By Sanskriti Global Exports by Himanshu Gupta

Trade Winds Shift: India-UK FTA Ratified, RoDTEP Expanded Amid New Supply Chain Pressures

Date: October 24, 2025

Good morning, and welcome to your essential daily briefing. Today’s trade landscape is a testament to the adage that in global commerce, the only constant is change. We are witnessing the culmination of years of negotiation with one hand, while the other grapples with emergent geopolitical and commodity-based challenges. The headline news is undoubtedly the long-awaited ratification of the India-UK Free Trade Agreement (FTA), a landmark development promising to redefine a centuries-old economic partnership. This is coupled with a welcome domestic policy boost through an expansion of the RoDTEP scheme for high-growth sectors.

However, these significant opportunities do not exist in a vacuum. Fresh reports of logistical congestion in the critical Strait of Malacca are sending ripples through East Asian supply chains, and a sudden, sharp volatility in the lithium market is forcing battery and electronics manufacturers to urgently reassess their sourcing strategies. For the Indian import-export professional, today is a microcosm of the modern trade environment: a complex interplay of strategic opportunity and operational risk. Let's break down the key developments.

Factual Summary of Key Developments

Our analysis today synthesises reports from global trade wires, government notifications, and commodity market trackers. Here are the facts you need to know:

1. India-UK FTA Finally Ratified, Implementation from January 2026: After years of intense negotiations, sources within the Commerce Ministry have confirmed that both Indian and UK parliaments have completed the ratification process for the comprehensive Free Trade Agreement. The agreement is set to come into force on January 1, 2026. The deal is expected to provide zero-tariff or reduced-tariff access for over 90% of Indian goods entering the UK market, with major gains anticipated for textiles, apparel, pharmaceuticals, automotive components, and processed agricultural products. Conversely, India will phase out tariffs on key UK exports, including Scotch whisky, high-end machinery, and certain financial services.

2. DGFT Notifies Expanded RoDTEP Rates for High-Tech Sectors: In a significant boost for ‘Make in India’, the Directorate General of Foreign Trade (DGFT) issued a notification last night expanding the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme. The revised schedule includes higher remission rates for select high-potential sectors. Notably, manufacturers of green hydrogen components, advanced electronics (including semiconductor assembly components), and specialty chemicals will now see RoDTEP rates increase by an average of 0.5% to 1.2%. The move is clearly aimed at enhancing the global competitiveness of India's next-generation manufacturing exports.

3. New Maritime Protocols Cause Congestion in Strait of Malacca: A new trilateral maritime security pact between Singapore, Malaysia, and Indonesia has led to enhanced, albeit slower, vessel screening protocols in the Strait of Malacca. Shipping lines are reporting vessel transit delays of 24 to 48 hours, creating a backlog at key ports. This chokepoint, through which a significant portion of India's trade with East Asia and the Pacific passes, is already leading to a spike in spot freight rates and discussions of rerouting cargo via the more time-consuming Sunda Strait.

4. Lithium Prices Surge on South American Supply Disruption: The global commodity markets were jolted by news of a major operational halt at a leading lithium mine in Chile due to labour disputes. This has triggered an immediate 18% surge in the spot price of lithium carbonate. For India, a major importer of lithium for its burgeoning electric vehicle (EV) and battery manufacturing ecosystem (under the PLI scheme for Advanced Chemistry Cells), this development poses a serious input cost challenge and highlights the strategic vulnerability of the supply chain.

Implications for Indian Import-Export Professionals

Translating these headlines into actionable intelligence is critical. Here are the immediate implications for your business:

• (FTA) Proactive Opportunity Analysis is Crucial: The two-month window before the India-UK FTA implementation is a golden period. Exporters, particularly in textiles and auto components, must immediately engage with their UK buyers to plan for 2026. This involves reviewing pricing structures to reflect the new tariff regime and preparing documentation to meet the 'Rules of Origin' criteria, which will be strictly enforced. Importers of UK goods should prepare for increased competition.
• (RoDTEP) Re-evaluate Your Export Pricing: If you operate in the newly covered electronics, green hydrogen, or specialty chemical sectors, your export costing models are now out of date. Recalculate your final export price immediately to leverage this new advantage. This could be the edge you need to undercut competitors or improve your margins in fiercely contested global markets.
• (Logistics) Consult Your Freight Forwarder Yesterday: The Malacca Strait disruption is not a temporary glitch; it's a new operational reality. Contact your logistics partners to understand the cost and time impact on your specific shipping routes. Consider building a buffer into your delivery timelines for East Asian markets and explore the financial viability of alternative, albeit longer, sea routes.
• (Commodities) Secure Your Lithium Supply Chain: For importers in the EV and electronics sectors, the lithium price shock is a red alert. This is the time to activate risk mitigation strategies. Explore diversifying your sourcing away from a single region, engage in talks for longer-term supply contracts to hedge against spot price volatility, and accelerate R&D into battery chemistries that use more readily available materials.
• (FTA) Scrutinise Non-Tariff Barriers: While the FTA removes tariffs, it doesn't eliminate non-tariff barriers (NTBs) like sanitary and phytosanitary (SPS) standards or technical regulations. Indian exporters must now double down on understanding and meeting UK-specific quality and certification standards (e.g., UKCA marking) to ensure their market access is smooth.

Conclusion: A Time for Strategic Agility

Today’s roundup paints a clear picture: the path to growth in Indian foreign trade is paved with both historic opportunities and significant operational hurdles. The India-UK FTA is a generational opportunity that demands meticulous planning and proactive engagement. The government's targeted RoDTEP expansion provides a welcome tailwind for our most innovative sectors. Yet, these positives are tempered by the realities of fragile global supply chains, evidenced by the Malacca congestion and the lithium price shock.

The successful Indian trader in late 2025 and beyond will not be the one who simply reacts, but the one who anticipates. Agility, diversification of markets and suppliers, and a deep, nuanced understanding of both policy and logistics are no longer just best practices—they are the essential tools for survival and success. Seize the opportunities, but be prepared to navigate the challenges with foresight and resilience.

Source: Original