India Must Brace for Future Trade Barriers Amid Global Policy Shift

India Faces Tougher Trade Challenges: Here's What You Need to Know!

India faces growing challenges as developed economies adopt non-tariff and unilateral duty-related barriers, potentially impacting exports. Director General of Foreign Trade (DGFT), Santosh Kumar Sarangi, highlighted concerns about mechanisms such as the EU’s Carbon Border Adjustment Mechanism (CBAM) and deforestation regulations. These measures, while targeting environmental goals, act as barriers for goods from developing nations.

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Global Policies Reshaping Trade Dynamics

Both the US and the European Union are implementing strategies to prioritize domestic manufacturing:

• US Policies: The Inflation Reduction Act and CHIPS Act focus on strengthening local industries, indirectly limiting market access for exporters like India.
• EU Regulations: CBAM taxes carbon-intensive imports, while deforestation laws impose strict compliance on exports, creating non-tariff barriers.

These policies often violate WTO norms, creating hurdles for exporters.

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India’s Vulnerable Sectors

Sarangi noted potential risks from tariff measures, particularly reciprocal actions by major economies. While agriculture exports to the US may remain unaffected due to limited trade volumes, certain industrial and high-value exports could face significant challenges.

Strategies for Resilience

India must proactively address these barriers by:

• Strengthening domestic manufacturing and aligning with global environmental standards.
• Diversifying export markets to reduce dependence on vulnerable regions.
• Building alliances with like-minded economies to counter unfair trade practices.

India’s preparedness to navigate evolving global trade policies will ensure it not only withstands these challenges but also capitalizes on emerging opportunities.

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