E-Paper
Anchor of indispensability through global trade
This article is authored by Arnab Ghosh, AVP and Lipika Jain, AD, MSL Public Affairs.
The recently released Economic Survey 2025–26 marks a profound shift in India’s economic outlook. For years, policy thinking revolved around our strategic resilience--the ability to withstand global shocks, whether pandemics, geo-political tensions, or supply-chain disruptions. The latest edition moves far beyond this approach and aims to position India for building strategic indispensability. This is not about merely surviving volatility. It is about becoming a source of reliability, capability, and value for the global economy. In effect, India is no longer content with finding a seat at the global table; it is positioning itself to become the table itself – a platform for global trade.
The past few days have fundamentally rewritten the rules of Indian trade diplomacy. On January 27, 2026, India and the European Union signed what many are calling the “mother of all deals.” After nearly two decades of negotiations, the India-EU Free Trade Agreement has unlocked preferential access for Indian businesses to a combined market of nearly two billion people.
For the first time, Indian textiles, leather goods, and footwear will enter the EU with zero-duty access, finally placing Indian manufacturers on equal footing with competitors from countries such as Vietnam and Bangladesh. At the other end of the value chain, the agreement reflects a carefully calibrated exchange. India has agreed to phase down its steep tariffs on European automobiles from 110% to 10% and reduce duties on wines from 150% to around 20% over time. In return, 70.4% tariff lines covering 90.7% of India’s exports will have immediate duty elimination for important labour-intensive sectors such as textiles, leather and footwear, tea, coffee, spices, sports goods, toys, gems and jewellery and certain marine products, amongst others.
While we were still unravelling the nuances of the EU FTA,
on February 2, 2026, India’s trade relationship with the US underwent a dramatic reset. After a period of elevated tariffs in 2025, both countries announced a landmark agreement cutting reciprocal tariffs on Indian goods from 25% to 18%. Branded by both New Delhi and Washington as a “friendship deal”.
Taken together, these moves effectively end the recent era of tariff friction and position India as the primary alternative in global supply chains at a time of intensifying geopolitical fragmentation.
The breakthroughs of early 2026 did not emerge in isolation. Throughout 2025, India quietly but decisively transformed its trade policy from a defensive shield into an offensive instrument.
Within a single year, India concluded or operationalised major trade agreements with the UK, Oman, and the European Free Trade Association (EFTA), covering Switzerland, Norway, Iceland, and Liechtenstein. These were not traditional tariff-cutting arrangements. They reflected a new generation of FTAs, ones that integrate provisions on digital trade, labour standards, data flows, and green mobility.
The significance lies in alignment. Indian exports are no longer merely cost-competitive. They are becoming increasingly compliant with the regulatory, environmental, and social standards demanded by western markets. This shift enables India not just to sell more, but to sell sustainably and at higher value.
Perhaps the most sophisticated element of India’s 2026 strategy is how it reconciles global openness by disciplined indigenisation. The objective is not to justify intervention in general, but to discipline it. The framework proceeds by identifying where intervention may be warranted, clarifying where it should be avoided, and embedding discipline through sequencing, conditionality, and export exposure.
Rather than blanket bans or indiscriminate tariffs, the Survey proposes a Tiered Framework that determines where India must build domestic capacity and where global integration is necessary.
Tier 1 looks at critical vulnerabilities requiring immediate strategic priority. These are sectors where import dependence poses existential risk and domestic capability can be achieved.
Tier 2 covers economically feasible capabilities where disciplined indigenisation would be sufficient. Domestic production can approach global cost frontiers with appropriate scale and learning.
Tier 3 handles low strategic urgency items where market-driven development suffices. Protection here would impose costs without commensurate strategic benefit.
This calibrated approach described in the Survey as disciplined swadeshi recognises a hard truth that protection without productivity does not lead to sovereignty, but only stagnation. By allowing openness where it strengthens competitiveness, India aims to ensure that its strategic sectors remain world-class rather than inward-looking.
India’s trade strategy in 2026 is built on a clear principle: Be open where openness builds strength and be self-reliant where dependence creates vulnerability. Through historic trade agreements with the US and the EU, and through a surgical, tiered industrial strategy at home, India is transitioning from a participant in global markets to a stabilising anchor within them.
The world is no longer just evaluating Indian suppliers as an option. For resilient, high-value global supply chains, buying Indian is rapidly becoming a strategic necessity.
This article is authored by Arnab Ghosh, AVP and Lipika Jain, AD, MSL Public Affairs.
