By Sanskriti Global Exports by Himanshu Gupta
Navigating New Horizons: Unpacking the Trade Headwinds and Tailwinds of July 2025
Mumbai, IN – 11 July 2025 – The global trade landscape remains a complex tapestry of strategic alliances, logistical bottlenecks, and evolving regulations. For the Indian import-export community, this week has been nothing short of pivotal. We've witnessed the historic conclusion of a long-awaited trade agreement, the emergence of a critical new supply chain chokepoint, and the tightening of environmental compliance in a key market. Standing still is not an option. Success today requires a deep understanding of these developments and, more importantly, the agility to adapt. This briefing cuts through the noise to provide a clear, actionable analysis of the events shaping your business right now.
The Day's Top Developments: A Factual Summary
This week's roundup is dominated by four key events that carry significant weight for Indian commerce, from policy corridors in New Delhi and London to the bustling shipping lanes of Southeast Asia.
1. Landmark India-UK Free Trade Agreement (FTA) Finally Signed
After years of intense negotiations, India and the United Kingdom have officially signed their comprehensive Free Trade Agreement. The deal, hailed as a cornerstone of the '2030 Roadmap,' is set to eliminate tariffs on over 90% of goods traded between the two nations. Key Indian export sectors like textiles, apparel, leather goods, and engineering products are poised for immediate gains with zero-duty access to the UK market. On the import side, the agreement facilitates easier access to high-end British machinery, medical devices, and iconic consumer goods like Scotch whisky, with phased tariff reductions. The services sector, particularly IT, financial services, and healthcare, also sees significant provisions for easier market access and professional mobility.
2. Severe Congestion Cripples Southeast Asian Transshipment Hubs
A 'perfect storm' of a new, bug-ridden customs automation system rollout at the Port of Singapore, coupled with limited labour action at Malaysia's Port Klang, has triggered severe logistical disruptions across Southeast Asia. Berthing delays are reportedly extending up to 7-10 days, creating a massive backlog of containers. This chokepoint is critically impacting the arterial trade route connecting India with ASEAN, China, Japan, and South Korea. Freight forwarders are reporting a spike in spot freight rates and are scrambling to find alternative routing, putting immense pressure on supply chain timelines and costs for Indian traders reliant on these lanes.
3. European Union Announces Stricter CBAM Reporting Mandates
As the transitional phase of the Carbon Border Adjustment Mechanism (CBAM) progresses, the European Commission has announced a more stringent set of reporting requirements, effective Q4 2025. The new rules demand more granular data on embedded emissions, including both direct and key indirect emissions from electricity consumption during production. Furthermore, the EU has signalled its intent to expand the scope of CBAM to include polymers and certain organic chemicals by 2027. This move intensifies the compliance pressure on Indian exporters in the targeted sectors—primarily iron, steel, aluminium, cement, and fertilisers—making robust carbon accounting an non-negotiable aspect of accessing the EU market.
4. Government Unveils 'PLI 3.0' for High-Value Manufacturing
In a major push for 'Make in India for the World,' the Government of India has announced the third iteration of its flagship Production Linked Incentive (PLI) scheme. 'PLI 3.0' is sharply focused on attracting investment in high-value-added and technologically advanced sectors. The initial tranches of the scheme will target medical technology (specifically diagnostic and imaging equipment), green hydrogen components (including electrolysers and fuel cells), and advanced semiconductor components. The scheme aims to bolster domestic manufacturing capabilities, reduce import dependency, and establish India as a key global exporter in these sunrise sectors.
Implications for Indian Import-Export Professionals
Understanding these events is the first step. The crucial next step is to translate this knowledge into strategy. Here are the immediate implications and recommended actions for your business:
-
On the India-UK FTA:
- Exporters: This is a goldrush moment, particularly for apparel, automotive components, and processed foods. Your immediate task is to master the 'Rules of Origin' criteria. Begin auditing your supply chain to ensure your products qualify for the preferential tariffs. Update your pricing models to reflect the duty savings and enhance your competitiveness.
- Importers: Anticipate lower sourcing costs for high-quality UK capital goods and technology, which can boost your manufacturing efficiency. However, also prepare for increased domestic competition in sectors like premium consumer goods and processed foods.
-
On the Southeast Asian Port Congestion:
- Logistics Planning: Immediately engage with your freight forwarder to discuss contingency plans. Explore alternative sea routes, such as transshipping via Colombo or bypassing the congested hubs altogether where possible. For time-sensitive, high-value cargo, evaluate the cost-benefit of a temporary shift to air freight.
- Client Communication: Proactively communicate with your buyers and suppliers about potential delays. Managing expectations is critical to preserving business relationships during this disruption. Build buffer time into your production and delivery schedules for all new orders involving these routes.
-
On the New EU CBAM Rules:
- Compliance Overhaul: The grace period for lax reporting is over. You must now invest in sophisticated carbon accounting systems. This is no longer just an environmental issue; it is a core business-critical function. The cost of compliance and potential CBAM levies must be factored directly into your export pricing for the EU.
- Strategic Opportunity: Businesses that can demonstrate low-carbon production processes will gain a significant competitive advantage. This is a powerful incentive to invest in greener technology and energy efficiency, turning a regulatory burden into a long-term market differentiator.
-
On the PLI 3.0 Scheme:
- Domestic Manufacturers & Exporters: If your business operates in or supplies to the medical device, green energy, or semiconductor sectors, this is a clarion call. Deeply analyze the scheme's eligibility criteria and incentive structures. This is a state-supported opportunity to scale, modernise, and compete globally.
- Importers: Demand for specialised raw materials and components needed for these PLI-targeted industries is set to surge. Position yourself as a key supplier to these emerging manufacturing ecosystems.
Conclusion: The Proactive Trader's Advantage
The developments of July 2025 underscore a fundamental truth of modern trade: the landscape is in a constant state of flux. The signing of the India-UK FTA and the launch of PLI 3.0 present incredible avenues for growth, while the logistical snarls in Asia and the EU's tightening green regulations serve as stark reminders of the operational and compliance challenges we face. The winning formula lies not in reacting to events, but in anticipating them. Indian trade professionals who act decisively today—by mastering new trade rules, diversifying logistics, investing in compliance, and seizing policy-driven opportunities—will be the ones who not only survive but thrive in the dynamic months ahead.
Source: Original