India’s pivot from tariff protection to deepening global supply chain links underscores new trade hurdles. While agreements with key nations open opportunities, non-tariff barriers and compliance costs threaten to limit actual gains for small businesses, signalling a complex transition in India’s export landscape.
India’s recent rush to lock in trade deals marks a clear shift in strategy: rather than relying mainly on tariff protection at home, it is betting on deeper links to global supply chains. Agreements with the United Kingdom, the United Arab Emirates and Australia have already been signed or are nearing completion, while talks with the United States and Canada continue. According to trade experts cited in the supplied material, the harder task now is not winning access to foreign markets but turning that access into durable export gains.
Ajay Sahai, director general of the Federation of Indian Export Organisations, said the value of a free trade agreement is measured less by how many duties fall and more by whether companies can compete on price, quality and delivery. He pointed to sectors such as textiles, leather, pharmaceuticals and engineering goods as early beneficiaries of deals with Britain and Oman, while access through the UAE is also opening routes into West Asian markets and the accord with Australia could help pharma and food exporters. But as the Global Trade Research Initiative has argued, Indian firms have often struggled to make full use of such agreements, with only a minority of exporters tapping into the benefits while foreign companies exploit India’s open market far more effectively.
The reason is increasingly tied to rules rather than tariffs. As India’s trade ties deepen with advanced economies, non-tariff barriers are becoming more important, including environmental and documentation requirements. The European Union’s carbon border adjustment mechanism is a striking example. Due to take effect in 2026, the scheme will require exporters to account for the carbon content of shipments, a change that could affect more than €6 billion in Indian iron, steel and aluminium exports. The supplied reporting also notes that Indian steel shipments to the EU fell 13% in the first four months after the measure began to bite.
Smaller businesses face the sharpest pressure. The paperwork and certification needed to meet foreign standards can wipe out the benefit of modest tariff cuts, especially for micro, small and medium-sized enterprises. The material provided says India has 1.58 crore registered MSMEs, but only 1.5 lakh are exporting. It also says Indian sports goods can end up 15% to 20% more expensive than rivals from China and Pakistan because of compliance costs, leaving many firms shut out of markets they should, in theory, be well placed to serve.
Domestic industrial policy remains part of the problem. Exporters still complain about inverted duty structures, where raw materials are taxed more heavily than finished goods. If steel and aluminium inputs cost more at home than abroad, Indian manufacturers start at a disadvantage against overseas rivals who can source those materials more cheaply. Even logistics gains have not fully closed the gap. Port turnaround times have improved to 0.9 days, but Deloitte India has argued that India still needs stronger automation, better logistics labour, more investment in digital trade systems and tighter links between freight corridors and ports before its trade agreements translate into broad-based gains.
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