New Policies in the Indian Trade Market

1. Launch of the Foreign Trade Policy (FTP) 2023–2028

In March 2023, the Government of India unveiled the new FTP, effective from April 1, 2023. This policy introduces several strategic initiatives:

Automation and Digitalization: The FTP emphasizes process re-engineering and automation to facilitate ease of doing business for exporters. It also focuses on emerging areas like dual-use high-end technology items under SCOMET, facilitating e-commerce export, and collaborating with States and Districts for export promotion.

One-Time Amnesty Scheme: To streamline operations, the FTP introduces a one-time Amnesty Scheme for exporters to close old pending authorizations and start afresh.

Support for MSMEs: The policy aims to support Micro, Small, and Medium Enterprises (MSMEs) by reducing the minimum export requirement for recognition as a status holder, allowing smaller exporters to achieve higher status and access benefits that lower transaction costs. Additionally, user charges under popular schemes like Advance Authorization and EPCG have been capped at ₹5,000, making it more affordable for MSMEs to export.

2. Enhancement of Export Incentives

The FTP 2023 introduces several measures to boost export incentives:

Remission of Duties and Taxes on Export Products (RoDTEP): The policy aims to enhance the RoDTEP scheme, which reimburses exporters for duties and taxes previously not refunded, thereby making Indian products more competitive in international markets.

Export Promotion Capital Goods (EPCG) Scheme: The FTP proposes to simplify the EPCG scheme, allowing exporters to import capital goods at zero customs duty, provided they meet specified export obligations.

Market Access Initiatives: The policy focuses on identifying and accessing new markets, particularly in regions like Africa, Latin America, and Southeast Asia, to diversify India's export destinations.

3. Promotion of E-Commerce Exports

Recognizing the growing importance of digital trade, the FTP 2023 outlines measures to promote e-commerce exports:

Simplification of Procedures: The policy aims to simplify customs procedures for e-commerce exports, reducing compliance burdens for small and medium-sized enterprises (SMEs).

Integration with Digital Platforms: The FTP encourages integration with global e-commerce platforms, facilitating easier access to international markets for Indian exporters.

Support for Startups: The policy provides support for startups engaged in e-commerce exports, including financial incentives and capacity-building programs.

4. Strengthening of Free Trade Agreements (FTAs)

India is actively pursuing and strengthening FTAs to enhance its trade relations:

India–EFTA Free Trade Agreement: The India–EFTA Free Trade Agreement, officially called the Trade and Economic Partnership Agreement (TEPA), is a comprehensive trade pact between the European Free Trade Association (EFTA) states (Iceland, Liechtenstein, Norway, and Switzerland) and the Republic of India. It was signed on March 10, 2024, after 16 years of intermittent negotiations, and is scheduled to enter into force on October 1, 2025. The agreement aims to eliminate or reduce tariffs on the majority of goods traded between India and the EFTA countries and to liberalize trade in services and investment. It also incorporates commitments on sustainable development and includes an unprecedented investment pledge of $100 billion from the EFTA side to India over 15 years.

India–UK Free Trade Agreement: Negotiations for an FTA with the United Kingdom are progressing, with expectations to finalize the agreement within the year. This FTA aims to boost bilateral trade and investment between the two nations.

5. Implementation of Anti-Dumping Measures

To protect domestic industries from unfair trade practices, India is implementing anti-dumping measures:

Solar Cell Imports: The Indian Commerce Ministry has proposed the imposition of an anti-dumping duty on solar cell imports from China for a duration of three years. This recommendation aims to protect domestic solar cell manufacturers from the adverse effects of low-cost Chinese imports, which are seen as a threat to local industry amid the rapid expansion of India's renewable energy sector.

Other Sectors: The government is reviewing other sectors for potential anti-dumping measures to safeguard domestic industries from unfair competition.

6. Digitalization of Trade Processes

The Indian government is focusing on digitalizing trade processes to enhance efficiency:

E-Bond System in Maharashtra: The Maharashtra government has introduced an electronic bond ('e-bond') system to replace traditional stamp paper bonds in import and export transactions. Launched on Friday, this digital initiative aims to streamline trade procedures, enhance business efficiency, and contribute to the modernization of the state's economy. The new system is expected to accelerate trade operations by increasing transparency and reducing reliance on physical documentation.
The Times of India

National Digital Trade Platform: The government is developing a National Digital Trade Platform to integrate various stakeholders in the trade ecosystem, including exporters, importers, logistics providers, and government agencies, to facilitate seamless trade operations.

7. Revised Foreign Borrowing Regulations

To enhance funding access for Indian companies, the Reserve Bank of India (RBI) has proposed significant changes to the country's corporate foreign borrowing regulations:

Increased Borrowing Limits: Companies would be allowed to borrow up to $1 billion or 300% of their net worth—whichever is higher—replacing the previous automatic route limit of $1.5 billion, which required specific approval for larger sums.

Removal of Cost Caps: The RBI intends to scrap cost caps on most external commercial borrowings (ECBs), allowing market-based interest rates rather than fixed ceilings aligned with global benchmarks.

Broadened Eligibility: Reforms would broaden the eligibility for both borrowers and lenders, permitting all India-incorporated entities, including those under financial restructuring or investigation, to raise overseas debt. Entities undergoing restructuring would require an approved resolution plan, while those under investigation must provide sufficient disclosures. Previously, only entities eligible for foreign direct investment could access foreign borrowings.
8. Simplification of Taxation for Foreign Firms

To improve the ease of doing business for foreign companies operating in India, NITI Aayog has proposed an optional presumptive taxation scheme:

Presumptive Taxation Scheme: NITI Aayog has proposed an optional presumptive taxation scheme for permanent establishments (PEs) of foreign companies operating in India. The goal of this proposal is to reduce bureaucratic discretion, minimize legal disputes, streamline compliance procedures, and safeguard government revenue. The simplified tax framework is expected to improve the ease of doing business for foreign firms in India, making the tax system more predictable and less cumbersome.

Conclusion

India's trade policy reforms in 2025 signify a strategic shift towards greater integration with the global economy, enhanced competitiveness, and a more conducive environment for businesses. By focusing on automation, digitalization, protective measures for domestic industries, and simplified regulatory frameworks, India is positioning itself as a formidable player in international trade. These initiatives are expected to not only boost exports but also attract foreign investment, thereby contributing to sustained economic growth and development.