Business Remedies | Charu Bhatia | June 20,2025 | As the global economy adjusts to post-pandemic realities and shifting geopolitical alignments, India finds itself at a pivotal moment in international trade. With its expanding manufacturing base, robust services sector, and strategic geographic position, India is poised to play a far more influential role in global commerce. Yet, the journey from being an emerging market to a trade powerhouse is marked by both opportunities and enduring challenges.
India’s trade performance over the past year underscores its growing influence. In the fiscal year 2024-25, India’s total exports, comprising both goods and services, crossed the $780 billion mark. The country’s merchandise exports remained strong in sectors such as petroleum products, pharmaceuticals, engineering goods, and textiles. Equally impressive was India’s performance in services exports, particularly in IT and software, which contributed an estimated $340 billion, solidifying India’s position as a global leader in digital services.
A major factor contributing to India’s improved trade standing is the global pivot away from China. Amid geopolitical tensions and the rise of the “China+1” strategy among multinational corporations, India is increasingly seen as a viable alternative for manufacturing. Companies across sectors like electronics, automobiles, and semiconductors are investing in Indian operations, encouraged by favorable government policies such as the Production Linked Incentive (PLI) schemes.
India’s trade ambitions are further supported by an active pursuit of bilateral and multilateral trade agreements. Recent deals such as the Comprehensive Economic Partnership Agreement (CEPA) with the UAE have already boosted trade volumes. Negotiations with the European Union, the United Kingdom, and Australia are ongoing, signaling India’s intent to diversify its trade partnerships beyond traditional allies. The growth of India’s digital economy has also been a game-changer. Platforms like the Open Network for Digital Commerce (ONDC) and digital payment infrastructure such as UPI are not only revolutionizing domestic commerce but also positioning India as an exporter of digital public goods. As demand for cross-border fintech, digital security, and remote services grows, India’s strength in digital innovation offers a valuable edge. Despite these positives, India’s trade journey is not without hurdles. Infrastructure bottlenecks, particularly in ports and logistics, continue to drive up trade costs and reduce efficiency. Although initiatives like Gati Shakti aim to address these issues, improvements are uneven and often slow.
Additionally, policy unpredictability, especially in the form of sudden export bans and tariff changes, can erode investor and partner confidence. The recent restrictions on rice, wheat, and sugar exports, for example, raised concerns about India’s reliability as a trade partner. Another area of concern is India’s relatively shallow integration into global value chains (GVCs). While countries like Vietnam and Mexico have become critical nodes in global manufacturing, India still lags in embedding itself deeply into these supply chains. High compliance costs, regulatory complexity, and quality standard issues often act as non-tariff barriers, particularly for smaller exporters. Nevertheless, the outlook remains promising. India is well-positioned to become a leader in green trade, especially as global attention shifts towards sustainable and low-carbon supply chains. With investments in renewable energy and green hydrogen gaining momentum, India can align its trade strategy with environmental goals. Additionally, new trade corridors with Africa, Southeast Asia, and Latin America are expanding India’s market access and reducing overdependence on Western economies.
The current geopolitical environment, marked by tensions in the Red Sea, realignments in Asia, and a growing focus on supply chain security, offers India a window of strategic relevance. Unlike some of its regional competitors, India offers political stability, democratic governance, and a vast consumer market, making it an attractive partner for countries seeking resilient and transparent trade relationships. To fully capitalize on these opportunities, India needs to stay the course on trade reforms. Streamlining customs procedures, investing in skilling and research, maintaining predictable policy frameworks, and improving port logistics are critical. A greater focus on high-value manufacturing, combined with digital leadership, can help India graduate from being just a participant in global trade to a trendsetter.
