infrastructure, logistics, and ease of doing business to strengthen India’s export competitiveness. In fact, India has set a target to achieve total exports of USD 2 trillion by 2032-33 (originally set for 2030), with merchandise and services sectors contributing roughly USD 1 trillion each.
However, ambition alone does not drive outcomes. The trade deals will create a structural framework to boost global trade participation and global value chain integration for India. The bottom line is that the trade finance ecosystem of the country needs to support the growth ambition and help exporters to leverage the emerging market access opportunities. A robust trade finance ecosystem is the key to building the foundation to grab the opportunities and drive inclusive economic growth. But without adequate access to trade credit, insurance, and liquidity, exporters cannot scale to meet rising demand.
Structural Financing Gap
The global trade finance landscape tells an important story. In economies like China, banking institutions play a strategic role in extending export credit in favourable financing terms and other support to boost exports. In contrast, exporters in economies like Vietnam continue to face constraints in accessing export credit insurance. The scenario has led to the global trade finance gap widening from US$1.5 trillion in 2015 to US$2.5 trillion in 2025 which was 10% of global merchandise trade flows, as per an estimate of the Asian Development Bank. In short, the data indicates that the demand for trade finance at the overall global level still remains underserved.
India is not immune. The export sector is also witnessing a lack of access to credit. As per DGFT data, in FY24, export credit accounted for US$124.7 billion – 28.5% of the estimated requirement of USD284 billion. According to FIEO, export credit under Priority Sector Lending (PSL) fell from Rs 19,861 crore (estimated at US$ 2.5 billion) in July 2022 to Rs 11,721 crore (estimated at USD 1.4 billion) by June 2024, marking a decline of over 40%. These figures indicate a clear disconnect between export ambition and financing capacity.
Expanding Solutions Spectrum
The answer is to strengthen the trade finance infrastructure of the country. It needs to have solution diversity. The strategy involves enhancing export credit and guarantee schemes, broadening the reach of factoring and receivables financing, and designing capital relief frameworks that encourage greater participation by private credit insurers. Integration of technology-enabled platforms into the trade financing mechanism will improve accessibility, transparency, and risk evaluation.
It is a multi-layered approach, and it is required to address the varied needs of exporters across sectors and sizes. For MSMEs, central to India’s export competitiveness, access to affordable working capital is often the decisive factor between fulfilling international orders and forfeiting them. There is an urgent need to develop collaboration among banks, fintechs, and global partners to build scalable solutions.
Digitisation as a Strategic Lever
For that to happen, digitising should be the way forward, as it will build the pathway for better operational and cost efficiency as well as quicker processing capability. Moreover, there should be a continued focus on offering MSME-targeted credit facilities.
There should also be a uniform regulatory framework. Standards harmonisation also deserves equal attention to navigate regulatory compliance hurdles across geographies. The Model Law on Electronic Transferable Records (MLETR), developed by the United Nations Commission on International Trade Law (UNCITRAL) is expected to redefine security, efficiency and standardisation in global trade. Therefore, the adoption of electronic transferable records will facilitate smooth and efficient access to trade finance solutions.
The potential gains from digitizing trade finance are significant. A report by the Boston Consulting Group (BCG) for the International Chamber of Commerce (ICC) indicates that adopting digital solutions could help global trade banks save US$2.5–6 billion per year, based on a total cost base of US$12–16 billion. So, digitisation must gain momentum to build competitiveness.
Public–Private Partnership: Unlocking Liquidity at Scale
Apart from digitisation, ensuring adequate liquidity across the trade finance ecosystem is equally important. The Berne Union Yearbook (2024) data on export credits offer a reality check on the dissimilarity in public sector participation in the export credit across regions. For instance, in the sub-Saharan Africa region, public institutions offer approximately two-thirds of short-term credit. In Latin America and South Asia, government participation is closer to one-third. On the other hand, exporters in North America rely majorly on private credit.
So, export credit ecosystems need to be strategically structured to meet the demand. In India, government interventions under Niryat Protsahan sub-scheme to boost MSME exports and improve access to trade finance are welcome developments. Nevertheless, a combination of government support and private capital can significantly narrow the trade financing gap.
Acing the Export Target
The trade deals have boosted global market accessibility for Indian exporters. But, trade engagements are not sufficient to attain the US$2 trillion exports target by 2032-33. The mission calls for the development of an inclusive, technologically advanced and globally interoperable trade finance ecosystem. Such a dynamic environment can be created by strengthening policy frameworks, expanding credit availability, adopting digitisation and building a robust public-private collaboration.
This article is authored by Kaushal Sampat, President at Vayana.
