Geopolitical uncertainty is rewiring global trade, India well placed: McKinsey Asia Chair

Global trade is undergoing a major shift due to geopolitical uncertainty. India is strategically positioned to benefit from this transformation over the next ten years. New trade routes are emerging, connecting India with the Middle East, Japan, Southeast Asia, and the European Union.

India and the European Union are nearing a significant Free Trade Agreement. Ambassadors from EU nations, including Italy, Estonia, and Malta, are optimistic about its conclusion. This deal is expected to boost trade and strengthen defense and strategic ties.

New EU GSP rules, effective January 1, 2026, will impact only 2.66% of India’s exports to the bloc. Agricultural products are excluded, and only leather benefits are reinstated in the non-agricultural sector. India’s graduation from GSP is attributed to its increasing export competitiveness.

India will be the partner country at Gulfood 2026 in Dubai. Over 160 exhibitors from 25 states will showcase processed foods, frozen products, and pulses. This participation aims to boost India’s agri-exports. The Indian Pavilion has doubled in size, reflecting growing global demand for Indian products. The event begins on January 26.

Facing global trade shifts and tariff pressures, India is urging its embassies to boost outreach in all markets, emphasizing that “every country matters.” The PMO has directed missions to diversify exports by engaging with even smaller economies, recognizing their potential for future growth and integration into global supply chains.

The European Union has suspended export benefits for a significant portion of Indian goods, including textiles and metals, effective January 1. This move removes an average 20% tariff advantage, impacting India’s price competitiveness against countries like Bangladesh and Vietnam. The suspension aligns with the EU’s Carbon Border Adjustment Mechanism and occurs as FTA talks are […]

Global trade is changing rapidly. US tariff policies have shifted focus from multilateral agreements to bilateral trade deals. This creates uncertainty for businesses. India is strategically diversifying its trade partnerships. This approach helps navigate a more disrupted world. New strategies are needed to adapt to these evolving trade dynamics.

Trade ministers and WTO chief Ngozi Okonjo-Iweala met in Davos to strategize for the upcoming 14th Ministerial Conference in Cameroon. Discussions centered on global trade policy challenges, potential compromises on key negotiating topics like Investment Facilitation, and WTO reform priorities. Switzerland emphasized its commitment to a rules-based multilateral trading system amidst global tensions.

Exporters are urging the government to implement tax incentives and rationalize import duties in the upcoming Budget. Key demands include reduced income tax for MSMEs, reinstatement of customs duty exemptions on certain leathers, and correction of inverted duty structures in sectors like synthetic yarns and electronics to boost domestic manufacturing and export competitiveness.

Following Donald Trump’s optimistic statement about a “good” trade deal with India, Union Minister Ashwini Vaishnaw expressed encouragement, highlighting India’s significant role in global trade. Trump, speaking at the World Economic Forum, praised Prime Minister Narendra Modi as a “fantastic man” and a friend, underscoring his respect for the Indian leader.