Introduction
The New Economic policy 1991 transformed India’s economic environment and has served as a foundation for the country’s global integration. This strategic framework lifted India’s status in the international trade arena, hastening its worldwide expansion. Liberalisation of trade policies led to a large positive externality in the Indian economy, particularly in expanding India’s footprint in global markets, paving the way to extensive international investment, technical innovation and larger industrial competitiveness. The reformative strategy of the Indian economy thus established a solid foundation for domestic firms to actively engage in international trade, consequently resulting in diversification of export portfolios and strengthening of trade connections. Economic liberalisation additionally encouraged innovation and entrepreneurship. This allowed Indian enterprises to explore new market opportunities and build a firmer presence in the global economic system.
India’s Foreign Trade Policy 2024
Given this backdrop, India’s Foreign Trade Policy 2024 looks forward to an ambitious vision for the country’s trade expansion, with a major goal of reaching US$ 2 trillion in exports by 2030 HSBC, 2024. This comprehensive policy framework is built on four essential pillars to transform India’s trading landscape. The first pillar focusses on incentive remission mechanisms, with an emphasis on expanding the Export Promotion Capital Goods (EPCG) scheme. To supplement the first pillar, the Amnesty Scheme is implemented to address the Historical trade commitments, offering relief to exporters while encouraging increased engagement in international commerce. The second pillar focuses on increasing export promotion through collaborative initiatives, such as the implementation of comprehensive district-level support structures. The prominent element under this initiative is the designation of new Town of Export Excellences, which create specialised zones for improved trade facilitation. The third pillar focuses on ease of doing business by digitising all trade processes. Through this initiative, automated IT solutions would streamline operations, minimise bureaucratic obstacles and improve operational efficiency in international trade. The fourth pillar focusses on new trade sectors, with a particular emphasis on e-commerce exports and SCOMET policy alignment.
Expansion of Trade through Strategic Tariffs Reforms
Over the years, trade promotion in India has shown significant progress. One cannot ignore the union government’s attention towards enhancing trade though various schemes and programmes. For instance, central sector schemes / projects such as Agricultural Product Export Development Authority (APEDA), Marine Product Export Development Authority (MPEDA), Trade Infrastructure for Export Schemes (TIES), export promotion schemes such as Market Access Initiative, jewellery sector, Interest Equalisation Scheme, Export Promotion Mission, Centre for Research on International Trade-CRIT (Centre for WTO Studies), Transport and Marketing Assistance (TMA) Scheme for specified agriculture products, Footwear, Leather and Accessories Development Programme (FLADP), Industrial Infrastructure Upgradation Scheme (IIUS), National Industrial Corridor Development and Implementation Trust (NICDIT).
For the successful implementation of the various programmes, the central government places considerable emphasis on budgetary allocation to enhance trade promotion and boost exports. In the Union Budget 2025 dedicated to export promotion, a substantial amount of ₹12,699.92 crores was earmarked for revenue expenditure, which constitutes 68.85% of the total budgetary outlay. This funding primarily covers operational costs, incentives, and support programs aimed at facilitating export growth. Additionally, ₹5,746.13 crores were allocated for capital expenditure, making up 31.15% of the total budget. This section is directed towards infrastructure development, modernisation, and capacity building to boost the overall trade ecosystem.
The Indian Government’s Strategy to strengthen trade has yielded significant outcomes as reflected in the report of recent policy measures. The cut down of the Basic Custom Duty (BCD) has created substantial economic benefits across multiple sectors. The exemption of BCD on 36 lifesaving drugs has notably improved healthcare affordability, which does lead to enhancing the price elasticity of demand for essential medicines and easing the financial burden on the potential consumers. While, in the electric vehicle (EV) and battery manufacturing industries, the extended BCD exemptions on capital goods have lessened production cost, extended economies of scale and encouraged capital formation, leading to an easy flow in domestic manufacturing and technological innovation within the clean energy sector. Additionally, the reduction in BCD on frozen fish paste and fish hydrolysate has directly expanded India’s position in the global seafood market. This was possible through enhanced export price competitiveness and broadening market access. Overall, these measures have collectively contributed to a more resilient and diversified trade environment for India.
It is noteworthy that the tariff rationalisation measures have also contributed to the import substitution strategy, fostering backward linkages in the supply chain, reduced dependence on imported intermediate goods, and improved the country’s current account balance. Collectively, these policy interventions support industrial efficiency, promote factor productivity, and enhance India’s global trade competitiveness.
