By Sanskriti Global Exports by Himanshu Gupta

The Deal is Done, But the Costs are Rising: Navigating Indian Trade in Late 2025

NEW DELHI – For the Indian import-export community, today's trade landscape presents a study in contrasts. On one hand, a moment of historic triumph with the long-awaited ratification of the India-UK Free Trade Agreement (FTA). On the other, a stark reminder of rising operational costs and the ever-growing complexity of global compliance. As a senior trade analyst, my advice is clear: the businesses that thrive in 2026 will be those that master the details of these new opportunities while strategically mitigating the emergent risks.

Today’s developments are not isolated events; they are interconnected threads in the evolving fabric of global commerce. From the corridors of power in New Delhi and London to the corporate boardrooms of major shipping lines in Europe, the decisions made today will directly impact your balance sheets tomorrow. Let's dissect the key news and understand what it truly means for your operations on the ground.

A Factual Summary of Today's Key Trade Developments

The global and domestic trade environment saw several significant shifts over the past 24 hours. Here is a summary of the critical events that demand your immediate attention:

1. India-UK Free Trade Agreement Formally Ratified: After years of intense negotiations, the parliaments of both India and the United Kingdom have given their final assent to the comprehensive FTA. The agreement is now officially slated to come into effect on January 1, 2026. The deal promises to eliminate tariffs on over 90% of goods traded between the two nations, with significant concessions in key sectors such as textiles, automotive parts, leather goods, and agricultural products for Indian exporters. On the import side, tariffs on Scotch whisky, certain high-end vehicles, and medical devices will be phased out. The agreement also includes robust chapters on services, intellectual property, and investment facilitation.

2. Major Shipping Lines Announce “Green Transition Surcharge” (GTS): In a coordinated announcement, shipping giants Maersk, MSC, and CMA CGM have introduced a new environmental surcharge, the GTS. Citing the immense cost of transitioning their fleets to low-carbon fuels like methanol and ammonia to meet international maritime regulations, the lines will levy the GTS on all cargo starting February 1, 2026. Initial estimates suggest the surcharge will add between 5% to 8% to freight costs on major East-West trade routes, impacting both importers and exporters.

3. DGFT Launches “Vyapar Saral 2.0” Digital Platform: The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce, has officially launched its next-generation trade facilitation platform, “Vyapar Saral 2.0.” This unified portal aims to integrate all import-export documentation, licensing, and compliance procedures into a single, AI-driven interface. A key feature is an advanced risk-management system that promises to significantly expand the “green channel” for compliant businesses, potentially reducing customs clearance times from days to mere hours.

4. Targeted Customs Duty Adjustments to Boost Domestic Manufacturing: In a move to further bolster the 'Make in India' initiative, the Ministry of Finance has issued a notification altering the customs duty structure for specific sectors. Basic Customs Duty on critical smartphone components, including display assemblies and camera modules, has been increased from 10% to 15%. Conversely, all import duties on capital goods and machinery required for setting up green hydrogen and battery cell manufacturing plants have been reduced to zero.

5. EU Signals Stricter Sustainability Compliance for Textiles: Reports from Brussels indicate that the European Commission is preparing to enforce stringent “Digital Product Passport” requirements for all textile and apparel imports by late 2026. This regulation, part of the broader EU Green Deal, will mandate complete, verifiable traceability of a product's supply chain, covering environmental impact, labour standards, and chemical usage.

Implications for Indian Import-Export Professionals

Understanding the news is only the first step. Translating it into actionable strategy is what separates leaders from laggards. Here are the immediate implications for your business:

• Navigating the India-UK FTA: The First-Mover Advantage: The six-week window before the FTA's implementation is critical. Exporters in apparel, engineering goods, and pharmaceuticals must immediately dissect the Rules of Origin (RoO) criteria to ensure their products qualify for tariff benefits. Service sector firms, particularly in FinTech and IT, need to analyze the new provisions on data flows and the movement of professionals. This is a golden opportunity to undercut competitors and lock in new British clients, but only for those who do their homework now.
• Recalibrating Budgets for Higher Logistics Costs: The new Green Transition Surcharge is not a temporary fluctuation; it is a structural cost increase. Exporters must immediately revisit their pricing models, especially for contracts extending into 2026. Recalculate your CIF (Cost, Insurance, and Freight) and DDP (Delivered Duty Paid) quotes. This is also the time to seriously evaluate regional markets that are less dependent on long-haul sea freight to diversify your risk.
• Embracing Digitalisation for a Competitive Edge: The “Vyapar Saral 2.0” platform will create a two-tiered system of traders: the digitally adept and the digitally challenged. Businesses that quickly train their teams and integrate their systems with this new platform will benefit from unprecedented speed in customs clearance. Your compliance history is now more important than ever, as the AI-driven system will reward those with a clean track record. Lagging in adoption will mean getting stuck in slower, more scrutinized clearance channels.
• Adapting to the Government's Industrial Policy Signals: The dual-pronged duty adjustment is a clear policy directive. For electronics assemblers, the message is unequivocal: accelerate localisation. The increased cost of imported components makes sourcing from domestic PLI-scheme beneficiaries a strategic imperative, not just a choice. For entrepreneurs and investors in the green energy space, this is a massive tailwind. The zero-duty on capital goods significantly lowers the barrier to entry for building India's next-gen energy infrastructure.
• Making Sustainability a Core Business Function: The EU's move on textiles is a harbinger of a global trend. Sustainability is no longer a corporate social responsibility talking point; it is a non-negotiable condition for market access. Textile exporters must urgently invest in supply chain traceability technologies. This requires a shift in mindset from simply manufacturing a product to documenting its entire journey. While a challenge, this is also an opportunity to build a premium 'Made in India' brand synonymous with ethical and sustainable practices.

Conclusion: The Age of the Agile Trader

The events of today underscore a fundamental truth of modern trade: the landscape is in a state of permanent flux. The ratification of the UK FTA is a significant victory, but it arrives in a world where operational costs, digital demands, and ethical expectations are all on the rise. Success is no longer just about finding a buyer and shipping a product. It is about mastering complex legal texts, integrating new technologies, re-engineering supply chains for transparency, and strategically aligning with national industrial policy. The agile, informed, and forward-looking Indian trader will not just survive this new era; they will define it.

Source: Original