Understaffed And Underutilised Indian Trade Service (ITS) – The Missing Link In India’s Trade Story

In the world of trade negotiators, anyone who has worked for a decade knows their counterparts. Not true for India.

There is no such permanent trade expertise layer in the Indian bureaucracy. This pattern was apparent in G20 and is constantly seen during any bilateral negotiations. 

“For example, most of the members of Katherine Tai (USTR)’s team which came for G20 had over a decade and usually two or more decades of experience, and the counterparts of India are the ones who have come on deputation with barely any serious exposure to trade, or any working relation with their counterparts in the world of trade.”

This is a retired Indian Trade Services officer pointing out to Swarajya —India's understaffing in trade specialisation and its limited presence in global trade negotiations.

While the head or minister may be a political appointee, the core of the negotiation and groundwork is handled by bureaucrats who provide continuity and expertise. These professionals serve as the backbone of trade negotiations.

However, for India, constant turnover within this crucial middle layer has weakened institutional memory and leaves senior officials, such as the minister or secretary, without the necessary support when navigating complex trade discussions.

Additionally, there is no stable foundational layer either, as it largely consists of young professionals or short-term consultants who are frequently replaced.

Current Global Trade Landscape

Looking at the current landscape, as discussions around Trump’s tariffs and broader trade negotiations continue, India’s trade ambitions remain at a critical juncture.

The U.S. has been increasing import tariffs on various goods and countries—imposing a 25 per cent tariff on all Mexican imports, 10 per cent on Canadian energy, 25 per cent on other Canadian goods, and 20 per cent on Chinese products.

Historically, India held a strong position in global trade, as it dominated exports of silk, cotton, sugar, and precious stones. The country was also a major supplier of spices to the West via the ancient spice route.

Over time, its trade dominance diminished.

Today, India is making a determined effort to stage a comeback and mark its position through ambitious targets and transformative policies.

The Foreign Trade Policy (FTP) 2023 has set a goal of increasing the exports (goods and services) to $2 trillion — while also making a shift from previous rigid five-year plans to a more adaptable framework based on global developments.

Beyond just commodity prices and tariffs, trade is also a strategic tool—shaping diplomacy, national security, and job creation in export-driven industries. Therefore, to engage and handle complex trade negotiations and administration, countries rely on specialised teams and structured frameworks.

The Indian Trade Service (ITS), which should ideally fulfill this role for India, remains severely constrained. With only 70–80 UPSC-recruited officers, most engaged in routine policy administration, the service is hardly able to contribute any depth to Indian trade diplomacy.

The Indian Trade Services

Initially called "Central Trade Service", the ITS was formed on the recommendation of the Abid Hussain Committee in 1977 and classified as a Group B service. It was later upgraded to Group A in 1985.

The first batch of direct recruits joined in 1986, and the service was officially renamed the Indian Trade Service. Its officers work in four key areas:

• Directorate General of Foreign Trade (DGFT): 80 per cent of ITS officers work here, implementing Foreign Trade Policy across 38 offices, with headquarters in Delhi.

However, despite its critical role in shaping India's trade policies, the current state of the service indicates the need for larger institutional support to ensure its continuous development.

According to a trade expert, ITS has historically struggled with low staffing levels and structural inefficiencies leading to demotivation among officers. Internal competition within the bureaucratic system has also been the reason for limitations in the service.

Since recruitment through the Civil Services Examination began in 1985, the total strength of ITS, including retired and recently recruited officers, stands at approximately 150.

The majority of positions are being filled through departmental promotions. From 1991 to 2005, there were almost no new recruitments, which also led to a major staffing gap.

Each year, only four to five officers enter the service, of which nearly 50 per cent continue to prepare for civil services and eventually switch to better services.

Of these, only one or two are left in the service, with some batches having a lone officer or none.

A former ITS officer told Swarajya, “After 1991, only three officers were recruited in 1997. Two of them moved to other departments, leaving just one in the service. Regular recruitment resumed in 2004.”

“During the long hiatus between 1991 and 2004, the 50:50 quota system (between direct recruits and promotees) led to the induction of officials from unrelated backgrounds, such as statistical assistants and stenographers, into ITS,” he adds.

Many of them eventually reached senior positions at the Joint Secretary level, after a long stagnation at the Director level due to the lack of a cadre review of the service since inception.

