By Sanskriti Global Exports by Himanshu Gupta

Navigating the Shifting Tides: PLI 2.0, UK FTA Progress, and New Commodity Headwinds

Date: October 29, 2025

Good morning, and welcome to your essential trade briefing. Today's landscape for Indian importers and exporters is a complex tapestry of significant domestic policy evolution, promising international diplomacy, and fresh volatility in global commodity markets. The government's strategic push towards self-reliance and export leadership is gaining new momentum, even as external factors demand heightened vigilance. For the astute professional, today’s developments are not just news items; they are strategic signposts for the coming quarters.

In this analysis, we will dissect the three pivotal stories of the day: the much-anticipated unveiling of the 'PLI 2.0' framework targeting high-tech sectors, a landmark breakthrough in the long-negotiated India-UK Free Trade Agreement (FTA), and an unexpected policy shift from Indonesia that will ripple through India’s edible oil import calculus. Let's delve into the details.

Today's Factual Summary

1. Government Unveils 'PLI 2.0' Framework for New-Age Sectors

The Ministry of Commerce and Industry, in a major announcement today, released the framework for the second phase of its flagship Production-Linked Incentive (PLI) scheme. Dubbed 'PLI 2.0', this phase moves beyond the initial sectors to target two critical, high-technology areas: green hydrogen components (including electrolysers and fuel cells) and advanced medical diagnostic equipment. With an initial outlay of ₹25,000 crore, the scheme aims to build domestic manufacturing capabilities, reduce critical import dependencies, and position India as a global export hub in these sunrise sectors. A senior ministry official stated that the scheme is designed to attract significant foreign investment and foster domestic R&D ecosystems.

2. India-UK FTA Talks Achieve Breakthrough on 'Rules of Origin'

After several challenging rounds of negotiation, sources in New Delhi confirm that Indian and British negotiators have achieved a major breakthrough on the contentious chapter concerning 'Rules of Origin' (RoO), particularly for the textiles and apparel sector. This has been a primary stumbling block in finalizing the comprehensive trade deal. The agreed-upon framework reportedly allows for a certain percentage of non-originating material to be used while still granting preferential tariff access, a compromise that balances Indian manufacturing interests with UK supply chain realities. This development significantly accelerates the timeline, with officials now expressing confidence that the FTA could be signed before the end of the year.

3. Indonesia Imposes New Export Levy on Crude Palm Oil

In a move that caught commodity markets by surprise, the Indonesian government announced a new 15% export levy on all crude palm oil (CPO) shipments, effective immediately. The stated purpose is to secure domestic supply for its expanding biofuel mandate and stabilize local prices. As the world's largest producer of palm oil and a primary supplier to India, this decision sent immediate shockwaves through the market. Futures prices on the Bursa Malaysia Derivatives exchange surged by over 5% within hours of the announcement. Indian importers, who rely heavily on Indonesian CPO for the FMCG and food processing industries, are now facing a sudden and significant increase in landing costs.

Implications for Indian Import-Export Professionals

These developments present a mix of substantial opportunities and immediate challenges. Here is a breakdown of the key implications for your business:

• PLI 2.0 - A New Frontier for Manufacturing Exporters: The new PLI scheme is a clear signal for diversification. Businesses in engineering, chemicals, and electronics should immediately evaluate opportunities to enter the green hydrogen or advanced medical device value chains. This is a chance to move up the value chain from traditional exports to high-tech, high-margin products. Exporters should anticipate a surge in demand for ancillary components and specialized raw materials, creating new domestic supply chain opportunities.
• UK FTA - Get Compliance-Ready Now: The breakthrough on RoO for textiles means the FTA is imminent. Apparel and textile exporters must proactively study the new origin criteria. It's time to review your supply chains, document your material sourcing meticulously, and prepare the necessary paperwork to claim preferential tariffs from day one. Failing to do so will mean losing out to more prepared competitors. Likewise, service sector exporters, particularly in IT and finance, should prepare for enhanced market access and potential visa relaxations.
• Palm Oil Shock - The Imperative for Sourcing Diversification: The Indonesian levy is a classic example of supply chain risk. Importers of edible oils must urgently activate contingency plans. This includes exploring alternative suppliers in Malaysia or looking further afield to South American countries for soy oil. For the FMCG sector, this will exert immediate pressure on input costs and margins. Hedging commodity risks and renegotiating supplier contracts will be paramount over the next few weeks.
• Investment and Joint Venture Magnet: Both the PLI 2.0 scheme and the impending UK FTA will make India a more attractive destination for foreign direct investment (FDI). Indian firms should be actively seeking joint ventures and technology transfer agreements with global players looking to establish a manufacturing base in India to serve both the domestic and export markets.
• Logistics and Infrastructure Planning: As manufacturing diversifies and trade with partners like the UK potentially surges, pressure on logistics infrastructure will increase. Exporters should start conversations with their freight forwarders about capacity and shipping lanes to the UK. Importers of new-age components under PLI will need to establish robust, potentially temperature-controlled, supply chains.

Conclusion: A Call for Strategic Agility

Today’s roundup paints a picture of a nation actively shaping its trade destiny while simultaneously navigating the unpredictable currents of global commerce. The twin policy moves—PLI 2.0 and the UK FTA breakthrough—represent a strategic, forward-looking agenda to boost high-value exports and integrate India more deeply into global value chains. They are an open invitation for Indian businesses to invest, innovate, and scale.

However, the Indonesian palm oil levy serves as a stark reminder of the external vulnerabilities that persist. The most successful import-export professionals in this environment will be those who demonstrate strategic agility. They will be the ones who seize the new manufacturing opportunities, prepare meticulously for the benefits of new trade agreements, and build resilient, diversified supply chains to withstand external shocks. The landscape is dynamic, and proactive planning, not reactive scrambling, will be the key to sustainable success.

Source: Original