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Mumbai: India’s chemical sector has received a significant policy reprieve with the extension of the export obligation period under the Advance Authorisation scheme from 6 months to 18 months for products covered by Quality Control Orders (QCOs). The change, formalised through Notification No. 28 dated May 28, 2025, by the Directorate General of Foreign Trade (DGFT), follows recommendations from the Department of Chemicals and Petrochemicals (DCPC) and mirrors similar adjustments made for other sectors such as textiles.

The timing of this decision is notable. In the financial year 2024–25, chemical exports reached $46.4 billion, accounting for 10.6% of India’s total export value. The sector’s scale and complexity make it particularly sensitive to regulatory timelines and input cost fluctuations. By extending the export obligation period, the government has effectively reduced pressure on exporters to meet tight deadlines, allowing greater flexibility in procurement, production and shipment planning.

Under the Advance Authorisation scheme, importers are permitted to bring in duty-free raw materials for export production. While these inputs are exempt from QCO compliance, the finished products must adhere to the relevant standards. The extended timeline provides exporters with a wider operational window to meet these requirements without compromising on quality or delivery commitments.

Industry stakeholders have welcomed the move as a practical step that aligns regulatory compliance with commercial realities. The chemical sector, which includes a broad array of petrochemicals, industrial chemicals and specialty compounds, often faces logistical and supply chain challenges that are exacerbated by short export obligation periods. The new 18-month window is expected to ease working capital constraints and reduce the risk of penalties or lapses due to unforeseen delays.

This policy shift also has implications for India’s positioning in global markets. With more time to fulfil export obligations, companies may be better equipped to compete on quality and reliability – factors that are increasingly critical in international trade. While the government has framed the extension as part of its broader strategy to support the chemicals and petrochemicals industry, the measure stands out for its immediate operational impact rather than aspirational rhetoric.

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Mumbai: India’s shrimp export volume is expected to fall by 15–18% in the current fiscal year following a sharp increase in tariffs imposed by the United States, according to a report released by Crisil Ratings. The new tariff rate of 58.26%, which includes countervailing and anti-dumping duties, came into effect on August 27, 2025, and has rendered exports to the US market economically unviable for most Indian processors.

The US accounted for nearly 48% of India’s $5 billion shrimp exports in fiscal 2025, making it the largest destination for Indian seafood. Crisil Ratings noted that while exporters had anticipated the tariff hike and front-loaded shipments in the first quarter, overall revenues are still projected to decline by 18–20% year-on-year. The inability to pass on the increased costs to buyers has led to a projected erosion of operating profit margins by 150–200 basis points, pushing margins to a decade-low of 5.0–5.5%.

Rahul Guha, senior director, Crisil Ratings, said the tariff shock would have cascading effects across the value chain as the headwinds will impact processors and discourage farmers from continuing to invest in shrimp culture. “Farmers incur upfront costs for land lease, seed and feed. Additionally, investments in equipment for aeration, electricity and overall pond management and biosecurity have substantially raised the production cost. To boot, the risk of diseases, reduced harvests and unprofitable global prices have been forcing farmers to look at alternative cultures that entail lower investments and limited risks,” he said.

The report highlights that India’s competitive position has weakened significantly compared to other major shrimp-exporting countries such as Ecuador, Vietnam, Indonesia and Thailand, which face substantially lower tariffs in the US market. Despite India’s well-developed domestic infrastructure and strong distribution networks in the US, the steep tariff hike has tilted the playing field.

Crisil Ratings analysed 63 shrimp exporters, representing approximately 55% of industry revenues, and found that their credit profiles are likely to deteriorate. Interest coverage ratios are expected to moderate to around 3.3 times this fiscal from 4.8 times last year, reflecting the pressure on profitability. Himank Sharma, director, Crisil Ratings, noted that the credit profiles of shrimp exporters focused on the US market will face further challenges after two sluggish years.

The decline in export volume is also expected to reduce capacity utilisation and shrink sales of value-added and large-sized shrimp, which were primarily destined for the US and commanded higher margins. While working capital debt may ease due to lower business volumes, the overall debt protection metrics are set to weaken.