He laments that “reports from various committees—including the Geethakrishnan Committee (2000), ASCI (2005), and even an American consultancy firm—suggested reforms, but their recommendations were largely ignored.”

Reviewing The Service

For any Group A service, a cadre review is supposed to be conducted every five years to restructure and address staffing deficiencies. But in the case of ITS, it was undertaken only once in 2014.

This review is essential for rationalising the cadre structure, improving efficiency, and boosting officer morale.

The officers complain that even the cadre review of 2014 was a half-hearted attempt, with the total strength of the cadre being raised from 190 to 191.

Additionally, officials add that the absence of a strong feeder cadre, such as section officers, has weakened institutional continuity.

“Without experienced mentors to guide new officers, the service struggles to maintain institutional memory and operational efficiency,” explains the official.

Recognising the Need for Specialised Expertise

Currently, the ITS has 1 Additional Secretary post, 26 Joint Secretary posts, and 31 Deputy Secretary/Director-level positions.

Limited promotions and career stagnation have further demotivated officers, leading many to either switch to other services or opt for voluntary retirement.

A senior government official said, "there have been many officers who have developed valuable expertise in global trade, which is crucial for the nation’s future today. However, they faced limitations in recognition or career progression they expected."

This gap in expertise within the system often impacted several trade-related diplomatic engagements between India and other nations.

As tensions escalated, a trade standoff occurred between Malaysia, the world's second-largest producer and exporter of palm oil, and India, its biggest buyer at the time. The Ministry of Commerce was expected to suggest a countermeasure.

“Meanwhile, it was Mr. Vijay Rajmohan, Director, Department of Agriculture, who recommended invoking India-Malaysia bilateral trade pacts. As a result, for the first time, India imposed restrictions on palm oil imports worth Rs 40,000 crore from Malaysia in retaliation,” he added.

In January 2020, India formally amended its trade policy, moving refined palm oil and palmolein from the ‘Free’ category to ‘Restricted,’ effectively curbing imports from Malaysia.

“An annual performance appraisal report from that period highlighted a crucial gap — what the Commerce Ministry failed to do, the Agriculture Department managed to implement, “ the official added while highlighting the need for stronger institutional capacity and in-depth trade expertise to handle such situations effectively.

Why Does India Need an improved and specialised Trade Service?

As India aspires to become a $2 trillion export economy and a $10 trillion economy by 2032, the country must strengthen its institutional framework for trade.

1. Developing Institutional Memory in Trade Diplomacy

Multiple officials continued to highlight the missing institutional memory as a major drawback in India's trade negotiations.

"Take the Indo-Sri Lanka Free Trade Agreement (ISFTA)," a retired officer told Swarajya, "which is a key pact made in 1998. But today, the officials who led those negotiations are gone... and the key records and rationale behind critical clauses are either missing or fragmented, making it difficult for current officers to build on past agreements."

Further, beyond technical expertise, trade negotiations depend on long-standing relationships and trust between negotiators.

“Officials from the EU and US have worked together for decades, forming networks that enable smoother agreements. But in India's case, frequent transfers and the lack of a specialised cadre mean that every negotiation often feels like a first-time experience.”

2. Trade Administration, Anti-Dumping, and Trade Defence Mechanisms

The understaffing has also posed struggles with trade administration, particularly in areas such as anti-dumping and countervailing investigations.

Under WTO rules, trade disputes involve a structured process requiring legal and economic expertise under the Agreement on Subsidies and Countervailing Measures (ASCM).

The U.S. has a dedicated team of 800 experts for handling anti-dumping cases, whereas India’s resources remain significantly limited with only a handful of officers involved in both offensive and defensive investigations.

As per officials, this is highly inadequate for any meaningful intervention, especially when it comes to defending India’s interest during investigations from teams from other countries.

Moreover, while India’s focus remains on promoting exports, state-level engagements, handholding, and industry partnerships — which are crucial for initial growth — remain weak.

"Promoting exports requires deep knowledge of international markets, historical trade decisions, and strong industry collaboration, all of which demand a well-structured and motivated team,” the official adds.

Several economies establish specialised trade organisations with strong workforce capacity to promote exports, attract investments, negotiate agreements, and regulate related trade policies.

