11 Challenges Faced by Indian Exporters in 2023

As India strives to become a global economic superpower, businesses in the country will increasingly rely on international trade and exports. However, the export landscape has changed dramatically over the past few years; what challenges will Indian exporters face in 2023?

The emerging technologies, changing regulations, unusual Covid-19 conditions, employment shift of younger generations and increased globalization have slowed down many business activities in 2020 but it is also creating new opportunities for Indian exporters as well. Despite this, there are still several obstacles that exporters must tackle to successfully export goods from India.

In this article, we will be exploring some of the major challenges that Indian exporters are currently facing or may face in 2023. By understanding these challenges and potential solutions to them, you can better prepare yourself for successful exporting ventures in the near future.

Indian exporter challenges

  1. The impact of currency fluctuations on Indian exports – Currency fluctuation is a major challenge for India’s exporters as it creates transparency in terms of transactional costs and total earnings. Fluctuations in currency exchange rates directly impact the competitiveness of Indian exporters in global markets. In addition, the conversion of profits can be costly due to exchange rate fluctuations, which diminishes the profits earned by Indian exporters. Furthermore, international buyers opt to procuring goods and services from suppliers offering competitive pricing, thus putting pressure on the margins earned by Indian exporters. Therefore, currency fluctuations create a lot of uncertainty and complexity when doing business transaction with other countries, especially those with weaker currencies that are highly volatile.
  2. Barriers and complexities of international trade laws – International trade laws in India present a range of complex challenges for exporters. These laws govern how goods are produced and sold, financial operations, taxation and currency conversion. Complying with these legal requirements can be time-consuming and costly, making it difficult for businesses to export their products globally. Furthermore, there are numerous restrictions on the trade of certain goods, as well as regulations on labour standards to be met when exporting services and products. In addition, there are political tensions that could hamper the free movement of goods from one country to another. As such, Indian exporters must consider these barriers and complexities when attempting to expand overseas.
  3. Taxes & tariffs imposed on exports – Taxes and tariffs can have a significant impact on the competitiveness of Indian exports, as they may increase production costs which in turn can make them less competitive as compared to other countries’ products in international markets. Additionally, there are various types of taxes that might be imposed such as GST, import duties, octroi taxes and more, which makes it difficult for export businesses to comply with these taxation regulations due to lack of awareness and resources. 
  4. Rising competition from overseas markets – With the advancements in globalization, the world has become a more open place for foreign investment and expansion. This has led to increasing competition among companies that are fighting to get their share of market in overseas markets. The rising competition in these markets is posing major challenges for Indian exporters, who must compete with perceived better quality products being offered by much bigger and better-established brands from overseas. To overcome this challenge, Indian exporters must strive to create unique value propositions which set them apart from the competition and position them well in the global marketplace.
  5. Export quality & pricing constraints – Poor quality due to lack of access to technology and cost pressures constrain sales. Additionally, as compared to other countries, Indian prices are too high and often higher than the global averages; this makes it difficult for exporters to attract customers from mature markets. Furthermore, there are a range of local statutory constraints that must be adhered to in order to ensure compliance with applicable laws, leading to increased costs, paperwork and delays. All these challenges make it difficult for Indian exporters to remain competitive in the international market and discourage prospective buyers from considering purchasing Indian goods over goods sourced from more established countries. These difficulties create an urgent need for reforms in policies related to export quality assurance and enhancement of competitiveness through price reductions for exports.
  6. Lack of access to working capital and financing facilities – The cost of financing can be a major constraint as businesses need a considerable amount of funds, but often lack the necessary resources or collateral to obtain them. This lack of access to working capital puts their businesses in a vulnerable and costly position. Furthermore, due to currency fluctuations and other issues such as payment delays, there is an additional financial burden imposed on exporters making it difficult for them to meet the demands of increasing export volumes.
  7. Unfamiliarity with Globalized Markets – Indian exporters often face several challenges as they enter the globalization of international markets, chiefly due to the unfamiliarity that can arise if the business is new to this type of market. These challenges include difficulty in obtaining relevant information or resources, adapting marketing programs to appeal to local demographics and cultures, cultural differences, different language barriers, lack of trust by foreign buyers, lack of export incentives or support schemes, inadequate financial resources for using global purchasing options, and more stringent product requirements on a global scale. Indian exporters need to be aware of these potential pitfalls and develop strategies specifically designed to tackle them.
  8. Complex Paperwork for Customs Clearance – India is home to globalised and modernised businesses; however, the cumbersome paperwork associated with many of its ports can be a major challenge for Indian exporters. One of the problems faced by exporters is complex paperwork associated with customs clearance. This involves a significant amount of manual data entry across multiple documents that could result in delays or incorrect classification when submitting goods to foreign ports. Training customs officials on proper filing and documentation, setting up digitisation solutions, and providing online information like duty rate calculators could help reduce the cumbersome paperwork and time delays associated with export shipments. These improvements would then lead to increased efficiency in customs clearance for all Indian exporters.
  9. Rising cost of production in India – With labour and materials becoming increasingly expensive, Indian-made items can be too costly for international buyers. Moreover, India’s infrastructure also puts a strain on businesses as logistics are often difficult and slow. As a result, to remain competitive globally, exporters must look for alternative and more affordable countries where they can do business. This requires planning, investments, and networking in other countries which can be time-consuming and potentially expensive.
  10. Standards required by foreign buyers – One of the major challenges for Indian exporters is meeting the standards and certifications required by foreign buyers. Different countries have different standards for product quality, safety, labeling, etc. that must be met in order for a product to be shipped abroad. Meeting these standards is often time-consuming and expensive, resulting in added cost burden or even loss of market potential. Many Indian companies are now investing in quality control infrastructure and processes in order to successfully meet the standards of importing countries without compromising on their products’ quality.
  11. Increasing competition from online venues – The competition to global Indian exporters has been increasing due to the growing presence of online resources and the fact that customers now have access to more information than ever before. Additionally, with more companies offering products via online stores, international consumers are exposed to greater competition. This not only makes it difficult for Indian exporters to differentiate their product offerings but also erodes their pricing power. This poses a major challenge for Indian exporters as they need to offer highly competitive prices across various channels in order to grab market share from competitors.