Partnered prosperity in a Globalist Gambit: Mapping India's trade ascent

The OECD, in its publication on the Economic Outlook, identifies key metrics for the Indian macroeconomic landscape. The document identifies real GDP growth for India at 6.2 per cent in 2026-27 and 6.4 per cent in 2027-28. It further notes that the impact of the higher tariffs applied by the United States had been expected to weigh on exports. However, private consumption will be supported by rising real incomes as inflation remains low and consumption taxes decline. With the WTO edging towards increased fragmentation, ‘regionalism’ and bilateralism in trade have become the norm. India has realised this growing consensus and has been working to remedy its trade measures by opening up its routes to economic superpowers. India’s approach to trade agreements can be understood in four trends. First, it has concluded agreements with developed countries to increase its access to those markets. Second, it has agreements with most of the countries forming part of the Regional Comprehensive Economic Partnership despite not being part of the regional agreement. Third, it has targeted specific geographies. Lastly, it is seeking to conduct negotiations with significant bilateral partners. 

Set against this premise, the 2026 Union Budget sought to streamline India’s policy mandarins to further its growth landscape. The announcements are in sync with the vision of ‘Viksit Bharat’, with Ease of Doing Business as a cornerstone of the Indian economic reform agenda and a talisman for all-inclusive development. The announcements hinge on a reformist narrative and are aimed at digital trade facilitation, tax certainty, reduction in compliance, trust-based customs systems and an investor-friendly regime.

 

The Indian trade landscape

 

The past months have witnessed trade deals with economic giants augmenting investor-friendly confidence in India’s global trade agenda. Though the agreement with the United States has been negotiated to avoid retaliatory tariffs, it is consistent with the changing trade policy, moving away from protectionism to domestic support programmes and trade deals. It has been argued that the Union Budget has sought to place international trade and exports at the centre of the Indian growth strategy, reaffirming not just the Economic Survey findings but the government’s commitment to building a competitive, resilient and globally integrated economy. Centred on macroeconomic stability, fiscal discipline and sustained public investment, the Budget seeks to make a comprehensive reform and investment agenda with an aim to strengthen India’s position as a trusted global trading partner and accelerate progress towards the vision of Viksit Bharat. The Budget announcements recognise the importance of exports as a catalyst for employment, industrial upgrading, foreign exchange earnings and the integration of global value chains. 

The Budget has sought to include measures surrounding the services sector, manufacturing, infrastructure for Special Economic Zones, ease of doing business and sector-specific reforms with initiatives such as Biopharma SHAKTI, the Semiconductor Mission 2.0, expansion of the electronics components manufacturing scheme and the development of rare earth corridors and chemical parks. One of the major highlights of the present Budget is the focus on scaling domestic manufacturing in strategic and labour-intensive sectors, thereby strengthening export competitiveness and reducing dependence on critical imports. However, one of the issues that had been highlighted by stakeholders was the regulatory structure that underpins the customs framework in India. Some of the changes that stakeholders had anticipated were an overhaul of the customs regulatory framework, rate rationalisation, etc, to facilitate Indian trade.

 

Non-tariff barriers to trade

 

Though the FTAs that India has entered into seek to tackle the tariffs imposed by trade partners, the non-tariff barriers also merit similar analysis. Non-tariff barriers are important determinants since they enhance consumer confidence, improve access to markets and align a country’s products with global standards. The WTO identifies issues of import licensing, rules for the valuation of goods at customs, preshipment inspection, rules of origin and investment measures to be some non-tariff barriers that hinder international trade. Some of the non-tariff barriers that India faces are specific licensing requirements for various products, sanitary and phytosanitary measures, complex certification requirements, lengthy customs clearances and certain FDI restrictions, for instance, the classification of foreign direct investment in India and the imposition of anti-dumping duties. 

In summary, as India steps out of the fragmenting multilateral trade order and prepares to sail in the FTA era, it will have to consider certain pressing fundamentals. One such pressure point would be the adequate consolidation of tariff and non-tariff barriers to trade. Though the Indian government has entered into FTAs with a view to facilitating trade and improving the overall economy, the grassroots realities of all the industry entities involved in the process will have to be considered. The reason behind the ardent expectation of having better procedural rules for customs processes will have to be noted since these changes would have a lasting effect on facilitating trade. 

Mukesh Butani is the managing partner, and Spandana Koona is an associate at BMR Legal Advocates. 

Disclaimer: These are personal views of the writers. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper.