BharatNotes India's trade policy sits at the intersection of domestic industrial promotion, international commitments under the WTO, and strategic economic diplomacy. As the world's fifth-largest economy and a rapidly growing manufacturing base, India uses a sophisticated toolkit of tariff instruments, trade remedies, export promotion schemes, and bilateral trade agreements to manage its external sector. This chapter covers the full architecture of India's trade policy for UPSC GS3, including anti-dumping and countervailing measures, WTO dispute experience, major FTAs, and the Foreign Trade Policy 2023-28.
India's Trade Profile
Merchandise Exports — Major Categories
| Category | Share of Merchandise Exports | Key Products |
|---|---|---|
| Engineering goods | ~26% | Machinery, iron & steel, auto components |
| Petroleum products | ~14% | Refined petroleum (India is a major refiner) |
| Chemicals | ~9% | Organic chemicals, pharma ingredients |
| Gems & Jewellery | ~10% | Cut diamonds, gold jewellery |
| Pharmaceuticals | ~7% | Generic formulations, APIs |
| Electronic goods | ~6% | Mobile phones (growing rapidly under PLI) |
| Textiles & Apparel | ~8% | Cotton yarn, readymade garments |
Merchandise Imports — Major Categories
| Category | Share of Merchandise Imports | Key Driver |
|---|---|---|
| Crude oil & petroleum | ~22–25% | India imports ~87% of crude oil requirements |
| Electronic goods | ~10% | Consumer electronics, telecom equipment |
| Machinery | ~8% | Capital goods for industry |
| Gold | ~6% | Jewellery demand; investment |
| Coal, coke, briquettes | ~6% | Power sector dependence |
| Chemicals | ~5% | Industrial chemicals |
Trade Balance
FY 2024-25 (April–March)
| Component | Value (USD billion) | Change from FY23-24 |
|---|---|---|
| Merchandise exports | 437.42 | Broadly flat |
| Merchandise imports | 720.24 | +6.2% |
| Merchandise trade deficit | 282.83 | Widened significantly |
| Services exports | 387.55 | +13.6% (PIB PRID 2252272) |
| Services imports | 194.95 | +9.3% |
| Services trade surplus | ~188.84 | Strong improvement |
| Overall trade deficit | ~89.8 | Reduced vs merchandise-only |
FY 2025-26 (April–March) — Latest Data (PIB, April 2026)
| Component | Value (USD billion) | Change from FY24-25 |
|---|---|---|
| Merchandise exports | 441.78 | +0.93% |
| Merchandise imports | 774.98 | +7.6% |
| Merchandise trade deficit | 333.19 | Widened by ~$50 billion |
| Services exports | 421.32 | +8.71% (revised from initial $418.31B estimate; DGCI&S/PIB May 2026) |
| Services imports | 204.42 | +2.9% |
| Services trade surplus | ~216.9 | New record |
| Total exports (merch + services) | 863.11 | +4.59% (revised from initial $860.09B; BW Businessworld/PIB May 2026) |
| Total imports (merch + services) | 979.40 | +6.47% |
| Overall trade deficit | ~116.3 | Widened from ~$90B in FY25 |
India's services surplus (led by IT/BPO, business services, financial services) largely offsets the persistent merchandise deficit. The overall trade deficit of ~$119 billion (FY26) requires financing through capital inflows (FDI, FPI, remittances).
Trade Policy Instruments
Tariff Instruments
| Instrument | Full Name | Basis | Purpose |
|---|---|---|---|
| BCD | Basic Customs Duty | Tariff schedule (applied rate) | Primary import duty; revenue + protection |
| IGST | Integrated GST | Applied on imports post-GST | Equivalent to domestic GST; ensures tax neutrality |
| SWS | Social Welfare Surcharge | 10% of BCD | Funds social welfare |
| AIDC | Agriculture Infrastructure and Development Cess | On specific agri imports | Funds agri infrastructure |
| Anti-dumping duty | ADD | Beyond BCD | Counter unfair foreign pricing |
| Countervailing duty (CVD) | CVD | Beyond BCD | Counter foreign subsidies |
| Safeguard duty | SG | Temporary | Protect domestic industry from surge |
India's average applied tariff (~13% in 2024) is higher than the WTO average (~9.5%), reflecting a preference for tariff protection across manufacturing and agriculture. Bound tariffs (maximum permissible under WTO) are often much higher, giving India policy space.
Non-Tariff Barriers (NTBs)
- Quality Control Orders (QCOs): Bureau of Indian Standards (BIS) mandatory certification for products — increasingly used to restrict imports (over 120 product categories by 2024)
- Phytosanitary measures: Import conditions on agricultural products
- Import licensing: Used for sensitive commodities
- Domestic content requirements: Minimum local procurement in government tenders (Public Procurement Policy)
Anti-Dumping Mechanism
What is Dumping?
