By Sanskriti Global Exports by Himanshu Gupta

Navigating the Headwinds: PLI Expansion, FTA Hopes, and a Looming Logistics Crisis

Date: February 23, 2026

The first quarter of 2026 is already proving to be a crucible for Indian import-export professionals, testing both our agility and strategic foresight. This week’s developments present a classic mix of immense opportunity and significant operational risk. On one hand, a landmark expansion of the Production Linked Incentive (PLI) scheme and a pivotal breakthrough in the long-awaited India-UK Free Trade Agreement (FTA) signal a bullish future for domestic manufacturing and services exports. On the other, a rapidly escalating logistics crisis in Southeast Asia and sharp currency fluctuations serve as a stark reminder of the inherent volatility in global trade. For businesses navigating these waters, understanding the nuances of these events is not just beneficial—it is critical for survival and growth.

Factual Summary: The Week's Key Developments

Our analysis is based on a confluence of reports from government circulars, international shipping-line advisories, and financial market data. The four key developments shaping the trade landscape this week are:

1. Government Launches PLI 2.0 for Advanced Medical Devices & Robotics: In a major push towards self-reliance and high-value exports, the Union Cabinet has approved a ₹25,000 crore PLI scheme for the 'Advanced Medical Devices and Robotics' sector. The policy is designed to attract global players to set up manufacturing in India and to help domestic firms scale up production of sophisticated equipment like robotic surgical systems, advanced imaging devices (MRI, PET scanners), and critical care implants. The goal is to slash the current 75-80% import dependency in this category and establish India as a global manufacturing hub.

2. Critical Port Congestion Cripples Southeast Asian Hubs: Major transhipment ports, including Singapore and Malaysia's Port Klang, are reporting severe vessel bunching and berthing delays of up to 10 days. The disruption is attributed to a dual impact: the phased implementation of the new 'ASEAN Green Shipping Corridor' regulations, which has created documentation and inspection backlogs, and a premature surge in cargo ahead of the upcoming Lunar New Year factory shutdowns in China and Vietnam. Consequently, spot freight rates on the India-Far East routes have spiked by 15-20% in the last week alone.

3. India-UK FTA Sees Breakthrough on Key Chapters: After more than a dozen rounds of negotiations, sources confirm that Indian and UK trade representatives have reached an agreement-in-principle on the historically contentious chapters of Rules of Origin and Services. This breakthrough paves the way for a potential final agreement by mid-2026. The services chapter reportedly grants Indian professionals in IT and healthcare easier visa access, while the Rules of Origin text has found a middle ground acceptable to both nations' automotive and textile sectors.

4. Rupee Appreciation and Commodity Price Shocks: Strong Foreign Institutional Investor (FII) inflows into the Indian equity markets have led to a sharp appreciation of the Indian Rupee, which briefly touched a 12-month high of ₹81.50 against the US Dollar. While a sign of economic confidence, this has put immediate pressure on exporter margins. Simultaneously, supply disruptions at major mines in Chile have caused London Metal Exchange (LME) copper prices to surge past $9,500 per tonne, hitting Indian manufacturers of cables, electronics, and EVs with significantly higher input costs.

Implications for Indian Import-Export Professionals

Translating these headlines into actionable strategy is paramount. Here is our analysis of what these developments mean for your business:

On the New PLI Scheme:

• For Importers: If you are an importer of finished high-end medical devices, the long-term outlook involves increased domestic competition. In the short-term, however, there will be a surge in demand for specialized raw materials, high-precision components (semiconductors, specialized alloys, sensors), and capital goods (CNC machines, testing equipment) required by the new manufacturing plants. This is a diversification opportunity.
• For Exporters: For existing domestic medical device manufacturers, this is a clear signal to scale up and invest in R&D to meet the eligibility criteria. For businesses in ancillary sectors (precision engineering, software development, electronic components), this opens a vast new domestic B2B market that will eventually serve as a springboard for exports.

On Southeast Asian Logistics Snarls:

• Immediate Action Required: Exporters to ASEAN and Far East markets must immediately communicate with their freight forwarders and buyers about potential delays. Factor in at least two additional weeks of transit time in your planning. Review your Letter of Credit (LC) and shipping deadlines to avoid penalties.
• Cost & Contract Review: The spike in freight rates will erode margins. Importers must recalculate landing costs and decide whether to absorb them or pass them on to customers. This is a crucial time to explore quotes from different shipping lines or consider alternative, albeit more expensive, options like partial air freight for time-sensitive cargo.

On the India-UK FTA Progress:

• Proactive Planning: While the final text is not public, exporters in textiles, handicrafts, pharmaceuticals, and IT services should begin due diligence. Start identifying potential distributors in the UK and preparing the documentation needed to comply with the anticipated Rules of Origin.
• New Sourcing Opportunities: Importers of British goods, particularly industrial machinery, high-end automotive components, and spirits like Scotch whisky, should model the potential cost savings from tariff reductions. This could open up new, competitive sourcing channels that were previously unviable.

On Currency and Commodity Volatility:

• Hedge Your Forex Exposure: For exporters, the strong Rupee makes your goods more expensive for foreign buyers and reduces your earnings in rupee terms. It is imperative to engage in forex hedging strategies (e.g., forward contracts) to lock in a favourable exchange rate and protect your profit margins.
• Manage Input Costs: For importers and manufacturers reliant on copper, the price surge is a direct hit to the bottom line. Secure your inventory, renegotiate pricing terms with your clients where possible, and explore contractual clauses that allow for commodity price adjustments.

Conclusion: A Call for Strategic Agility

The landscape of February 2026 underscores a fundamental truth of modern trade: opportunity and risk are two sides of the same coin. The government's strategic push through the new PLI scheme and the potential market access from the UK FTA offer significant runways for growth. However, realising this potential requires navigating the immediate and painful operational challenges posed by supply chain disruptions and financial market volatility. The winning businesses in this environment will not be those who simply react, but those who proactively analyze, plan, and execute with precision and agility.

Source: Original