By Agneshwar SenThe year 2025 marked a decisive turning point in global trade. Slower growth in major economies, sudden tariff escalations and growing concentration of critical supply chains made international commerce more fragmented and unpredictable. Yet, amid this turbulence, India demonstrated notable resilience and began a deliberate recalibration of its global economic integration.India’s total exports in FY 2024–25 reached $824.9 billion, registering a 6% year-on-year increase despite muted global demand. This performance did not reflect insulation from global headwinds, but a conscious strategic shift combining market diversification, supply-chain repositioning and institutional reform.One of the disruptions of 2025 came from the United States’ reciprocal tariff announcements across sensitive sectors such as metals, chemicals and machinery. These measures had a material impact: India’s exports to the US declined by approximately 37.5% between May and September 2025. India’s response focused on containment rather than confrontation. While the bilateral trade deal with the US may now be concluded in 2026, India moved on to face the disruptions. Trade defence instruments such as anti-dumping and safeguard duties were deployed to prevent destabilising import surges, while export support schemes were recalibrated to favour value-added manufacturing. Customs processes were streamlined through wider risk-based clearances to save time and improve competitiveness.A defining feature of 2025 was India’s renewed emphasis on Free Trade Agreements as strategic resilience tools. The India–EFTA Trade and Economic Partnership Agreement, signed in March 2024 and in force from 1 October 2025, marked India’s first operational FTA with developed European nations. Under this agreement, India secured duty concessions on more than 92% of tariff lines, and the partnership is projected to attract $100 billion in investment and create one million jobs over 15 years.In parallel, India and the United Kingdom signed the Comprehensive Economic and Trade Agreement on 24 July 2025, with implementation expected in mid-2026. Once operational, it will provide duty-free access to 99% of India’s exports to the UK by value. Negotiations with the European Union, Canada, New Zealand, the GCC, The Eurasian Economic Union, Israel and Oman progressed steadily, creating a wider, rules-based network of trade partnerships.To boost domestic exports through upgrading export infrastructure, strengthening trade finance availability, improving market intelligence and enabling MSMEs to meet global standards, the government launched a ₹25,060-crore mission. This marks a structural shift from episodic incentives to systematic export capability building.Global supply-chain diversification further shaped India’s trade trajectory. Companies in electronics, pharmaceuticals, auto components and solar equipment accelerated strategies to hedge geopolitical and tariff risks. India emerged as a key beneficiary through targeted production-linked incentives and a strengthening manufacturing ecosystem. Indian firms increasingly integrated into wider global production networks, moving steadily up the value chain.India also broadened its export geography. Shipments to Africa, West Asia and Latin America grew steadily, reducing dependence on traditional Western markets and acting as a natural buffer when US-bound exports slowed down. Geographic diversification functioned as a practical risk-management tool rather than a purely aspirational objective. Export diversification helped control the damage from the uncertain US market conditions.Domestic policy reforms strengthened India’s ability to absorb external shocks. The roll-out of GST 2.0 simplified the indirect tax structure from a four-slab system to a two-slab framework, lowering compliance burdens and reducing classification disputes. A high-level committee recommended targeted rollback of the Quality Control Order regime, which by 2025 covered about 790 products, easing input-cost pressures and supply bottlenecks. The government also signalled reforms to the customs duty regime through lower rates on selected goods, greater transparency and reduced discretion.Looking ahead to 2026, two structural priorities will define India’s trade position: access to critical minerals and logistics competitiveness. India has approved a ₹7,280-crore production linked incentive scheme to promote domestic rare-earth magnet manufacturing, along with strategic arrangements with mineral-rich partners such as Australia and selected African economies.Logistics reform is the second critical lever. Under the PM Gati Shakti initiative, multiple multimodal logistics parks and dedicated cargo terminals linked to freight corridors and major ports are under construction. The Indian Ports Act, 2025 has introduced a modern regulatory framework to streamline port operations, enhance tariff transparency and align India’s maritime ecosystem with global standards.The central lesson of 2025 is that resilience in global trade does not come from inward retreat, but from strategic integration. India is shifting from reacting to volatility towards shaping outcomes. Through diversified markets, stronger trade agreements, secure critical mineral access and competitive logistics. India is positioning itself not merely to participate in global commerce, but to influence its future direction.(Agneshwar Sen is Trade Policy Leader, EY India. Shiv Ashish, Senior Tax Professional, EY India, also contributed to the article)