Dumping occurs when an exporter sells goods in the importing country below their normal value (price in the home market or cost of production). It can harm domestic producers in the importing country.
WTO Anti-Dumping Agreement (ADA)
The WTO Agreement on Anti-Dumping (Article VI of GATT + Anti-Dumping Agreement) allows countries to impose anti-dumping duties if:
- Dumping is occurring
- Material injury (or threat of material injury) to domestic industry is caused
- Causal link between dumping and injury is established
India's Mechanism: DGTR
The Directorate General of Trade Remedies (DGTR), under the Ministry of Commerce and Industry, is India's nodal agency for:
- Anti-dumping investigations
- Countervailing duty investigations
- Safeguard duty investigations
- Sunset reviews (renewal of existing duties)
Important process note: DGTR recommends; Ministry of Finance issues the final notification imposing the duty. From 2020–2023, the Ministry of Finance rejected DGTR recommendations in over 50% of cases — a source of contention between the two ministries and criticism from domestic industry.
Anti-Dumping Investigation Process
- Petition filed by domestic industry (or suo motu by DGTR)
- Initiation — DGTR issues public notice; investigation period defined
- Questionnaires sent to exporters, importers, domestic producers
- Dumping margin calculation: Normal Value vs Export Price
- Injury analysis: Impact on domestic producers (price, profitability, market share, employment)
- Disclosure statement: Parties can comment on findings
- Final finding: DGTR recommends anti-dumping duty
- Customs notification: Ministry of Finance imposes duty
- Duration: Anti-dumping duties are valid for 5 years; sunset review initiated before expiry
India is one of the most active users of anti-dumping globally. In September 2025 alone, DGTR issued 16 final determinations and opened 31 new investigations. Major source countries for anti-dumping cases: China (by far the largest), South Korea, Japan, Taiwan, EU, USA.
Countervailing Duties (CVD)
Countervailing measures (Agreement on Subsidies and Countervailing Measures — ASCM) allow importing countries to impose duties to offset foreign government subsidies that harm domestic producers.
| Type of Subsidy | WTO Status | CVD Applicable? |
|---|---|---|
| Prohibited subsidies (export subsidies, import substitution subsidies) | Prohibited | Yes |
| Actionable subsidies (causing adverse effects to other members) | Permitted unless challenged | Yes, if material injury |
| Non-actionable subsidies (R&D, disadvantaged regions) | Permitted | No |
India itself has faced CVD investigations — notably, the US and EU have challenged India's RoDTEP scheme as a potential export subsidy, though India argues RoDTEP merely remits embedded taxes (a WTO-compatible mechanism).
Safeguard Measures
Safeguard measures are temporary import restrictions applied when a surge in imports causes or threatens serious injury to domestic industry — regardless of whether dumping or subsidisation is occurring.
- Governed by GATT Article XIX and WTO Agreement on Safeguards
- Applied as additional duties or quantitative restrictions
- Must be non-discriminatory (applied to all import sources, unlike anti-dumping)
- Maximum duration: 4 years (extendable to 8 years in some cases)
- India has invoked safeguards on steel products, solar cells, certain chemicals
WTO Dispute Settlement: How It Works
The Dispute Settlement Understanding (DSU) is the WTO's rulebook for resolving trade disputes.
Process
- Consultations (60 days): Parties try to resolve bilaterally
- Panel established: Three-member panel hears the case
- Panel report: Findings circulated; can be appealed
- Appellate Body (AB) review: Reviews legal questions from panel report
- Implementation: Losing party must bring measure into conformity
- Retaliation: If non-compliance, winning party authorised to suspend concessions
Appellate Body Crisis
Since December 2019, the WTO Appellate Body has been non-functional because the US blocked appointment of new AB members (citing concerns about AB overreach). This means disputes cannot be fully adjudicated — creating a backlog. Some countries use the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a workaround; India is not a member of MPIA.
India's Major WTO Disputes
| Dispute | Parties | Issue | Outcome |
|---|---|---|---|
| US solar safeguards | India vs USA | US safeguard duties on solar cells/panels | WTO panel (2019) ruled in India's favour; US appealed |
| India sugar subsidies | Australia, Brazil, Guatemala vs India | India's production-linked and marketing subsidies for sugar exports challenged as WTO-incompatible | Panel ruled against India (2021); India appealed |
| India poultry ban | USA vs India | India's ban on US poultry imports (avian influenza risk) | WTO ruled against India; India made regulatory changes |
| India steel safeguards | EU vs India | India's safeguard duties on certain steel products | India withdrew duties |
| Public stockholding (food) | USA and others vs India | India's MSP procurement creates trade-distorting subsidies under WTO AoA | Protected by "Peace Clause" pending permanent solution; ongoing |
WTO Peace Clause: Under the 2013 Bali Ministerial Decision, developing countries including India are shielded from legal action for public stockholding for food security purposes, pending a permanent solution — which has not yet been agreed.