• The U.S. International Trade Organisation (ITO) drives exports and investment, supported by the U.S. Commercial Service and the Office of the USTR.

3. Trade Specialists in Global Economic Diplomacy

Many countries have dedicated trade promotion agencies and commercial and trade consulates within their embassies.

The U.S. Embassy has a specialised commercial service to secure trade deals and market opportunities for American businesses.

Korea Trade-Investment Promotion Agency (KOTRA) helps Korean businesses expand globally. Japan External Trade Organization (JETRO) plays a key role in promoting Japanese exports and investments.

For India, however, many of such trade-related postings are often ad-hoc with specialised expertise often missing or underutilised.

Enhancing these roles with trade specialists could improve the identification of buyers, sellers, and investment opportunities while ensuring a proactive response to global trade policy shifts.

For example, the tariffs imposed by the Trump administration on multiple countries, including India, created new market gaps, opening avenues for a dedicated trade intelligence team that could help India analyse these shifts and capitalise on emerging opportunities.

4. Trade Finance for Export Growth

Beyond trade policy and negotiations, trade finance remains a crucial pillar with segments such as export credit, receivables financing, Letter of Credit (LC) discounting, and forfaiting and factoring.

For instance, the two-factor model allows Indian exporters to receive upfront payments while ensuring buyers in other countries meet their obligations.

This is the quickest way in which MSMEs can receive their export receivables after they export, without getting into the document negotiation process with banks.

The global factoring market is valued at approximately USD 4.5 trillion as per the data from Factor Chain International.

China’s factoring volume is currently USD 800 billion. Out of this, it is estimated that over one fourth is cross border factoring.

However, in India’s factoring market, while domestic receivables finance is slowly improving through the TReDS system, cross-border factoring is still under USD 1 Billion per annum. This needs serious and urgent attention.

India’s total factoring market, including domestic factoring, stands at just USD 25 billion.

Need for a Stronger Trade Administration

As global trade strategies evolve, India must scale up its trade administration to achieve its economic ambitions.

A skilled bureaucracy in this specialised sector is key to strengthening export promotion, involving states in trade efforts, and ensuring the effectiveness of trade fairs and export councils.

The officials serving believe that their experiences offer a multi-dimensional role beyond traditional administration.

Managing trade operations requires cross-cutting expertise in areas such as trade finance, marketing strategies, tariff and non-tariff policies, export-import logistics, and an in-depth understanding of at least 28 trade-related laws and agreements, which have specific mention.

A serving ITS officer explains, "Trade is a forward-looking field shaped by global events. The disruptions caused by COVID-19 forced nations to rethink supply chains, the tariff wars under the Trump administration illustrate how economies use trade to either strengthen their positions or challenge competitors."

Another officer added that "unlike physical development in other services, this sector is largely built on cerebral and strategic developments."

In October 2024, while addressing the probationers of the Indian Trade Service, the President of India emphasised the vital role of ITS officers in shaping trade policies that impact both economic growth and everyday life.

On the parting note, here are some key measures that may be undertaken to strengthen the ITS.

First, increasing direct recruitment through a cadre review. With the increase in recruitment on a yearly basis, a gradual expansion of ITS officers—rather than a one-time surge—would allow for continuous development and specialisation, forming a network of trade experts.

Experts suggest expanding the ITS cadre to at least 500 officers, with 300-350 direct recruits, compared to the current 60-70 officers.

An official added, "While there have been gaps in the past, the current government has recognised the urgent need for specialisation in trade administration. If decisive steps are taken now, there is potential to strengthen our position over the next decade."

Second, given the vast scope of trade administration, there is a need of the officers to be closely integrated with key ministries and industries, as nearly all major sectors engage with trade-related matters in the current global landscape.

Despite the growing complexity of global trade, India's trade officer-to-export ratio remains one of the lowest in the world, signalling an urgent need for institutional strengthening.

Third, for further expertise, the service should be augmented with officers from other government departments, who are engaged or have gathered expertise in this sector, as well as from the private sector through lateral entry schemes.

Officers with sector-specific experience, whether from other services or industry professionals, will help diversify and strengthen India's trade strategy, by introducing a mix of expertise to support and represent India's trade ambitions in the evolving global trade scenario.