Indian shrimp processors are understood to be exploring alternative markets such as the United Kingdom – aided by the India–UK free trade agreement – as well as China and Russia. These efforts may provide partial relief in the second half of the fiscal year, but are unlikely to fully offset the loss of US-bound shipments.

Responding to the mounting trade challenges, the Indian government has launched a strategic initiative to bolster the domestic shrimp market. A dedicated committee has reportedly been formed under the National Fisheries Development Board (NFDB) to chart a roadmap for building a resilient local ecosystem for shrimp consumption. This multi-stakeholder body comprises representatives from farming communities, feed manufacturers, and the Marine Product Export Development Authority (MPEDA), which plays a key role in export market development.

As part of this initiative, efforts are underway to raise public awareness about the nutritional benefits of shrimp. Proposals include setting up promotional stalls across key urban centres to educate consumers and encourage greater uptake. With India’s per capita shrimp consumption currently lagging behind countries like Japan, there is considerable scope to expand domestic demand.

To bridge this gap and cushion the impact of recent export disruptions, shrimp producers have proposed a range of innovative solutions. These include pioneering methods for transporting live shrimp without water and establishing interactive experience centres to engage and inform consumers.

Developing a strong domestic market is increasingly seen as essential for ensuring fair returns to producers and reducing dependence on unpredictable global trade dynamics. Expanding internal demand would also give Indian consumers access to premium-quality shrimp, much of which has traditionally been reserved for export.

The long-term viability of shrimp farming will depend not only on diversifying export destinations but also on significantly boosting domestic consumption. With the sector at a critical juncture, both processors and farmers must adapt to a more uncertain global trade environment while tapping into the untapped potential of the Indian consumer base.

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Mumbai: The food processing sector in India is seeing steady traction among micro enterprises, with over 1.44 lakh units approved for support under the PM Formalisation of Micro Food Processing Enterprises (PMFME) scheme as of 30 June 2025. The scheme, administered by the Ministry of Food Processing Industries, is centrally sponsored and demand-driven — allowing eligible applicants across states to seek financial, technical and business support without regional restrictions.

The PMFME scheme offers a credit-linked capital subsidy of 35% of the eligible project cost, capped at ₹10 lakh per unit. This support is targeted at individual micro enterprises seeking to upgrade or set up food processing operations. The scheme is part of a broader effort to accelerate micro, small and medium enterprises (MSME) growth in the sector, alongside the Pradhan Mantri Kisan SAMPADA Yojana (PMKSY) and the Production Linked Incentive Scheme for Food Processing Industry (PLISFPI), both of which also include MSME participation.

Training and capacity building form a significant component of the PMFME programme. As of the latest update, over 1.16 lakh beneficiaries have received skilling support under the scheme. This includes entrepreneurship development, product-specific training, and support for district-level resource persons and trainers. The aim is to equip micro operators with the skills required to meet industry standards and improve operational efficiency.

The scheme’s demand-led structure has enabled wide geographic coverage. In Bihar, for instance, 25,349 proposals have been approved under PMFME, in addition to 13 projects under PMKSY and seven under PLISFPI. The figures reflect the scheme’s reach across both high-growth and underserved regions, with approvals based on applicant readiness rather than location.

The government’s approach to food processing sector development appears to prioritise decentralised growth, with MSMEs positioned as key drivers of employment and value addition. By offering targeted incentives and skilling support, the PMFME scheme seeks to formalise and scale micro operations that have traditionally operated outside the organised sector.

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Mumbai: India’s battery recycling ecosystem is undergoing a structural shift, with the government initiating steps to integrate informal operators into the formal value chain. The Ministry of Environment, Forest and Climate Change (MoEF&CC) has stated that the Extended Producer Responsibility (EPR) framework under the Battery Waste Management Rules, 2022 is designed to incentivise formalisation by linking revenue generation to certified recycling activity. This includes the exchange of EPR certificates between producers and registered recyclers — a mechanism that excludes unregistered entities and encourages them to enter the formal system.

