India drawing up list of export snags in South Asia

New Delhi: The government is mapping regulatory and market-access barriers faced by Indian exporters in seven South Asian neighbours as part of a drive to diversify overseas markets to achieve its $1-trillion total exports target this fiscal.

Exporters have been asked to flag hurdles such as import restrictions, licensing requirements, product standards, technical regulations, banking and payment restrictions, high import tariffs and delays in regulatory approvals, officials told ET. The government is also examining whether Indian testing laboratories are recognised in these markets.

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India’s merchandise exports to Afghanistan, Nepal, Bangladesh, Sri Lanka, Bhutan, Maldives and Pakistan fell 1.3% to $25.7 billion in FY26, after growing 2% in FY25 and declining 8.57% in FY24.

“While work is being done to resolve non-tariff barriers with all countries and broader trade facilitation measures, efforts are on to boost exports of certain products including chemicals and pharmaceuticals to South Asian markets,” one of the officials said.

Tracing Potential

The industry is also trying to zero in on products with strong export demand or potential in these countries, the person said.

Indian turmeric and chilli exports to Sri Lanka have faced issues over pesticide residues beyond accepted levels, while yarn exporters to Bangladesh have sought expedited certification of rules of origin, exporters said.

“Not only South Asia, but there are many countries across the world where India’s exports are $800-900 million and can be easily scaled up to $1 billion,” another person aware of the exercise said. India’s goods and services exports touched a record $863 billion in 2025-26.

The development comes against the backdrop of existing regional trade arrangements. All South Asian Association for Regional Cooperation (Saarc) members – India, Pakistan, Sri Lanka, Bangladesh, Nepal, Bhutan, Maldives and Afghanistan – are part of the South Asian Free Trade Area (Safta). India, Bangladesh and Sri Lanka are also members of the Asia-Pacific Trade Agreement, which includes China. Separately, India and the Maldives have concluded the first round of negotiations for a bilateral free trade agreement.

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“It is strategically a good move to improve trade flows in the South Asia region and boost India’s export diversification efforts to be able to meet the $1 trillion export target,” said Ajay Sahai, director general of Federation of Indian Export Organisations (FIEO).

A yarn and fabric exporter to Bangladesh said there are no major non-tariff barriers in the region because most of the countries are raw material suppliers in the textile value chain. However, exporters sometimes face delays in obtaining certificates of origin from designated agencies, particularly when seeking preferential tariff treatment under trade agreements, the person said.

Bangladesh buys roughly 45% of India’s total cotton yarn exports. Another industry representative said political issues within the region need to be resolved for trade to increase.