By Sanskriti Global Exports by Himanshu Gupta

Navigating the Dual Reality: Global Headwinds and Domestic Tailwinds for Indian Trade

Date: October 25, 2025

Good morning, colleagues. As we close out another dynamic week in global trade, the landscape presents a familiar duality for Indian import-export professionals: significant external pressures demanding immediate strategic recalibration, countered by promising domestic policy shifts that open new avenues for growth. The developments of the past 24 hours are a perfect microcosm of this reality. From Brussels, we see the expansion of a formidable non-tariff barrier, while closer to home, new incentives aim to bolster our manufacturing export base. For the astute trader, navigating this complex environment is not just about survival; it's about identifying the strategic pivot points that will define success in 2026 and beyond. This briefing will dissect these key events and, more importantly, translate them into actionable intelligence for your business.

Factual Summary: The Day's Key Developments

Yesterday's trade news cycle was dominated by four significant announcements that will have cascading effects on Indian supply chains, cost structures, and market access.

1. EU Announces Phase-II Expansion of Carbon Border Adjustment Mechanism (CBAM): The European Commission formally announced its intention to expand the CBAM framework, effective January 2027. The expansion will now include textiles, pharmaceuticals (specifically Active Pharmaceutical Ingredients - APIs), and certain polymers. This moves beyond the initial scope of steel, aluminium, cement, and fertilisers. The announcement confirms that the transitional reporting period for these new sectors will begin in Q3 2026, requiring Indian exporters in these fields to start monitoring and reporting embedded carbon emissions much sooner than anticipated.

2. Major Shipping Alliances Impose 'Malacca Strait Congestion Surcharge': Citing heightened security protocols and increased naval traffic leading to significant transit delays, three of the world's largest container shipping alliances have jointly introduced a 'Malacca Strait Congestion Surcharge' (MSCS). The surcharge, averaging $150 per TEU (Twenty-foot Equivalent Unit), will apply to all vessels transiting the strait, impacting a vast majority of trade routes between India and East Asia (including China, Japan, South Korea) and beyond. The surcharge is effective for all bookings made from November 15, 2025.

3. Government of India Extends PLI Scheme to Advanced Medical Devices: In a major boost to the 'Make in India' initiative, the Ministry of Commerce and Industry, in collaboration with the Ministry of Health, announced the rollout of a Production-Linked Incentive (PLI) scheme for 'Advanced Medical Devices and Diagnostics.' The ₹15,000 crore scheme aims to foster domestic manufacturing of high-end medical equipment like MRI machines, high-end X-ray tubes, and advanced biotechnological diagnostic kits, thereby reducing import dependency and creating a new export category for India.

4. DGFT Launches Beta of 'E-Clear' Unified Digital Clearance Portal: The Directorate General of Foreign Trade (DGFT) has launched a beta version of its ambitious 'E-Clear' portal. This single-window system aims to integrate clearances from Customs, FSSAI, plant and animal quarantine, and other partner government agencies (PGAs) into a single, seamless digital workflow. The beta is currently open to a select group of Tier-1 Authorised Economic Operators (AEOs) in Mumbai and Chennai, with a nationwide rollout planned for mid-2026. The goal is to slash clearance times by up to 40% and drastically reduce paperwork.

Implications for Indian Import-Export Professionals

These developments are not just headlines; they are direct inputs for your next strategic planning meeting. Here are the critical implications and recommended action points:

• CBAM is No Longer a Distant Threat, It's an Immediate Compliance Challenge: The inclusion of textiles and pharma APIs is a direct hit on two of India's export powerhouses. This is a non-tariff barrier disguised as an environmental policy. Businesses must act now.
  • Action Point: Immediately begin the process of carbon footprint mapping for your products and supply chains. Invest in expertise or tools for Life Cycle Assessment (LCA). This data will be non-negotiable for exporting to the EU. Start dialogue with your EU buyers about compliance costs and data sharing.
• Freight Costs and Transit Times Are Set to Rise: The Malacca Surcharge directly inflates landing costs for imports from East Asia and makes our exports to the region more expensive. This erodes margins and impacts competitiveness.
  • Action Point: Review your Incoterms for all East Asian trade. If you are operating on a CIF (Cost, Insurance, and Freight) basis for imports or DDP (Delivered Duty Paid) for exports, this new surcharge will hit your bottom line directly. Renegotiate terms or re-budget immediately. Explore whether the slightly longer route via the Sunda Strait is a viable, albeit slower, alternative for less time-sensitive cargo.
• A Golden Opportunity in Med-Tech Manufacturing: The new PLI scheme is a clear signal from the government. It’s not just about incentives; it’s about creating a supportive ecosystem for a high-value industry. This is a diversification opportunity.
  • Action Point: If you are an importer of medical devices, this is the time to explore domestic manufacturing partnerships or backward integration. If you are an engineering or electronics exporter, evaluate how your capabilities can be pivoted to serve this burgeoning sector. The scheme will create a domestic market first, which can then be leveraged into an export launchpad.
• Gain a First-Mover Advantage with Digitalisation: The DGFT's 'E-Clear' portal, while in beta, signals the future of trade facilitation in India. Early adopters will gain a significant competitive edge through faster clearances and lower administrative overhead.
  • Action Point: If you are an AEO, lobby to be part of the extended beta testing. For all others, begin training your documentation and logistics teams on the principles of integrated digital clearance. The shift from paper-pushing to data management is accelerating, and those who prepare now will reap the benefits.
• Re-evaluate Your Forex Hedging Strategy: The combination of increased export compliance costs (CBAM) and rising import freight costs (MSCS) will put pressure on your net foreign exchange earnings. Any adverse movement in the USD/INR or EUR/INR rates will amplify these pressures.
  • Action Point: Consult with your financial advisor to review and potentially adjust your hedging strategy to account for these new, predictable drains on your foreign currency cash flows over the next 12-18 months.

Conclusion: The Imperative of Agility

The events of October 24th reinforce a fundamental truth of modern trade: stasis is not an option. While the EU's protectionist environmentalism and global shipping volatility present formidable challenges, India's proactive industrial policy offers a powerful counter-narrative. The winning formula for Indian traders will lie in their agility—the ability to swiftly adopt new compliance frameworks, re-engineer supply chains to mitigate costs, and pivot towards high-growth, domestically supported sectors. The future belongs not to the biggest, but to the most informed and adaptable. Stay vigilant, stay strategic.

Source: Original