To support this transition, a dedicated project has been launched under the Micro & Small Enterprises Cluster Development Programme (MSE-CDP) of the Ministry of Micro, Small and Medium Enterprises. The initiative aims to build capacity and upgrade informal sector operations by forming recycling clusters, thereby enabling small-scale recyclers to access technology, infrastructure and formal market linkages. The programme is expected to reduce fragmentation in the sector and improve traceability of recycled materials, particularly in the context of lithium-ion batteries.

Technology transfer is a key component of the formalisation effort. The Centre for Materials for Electronics Technology (C-MET) has developed a cost-effective lithium-ion battery recycling process, which has been transferred to several recycling firms and start-ups. This move is aligned with the government’s broader circularity goals under Mission LiFE and is intended to improve domestic recovery of critical minerals while reducing dependence on imported raw materials.

The EPR portal developed by the ministry has registered over 3,600 producers and 442 recyclers to date. Producers have procured EPR certificates for 7.29 lakh metric tonnes of key battery metals, against a target of 10.96 lakh metric tonnes. Only certificates issued by registered recyclers are recognised under the rules, reinforcing the need for informal operators to formalise in order to participate in the regulated trade of recycled materials.

The formalisation push is also expected to complement the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) battery storage, which has attracted significant investment in domestic cell manufacturing. With over 100-Gigawatt hour (GWh) of additional capacity announced beyond the PLI beneficiaries, the demand for recycled inputs is likely to rise — making the integration of informal recyclers into certified clusters both a commercial and regulatory imperative.

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Mumbai: India’s textile industry is set to benefit from a temporary exemption of customs duties on raw cotton imports, effective from 19 August to 30 September 2025. The move, announced by the Central Board of Indirect Taxes and Customs, removes the 5% Basic Customs Duty, the 5% Agriculture Infrastructure and Development Cess, and the 10% Social Welfare Surcharge previously levied on cotton imports. In total, the waiver eliminates an 11% import duty, offering immediate cost relief to manufacturers across the textile value chain.

The exemption is expected to ease pressure on domestic cotton prices, which have remained elevated due to supply constraints and seasonal volatility. By allowing duty-free imports, the government aims to improve raw cotton availability, reduce input costs, and stabilise prices for downstream products such as yarn, fabric, garments, and made-ups. This is particularly significant for small and medium enterprises (SMEs), which form the backbone of India’s textile ecosystem and are more exposed to fluctuations in raw material costs.

The timing of the waiver is critical. With export competitiveness under strain and inflationary pressures affecting consumer demand, the cost reduction could help manufacturers maintain margins and pricing stability. Lower input costs may also support India’s textile exports, which face stiff competition from countries with more favourable sourcing and duty regimes.

Industry associations have long called for the removal of import duties on cotton, citing the need to align domestic policy with global trade realities. The current exemption responds directly to these concerns, albeit for a limited duration. While the measure is temporary, it signals a willingness to intervene in support of a sector that contributes significantly to employment and foreign exchange earnings. Beneficiaries of the move include spinning mills, fabric producers, garment exporters, and ancillary units that rely on cotton as a primary input. The relief is expected to be most pronounced for SMEs operating in high-volume, low-margin segments, where even modest cost reductions can have a meaningful impact on viability.

The exemption also has implications for price transmission across the supply chain. If cotton prices soften as expected, consumers may see more stable prices for finished textile products, particularly in the domestic market. However, the short duration of the waiver means that its long-term impact will depend on subsequent policy decisions and market responses. The government’s decision reflects a balancing act between protecting domestic producers and ensuring affordability and competitiveness. While cotton farmers may be concerned about the potential impact on domestic prices, the exemption is framed as a short-term measure to address immediate supply and cost challenges.

As the textile sector navigates global headwinds and domestic constraints, the customs duty waiver offers a window of relief. Whether it translates into sustained gains will depend on how quickly manufacturers can leverage the cost advantage and whether the government considers extending or institutionalising similar measures in future.

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