By Sanskriti Global Exports by Himanshu Gupta

The October Trade Winds: A Strategic Briefing on Policy Shifts, FTA Progress, and Market Headwinds

Date: October 21, 2025

Esteemed professionals of India's import-export community, welcome to your essential briefing. In the dynamic theatre of global trade, a single day can introduce a confluence of policy shifts, market tremors, and strategic opportunities. Today is one such day. As we dissect the key developments, it's clear that the landscape demands not just attention, but agile and informed action. From critical notifications by the DGFT impacting the sunrise EV sector to significant strides in our trade negotiations with the United Kingdom, and the ever-present challenge of currency and commodity volatility, the currents are strong. This analysis aims to cut through the noise, providing you with a clear-eyed perspective on what these events mean for your operations, your strategy, and your bottom line.

Today's Key Trade Developments: A Factual Summary

Our roundup today consolidates four pivotal events that directly influence India's trade ecosystem. Each carries its own weight, but together they paint a complex picture of opportunity interwoven with challenge.

1. DGFT Revises Import Norms for EV Battery Components, Launches New Portal

In a much-anticipated move, the Directorate General of Foreign Trade (DGFT) issued Notification No. 42/2025-26, introducing revised policy conditions for the import of electric vehicle (EV) battery packs, cells, and related components under HS Chapter 85. The notification tightens the criteria for importing fully assembled battery packs, linking them to higher domestic value-addition certification. Conversely, it has eased the import process for lithium-ion cells and other primary components, aiming to bolster domestic battery assembly and manufacturing. A senior official noted this is a strategic step to position India as a key player in the EV supply chain, moving from an importer of finished goods to an assembler and, eventually, a manufacturer. Concurrently, the DGFT has launched the 'TradeFacilitate 2.0' portal, an AI-enabled platform designed to expedite customs clearance for pre-vetted 'Trusted Exporters and Importers'.

2. Major Breakthrough Reported in UK-India FTA Negotiations

Sources close to the negotiations in London have confirmed a significant breakthrough in the long-gestating UK-India Free Trade Agreement (FTA). The deadlock on two critical areas—'Rules of Origin' for textiles and automobiles, and market access for UK's financial and legal services—has reportedly been cleared. While the final text is yet to be signed, this development signals that the deal is in its final stages. This breakthrough could drastically reduce tariffs on Indian exports in sectors like apparel, automotive components, and agricultural products, while opening up the Indian market to UK's formidable services sector under a phased-in approach.

3. Rupee Breaches 85 Mark Against USD; Brent Crude Surges

On the macroeconomic front, market volatility has intensified. The Indian Rupee (INR) weakened past the psychological 85 mark against the US Dollar for the first time this fiscal year, closing at 85.15. The slide is being attributed to a hawkish stance from the US Federal Reserve and sustained demand for dollars from importers. This depreciation presents a classic double-edged sword for our trade community. Simultaneously, geopolitical tensions in the Strait of Hormuz have pushed Brent crude prices up by 4%, breaching the $98 per barrel mark. This spike is expected to have an immediate cascading effect on domestic logistics and manufacturing input costs.

4. Port Congestion at Colombo Adds to Logistics Woes

Adding to operational headwinds, major shipping lines have issued advisories regarding significant berthing delays and congestion at the Port of Colombo, a critical transshipment hub for Indian cargo. The backlog, caused by a combination of labour action and infrastructure upgrades, is causing delays of up to 72 hours, impacting supply chains for both inbound and outbound shipments, particularly for southern Indian ports.

Implications for Indian Import-Export Professionals

Translating these developments into actionable strategy is paramount. Here are the immediate and mid-term implications for your business:

• EV Sector Importers & Exporters Must Re-evaluate Supply Chains: The DGFT's new notification is a clear policy signal. If you import fully assembled EV battery packs, expect increased scrutiny, higher compliance costs, and potential non-tariff barriers. It is now critical to explore domestic assembly partners or pivot your import strategy towards cells and components. For domestic assemblers, this is a major tailwind, creating a more protected and favourable market.
• UK-Focused Exporters Should Prepare for a New Era: The impending UK-India FTA is a game-changer. Exporters in textiles, leather goods, gems and jewellery, and auto components should immediately begin identifying potential distributors and buyers in the UK. Prepare your documentation and compliance teams for new 'Rules of Origin' criteria. Service exporters, especially in IT, FinTech, and business consulting, should prepare for a significant new market to open up.
• Currency Hedging is No Longer Optional, It's Essential: With the Rupee trading above 85/$, the impact on your finances is direct. Exporters: Your realizations in Rupee terms will be higher, improving margins. However, do not get complacent; lock in these favourable rates using forward contracts to protect against any sudden reversals. Importers: Your landing costs have just increased significantly. It is imperative to hedge your dollar payables and perhaps renegotiate payment terms with suppliers to be in a currency other than the USD, if possible. All new costings must be done at the current exchange rate.
• Factor in Higher Freight and Input Costs Immediately: The twin blows of rising Brent crude prices and port congestion at Colombo will inflate your operational expenditures. Expect freight forwarders to announce revised fuel surcharges. Build these higher logistics costs into your pricing models for the upcoming quarter. Proactively communicate with your logistics partners to explore alternative shipping routes that bypass congested hubs, even if they are slightly longer, to ensure predictability.

Conclusion: Navigating with Foresight

The developments of October 21, 2025, are a microcosm of the modern trade environment: policy is fluid, markets are volatile, and opportunities are locked within challenges. The government's push for domestic value addition in the EV space, the promise of a landmark FTA with the UK, and the persistent macroeconomic pressures of a weak Rupee and high energy prices demand a proactive, not reactive, stance. The businesses that will thrive are those that can pivot their supply chains, leverage new market access, manage financial risk with discipline, and build resilience into their logistics. Stay informed, stay agile, and position your enterprise to harness the winds of change rather than be swept away by them.

Source: Original