Introduction

The Indian economy now faces headwinds as the global order shifts from free trade and multilateral frameworks towards protectionism and bilateralism. The Economic Survey 2025 warns of rising economic fragmentation, where trade barriers and bloc-based alignments pose challenges to India’s growth, competitiveness, and global market access.

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Challenges Before the Indian Economy

• Reduced Market Access: Tariffs and non‑tariff measures in key destinations threaten India’s export competitiveness.
  • Eg: Debates over EU carbon border rules and US tariff actions illustrate rising entry hurdles for Indian goods.
• Investment Uncertainty: Developed countries are tightening checks on foreign investments. This can slow Indian companies from buying firms or getting new technology, which hurts their edge in high‑tech industries.
• Inflationary Pressures: Export curbs abroad raise input costs and insecurity.
  • Eg: Commodity export controls and war‑related price spikes have inflated India’s import bill and disrupted supplies.
• Pressure on services and mobility: Tighter visa regimes and data rules in advanced economies can constrain India’s IT–BPM exports and movement of skilled workers, affecting a major source of surplus.
• Volatile capital flows: Global uncertainty can trigger outflows, weaken the rupee, and raise borrowing costs for Indian firms.

Measures to Meet These Challenges

• Diversify Export Markets: Grow sales in Africa, Latin America, and the Middle East to cut reliance on a few markets.
  • Eg: India–Africa, India–UAE CEPA.
• Strengthen Domestic Manufacturing: Use PLI and Make in India to boost local production, reduce imports, and raise high‑value exports.
  • Eg: Electronics and Pharma Sector.
• Strategic Trade Agreements: Seal smart bilateral or regional pacts to secure tariff cuts and standards access.
  • Eg: India–UK FTA talks post‑Brexit.
• Integrate into GVCs: Plug into global value chains (GVCs) in electronics, pharma, and IT to scale, specialise, and export more.
• Trade Facilitation and Tech Upgradation: Improve ports, customs, and digital trade systems to cut time and cost for exporters.
  • For instance: Paperless trade initiatives.

Conclusion

India can pair selective, high‑quality FTAs with capacity‑boosting industrial policy, while championing WTO reform and practical coalitions. Delivering standards‑compliant exports and reliable supply partnerships will strengthen credibility, attract investment, and enhance India’s reputation as a trusted global economic partner.

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