Export Promotion Schemes
RoDTEP (Remission of Duties and Taxes on Exported Products)
Launched in January 2021, RoDTEP replaced the MEIS (Merchandise Export from India Scheme), which the WTO had ruled was an impermissible export subsidy.
| Feature | Detail |
|---|---|
| Objective | Remit embedded taxes/duties not refunded through other mechanisms (GST refund, drawback) |
| Mechanism | Exporters receive scrips/credits as a percentage of FOB value; scrips tradeable and usable for customs duty payment |
| WTO compatibility | Structured to comply with WTO ASCM rules; remission of taxes only, not net subsidy |
| Coverage | Thousands of tariff lines across sectors |
| Ministry | Department of Commerce; CBIC implements |
The shift from MEIS (blanket incentive, WTO-incompatible) to RoDTEP (tax remission, WTO-compliant) was a significant reform in India's export policy architecture.
Services Export Incentive Scheme (SEIS)
Under FTP 2015-20, SEIS provided scrips to service exporters. Under FTP 2023-28, the regime is being revised; the successor mechanism is called RoDTEP for Services (being designed).
Special Economic Zones (SEZs)
- Governed by SEZ Act 2005
- Enclaves with duty-free imports, simplified regulations, and income tax benefits
- Critical WTO dispute: US challenged India's SEZ export subsidies (DS541); panel ruled against India in 2019; India has been transitioning away from direct export subsidies
Export Credit Guarantee Corporation (ECGC)
Provides credit insurance to exporters and banks, covering risk of non-payment by foreign buyers; ECGC was privatised/restructured in recent years.
PLI Scheme: Manufacturing Push
The Production Linked Incentive (PLI) scheme, launched 2020-21, is India's flagship manufacturing push — distinct from export promotion but crucial to trade policy as it targets import substitution and export competitiveness.
| Feature | Detail |
|---|---|
| Total outlay | ~₹1.97 lakh crore across 14 sectors (over 5 years) |
| Sectors | Mobile phones, electronics components, pharma APIs, medical devices, telecom, food processing, textiles (MMF), automobiles & auto components, advanced chemistry cell batteries, white goods (ACs, LED), specialty steel, solar PV modules, renewable energy, drone |
| Mechanism | Incentive as % of incremental sales over base year, paid to approved applicants who achieve production milestones |
| Target | Add ~$520 billion in manufacturing output over 5 years; boost exports by ~$390 billion |
PLI is also India's response to the China+1 strategy — multinationals diversifying supply chains away from China are being incentivised to anchor in India.
Free Trade Agreements (FTAs)
Recently Concluded FTAs
| Agreement | Partner(s) | Key Date | Status |
|---|---|---|---|
| India-UAE CEPA | UAE | Signed Feb 2022; in force May 2022 | Operational; bilateral trade target $100 bn |
| India-Australia ECTA | Australia | Signed April 2022; in force Dec 2022 | Operational; full CECA under negotiation |
| India-EFTA TEPA | Switzerland, Norway, Iceland, Liechtenstein | Signed March 2024; in force 1 Oct 2025 | Operational; EFTA committed $100 bn investment over 15 years; 1 million jobs |
| India-Oman CEPA | Oman | Signed 18 Dec 2025 | Signed; ratification pending; Oman's first bilateral FTA since 2006 |
| India-UK CETA | United Kingdom | Signed 24 July 2025 | UK Parliament cleared (5 Mar 2026); India Cabinet cleared; expected in force May–June 2026; as of 27 May 2026, gazette notification awaited |
| India-EU FTA | European Union | Negotiations concluded 27 Jan 2026 | Pre-ratification; EU legal scrubbing underway; expected in force ~early 2027 |
India-UK FTA: Key Features
Concluded on 6 May 2025 and signed on 24 July 2025, the India-UK Comprehensive Economic and Trade Agreement (CETA):
- India to eliminate tariffs on 99% of UK tariff lines (covering nearly 100% of trade value) — phased over time
- UK to reduce tariffs on 90% of Indian tariff lines
- Contentious issues resolved: Scotch whisky tariff reduced gradually; professional visa mobility (Mode 4 services — 20,000 additional UK work visas for Indian professionals); IP provisions
- Target: double bilateral trade to $112 billion by 2030 (from ~$56 billion currently)
- Expected in force: May 2026 — UK parliamentary ratification process near-complete as of May 2026 (Business Standard, March 2026)
India-EU FTA: Key Features
Negotiations relaunched in June 2022 after a nine-year suspension (talks originally began in 2007, stalled in 2013). Negotiations were concluded on 27 January 2026 — the largest trade deal ever concluded by either side (EU + India = ~25% of global GDP and ~2 billion people combined):
