Punjab’s export momentum weakens as global trade conditions shift

By Admin

08 Dec, 2025

Punjab, long recognised as a productive powerhouse, is now navigating a difficult phase in its export journey. As global trade undergoes rapid realignments marked by fresh tariffs, stricter sustainability norms and evolving supply-chain networks driven by geopolitical frictions the state finds itself vulnerable. Exporters of basmati rice and auto components, two of Punjab’s strongest pillars, are facing shrinking margins, delayed shipments and contract renegotiations. With nearly 15% of the state’s exports directed to the United States, tariff fluctuations have disrupted trade flows and highlighted the inherent risks of depending on a limited set of markets and product categories.

A Narrow Export Base Amplifies Vulnerabilities

Punjab’s merchandise exports grew from $5.79 billion in 2017–18 to $6.74 billion in 2023–24, yet its share in India’s total exports slipped from 1.9% to 1.5%, placing it 14th in the country. This decline underscores a structural imbalance: while production capacity is strong, export performance continues to lag.

The state’s export basket presents both diversification and dependency. Engineering goods have become the new backbone, rising from 29% in 2017–18 to over 41% in 2023–24. However, Punjab’s contribution to India’s engineering exports has risen only modestly from 2.1% to 2.5% indicating deep expertise but limited scale.

Once central to Punjab’s identity, textile exports have dropped from 31% to 21% due to rising competition, higher production costs and growing compliance requirements. Agriculture too has seen its share fall from 26% to 18%, constrained by climatic challenges and mounting non-tariff barriers.

New Champions: Electronics and IT Services

Amid these shifts, new sectors are emerging. Electronics exports are growing, while the IT-enabled services sector particularly concentrated in the Mohali-Derabassi corridor is accelerating rapidly. According to the PANJ Foundation, IT exports have soared from $50 million in 2017–18 to over $300 million in 2023–24, transforming Mohali into a rising digital export hub. Yet, despite such diversification, Punjab’s market reach remains narrow: over one-third of its exports are directed to the US, Saudi Arabia and the UK, and half of all exports are confined to just 10 countries.

Policy Preparedness: Stronger, But Gaps Remain

Punjab has significantly improved its institutional readiness, moving from rank 18 in 2020 to rank 10 in the NITI Aayog Export Preparedness Index in 2022. The next step is to convert this preparedness into consistent performance.

The India–UK Free Trade Agreement, signed in July 2025, is expected to unlock fresh opportunities for engineering, textiles and agro-processing by offering duty reductions and better access to the UK market. With strong quality assurance systems and export facilitation, Punjab can integrate more effectively into European value chains.

Export Concentration and Infrastructure Challenges

Export activity continues to be dominated by a few districts. Ludhiana, Mohali and Jalandhar collectively contribute nearly two-thirds of Punjab’s total exports. The state has expanded its logistics ecosystem with Inland Container Depots in Ludhiana, Jalandhar, Amritsar and Bathinda, providing critical links to western seaports. Improved air connectivity through the Amritsar and Chandigarh international airports, along with the upcoming Halwara airport, promises better handling of time-sensitive and perishable cargo. Despite these advances, long overland distances to major ports remain a persistent structural drawback.

The Potential of Overland Trade

The Attari Integrated Check Post (ICP) in Amritsar remains a key regional trade asset. Before recent disruptions with Pakistan, the corridor had demonstrated steady growth total trade through Attari rose from $260 million in 2022–23 to over $440 million in 2023–24. With enhanced regional stability, this route could help decrease dependence on seaports and extend Punjab’s reach into Central Asian and Eurasian markets.

Building Resilience Through Diversification

To reduce vulnerability, Punjab must broaden its export identity beyond traditional products. Expanding the range of Geographical Indication (GI) goods beyond Basmati rice and Phulkari embroidery through systematic certification, branding and global market development, can help strengthen rural linkages. The District as Export Hub initiative offers scope to scale GI-linked processing and marketing centres across districts.

The Road Ahead: Integrated, Technology-Driven Growth

For Punjab to sustain competitiveness, a holistic strategy is essential. This includes:

• Diversifying export products and markets
  
  

• Driving technology adoption in engineering, electronics and agro-processing
  
  

• Enhancing logistics efficiency through multimodal connectivity
  
  

• Supporting innovation through design-linked incentives and research collaborations
  
  

• Strengthening regulatory coherence and environmental compliance to match global standards
  
  

Punjab stands at a critical juncture: global disruptions present challenges, but also opportunities to reinvent and expand its export DNA. With the right mix of sectoral diversification, policy support and innovation-led growth, Punjab can navigate the shifting global landscape and reclaim momentum in India’s export story.