Prime Minister Narendra Modi’s Principal Secretary highlights the need for India to cut import dependence, strengthen manufacturing, and shift towards innovation to safeguard against global trade disruptions amid rising deficits and protectionist measures.
India must cut its dependence on imports and build more goods at home if it is to navigate a world of fraying alliances, vulnerable supply chains and rising trade barriers, Prime Minister Narendra Modi’s Principal Secretary Pramod Kumar Mishra said on Wednesday.
India’s merchandise trade deficit widened sharply to $147.09 billion in April-August 2026-27 from $123.88 billion a year earlier, according to commerce ministry data cited by Business Standard. Imports rose to $363 billion from $307.09 billion, while exports climbed to $215.91 billion from $183.21 billion, underscoring the pressure on the country’s external accounts even as overall trade flows expanded.
Mishra said India could no longer assume that global trade will remain open or predictable. Speaking at an event reported by Business Standard, he said supply chains are increasingly being used “as weapons”, capital can be switched on and off, and both tariff and non-tariff barriers are rising again. He also warned that India cannot rely on a friendly trade agreement to shield it from external shocks.
The commerce ministry’s broader export figures show a mixed picture. India’s cumulative merchandise and services exports in April-August 2026-27 reached $399.27 billion, up 15.55% from a year earlier, according to official data highlighted by the India Brand Equity Foundation. For August alone, total exports rose 25.41% to $82.68 billion, helped by stronger shipments of electronic goods, engineering goods and petroleum products. Even so, the merchandise trade deficit widened over the five-month period, suggesting import growth is still outpacing the gains from exports.
Against that backdrop, Mishra argued that India must do more than simply expand output. He called for stronger manufacturing, better skills for the young workforce, more foreign direct investment and a policy environment that investors can trust. That means stable taxes, reliable contracts, logistics that work and approvals that are actually granted, he said.
He also pressed for a shift in the way credit is extended to smaller firms. Instead of relying mainly on collateral, lenders should make greater use of cash-flow-based assessments drawn from GST returns, bank statements, payment data and the account aggregator framework. That approach, he said, would better serve first-generation entrepreneurs, asset-light exporters and smaller businesses whose strength lies in their operations rather than in family-owned property or other assets.
Mishra said the challenge for India’s financial system is no longer simply to deepen access to banking, but to support growth at scale. He said the economy will need vast amounts of capital over the next two decades for infrastructure, manufacturing, energy transition, enterprise and innovation, and that banks alone cannot shoulder the burden. India will need deeper bond and equity markets, larger institutional investors and more efficient ways of turning domestic savings into productive investment.
He also tied that financial agenda to industrial policy. Production-linked incentives have helped draw investment into 14 sectors, he said, but manufacturing should be seen as a foundation rather than the final goal. India must move towards greater domestic value addition, stronger component ecosystems, better design capability, intellectual property and brands that can compete globally. In his words, the country’s ambition should progress from “Make in India” to “Design in India”, then “Innovate in India” and ultimately “Lead from India”.
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