Tariffs Rationalisation Leading to Secured India’s Manufacturing Sector
Indian industries become more globally competitive as an outcome of the government’s rationalisation of tariffs, which have lowered manufacturing costs and ease local businesses to attain economies of scale and cost efficiency. Additionally, certain measures such as easing business establishment, elevate investor confidence and offering a stable legislative framework that entices multinational firms to establish industrial bases in India operates as a stimulant for foreign direct investment (FDI). Long-term economic growth is a collaborative outcome of knowledge transfer, human capital development and productivity gains, all of which the comprehensive developments are facilitated by the increased capital inflows.
While the government foster domestic industrial capacity and reduce external vulnerabilities in trade, these reforms accelerate the realisation of the Make in India vision—transforming India into a global manufacturing powerhouse, boosting employment generation, and enhancing the country’s export-led growth strategy.
The North-Eastern States of India: Need for Trade Recognition.
While India’s trade policies are developing, the northeastern region does not seem to harvest any substantial benefits despite its strategic geographical position. Sharing borders with China, Myanmar, Bangladesh, Bhutan, and Nepal, the northeast has the potential to serve as a crucial trade gateway linking India with the ASEAN economies. However, inadequate infrastructure, limited industrialisation, and weak trade facilitation have hindered the region’s ability to integrate into national and global supply chains. Despite its rich natural resources, skilled workforce, and proximity to international markets, the region remains economically marginalised.
The Act East Policy, designed to strengthen India’s engagement with ASEAN, is yet to make a significant impact on the Northeast’s trade potential due to slow execution and inadequate policy implementation. While connectivity projects like the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multi-Modal Transit Transport Project have been initiated, delays and lack of investment have prevented them from becoming operational trade routes. The government must take immediate steps to accelerate these projects and establish special economic zones (SEZs), industrial corridors, and modern border trade facilities to enhance the region’s trade competitiveness. Additionally, streamlining customs procedures, easing trade restrictions, and fostering stronger diplomatic ties with ASEAN nations will be crucial for ensuring that the Northeast does not remain an overlooked region in India’s broader economic strategy. Without urgent policy intervention, the region’s vast trade potential will remain untapped, limiting India’s ability to leverage its strategic position in the global market.
Conclusion
India’s international commercial footprint has been greatly enhanced by trade liberalisation since the 1991 New Economic Policy and the Foreign Trade Policy 2024. Strategic measures such as the reduction of BCD on vital industries including seafood, electric cars, and pharmaceuticals have improved industrial competitiveness, reduced production costs and broadened India’s export market. Global market integration and operational efficiency have been enhanced by increased budgetary allocation for trade infrastructure, digitisation of trade procedures and attention to developing industries like e-commerce exports. India’s manufacturing-led export development has been fuelled by these policies which have also improved import substitution, domestic value chains and drawn foreign direct investment. Regional differences still exist though. Despite being strategically close to ADSEAN markets, the North-Eastern states have not reaped the rewards of their national trade policy. The region has remained economically isolated due to delays in the operationalisation of important connectivity projects including the Kaladan Multi-Modal Transit Transport Project and the India-Myanmar-Thailand Trilateral Highway. In this respect, urgent action is required to harness the Northeast’s trade potential, including the development of the Special Economic Zones (SEZs), completion of infrastructural projects, simplification of the customs procedures and strong diplomatic ties with ASEAN. While the country procrastinates the integration of the Northeast into India’s global trade strategy, the goal of sustainable, inclusive growth remains incomplete, hence holding back India’s economic potential.
Author’s bio: Dr. Motika Sinha Rymbai is a Teaching Assistant cum Analyst at the Bharti Institute of Public Policy, Indian School of Business. She holds a Master’s degree in Economics, M.Phil in Economics, and Ph.D. in Economics from North–Eastern Hill University Shillong, Meghalaya. She has authored 10 publications in national and international journals. Her publications, including those in the Indian Economic Journal, Indian Journal of Public Health and the South India Journal of Social Sciences, examine fiscal policies, government capacity, and their impact on health outcomes, highlighting the region’s infrastructural challenges and economic potential. Dr. Motika was a fellow under the Meghalaya Legislative Research Fellowship programme jointly run by the Government of Meghalaya and Bharti Institute of Public Policy.