- Tariff coverage: EU to eliminate duties on 90%+ tariff lines (99.3% of trade value); India on ~86% of tariff lines (93% of trade value); overall coverage 96.6% (India) and 99.3% (EU)
- Bilateral trade: ~EUR 130 billion/year; FTA expected to add significantly to this
- Wide coverage: goods, services, investment protection, geographical indications (GIs)
- Key areas: EU demands on sustainability/labour standards; India's concerns on data localisation and auto tariffs — resolved in negotiations
- Investment protection and GI agreements negotiated separately alongside the FTA
- Ratification timeline: EU legal scrubbing underway (expected complete by July 2026); ratification by EU Parliament/Council and India's Union Cabinet required; expected in force ~early 2027 (EU Commission, 2026)
RCEP: India's Exit (November 2019)
India walked away from the Regional Comprehensive Economic Partnership (RCEP) — an FTA involving 15 countries (ASEAN-10, Australia, China, Japan, South Korea, New Zealand) in November 2019 at the Bangkok summit.
| Reason for exit | Explanation |
|---|---|
| China trade deficit | India's goods deficit with China was ~$52 billion (then); RCEP would have deepened this by flooding Indian markets with cheap Chinese goods |
| Inadequate safeguards | India's demand for stronger anti-surge provisions and auto-trigger safeguard mechanisms was not met |
| Services liberalisation | India wanted better market access for services (IT, healthcare, professional services); RCEP partners were reluctant |
| Dairy and agriculture | India's dairy farmers and agricultural sector vulnerable to competition from Australia and New Zealand |
| Data localisation | Concerns about cross-border data flow provisions |
RCEP came into force for its 15 remaining members in January 2022. India retains observer status; debate continues about whether India should eventually join.
Foreign Trade Policy 2023-28
Released on 1 April 2023, the Foreign Trade Policy (FTP) 2023-28 replaced the earlier FTP 2015-20 (which had been extended multiple times due to COVID-19 and global disruptions).
Key Features
| Feature | Detail |
|---|---|
| Target | Achieve $2 trillion in total exports (merchandise + services) by 2030 |
| Approach | Dynamic, responsive — no fixed five-year window; policy will be updated periodically |
| Export hubs | Focus on districts as export hubs (building on earlier initiative) |
| Incentive reform | Shift from WTO-incompatible direct incentives to WTO-compliant remission/refund mechanisms |
| Amnesty scheme | One-time settlement of pending export obligation defaults under EPCG and advance authorisation |
| Merchant exporters | Simplified compliance for merchant exporters |
| e-commerce exports | Recognition of e-commerce as a key export channel; simplified documentation for low-value exports |
| Towns of Export Excellence | Expanded list of specialised export clusters (textile towns, handicraft clusters, pharma clusters) |
Current Account Deficit (CAD) Management
India's persistent Current Account Deficit is structurally driven by the merchandise trade deficit (especially crude oil and gold imports), partially offset by the services surplus and remittances.
Policy Instruments for CAD Management
| Instrument | How It Helps |
|---|---|
| Gold import restrictions | BIS hallmarking mandate; gold import duty adjustments |
| Forex intervention by RBI | Prevents excessive rupee depreciation that could worsen the import bill |
| Export diversification | PLI, RoDTEP, FTPs — reduce dependence on commodities; boost value-added exports |
| Import substitution | PLI in electronics, solar, defence — reduce import bills |
| Energy transition | Renewable energy reduces crude oil import dependency over time |
| FCNR(B) deposits | Attract NRI deposits to shore up BoP capital account |
A sustainable CAD is generally considered to be below 2.5–3% of GDP. India's full-year CAD in FY 2024-25 was 0.6% of GDP (~$23.3 billion) (RBI BoP release, June 2025) — comfortably manageable. For FY 2025-26, the widening merchandise trade deficit ($333.19 billion vs $282.83 billion in FY25) and the overall trade deficit expanding to ~$119.3 billion signal potential CAD deterioration; full-year FY26 BoP data is expected from RBI by Q2 2026.
Previous Year Questions (PYQs)
Prelims
With reference to the Directorate General of Anti-Dumping and Allied Duties (now DGTR), which of the following statements is correct? (Pattern question)
- It functions under the Ministry of Commerce / Ministry of Finance
- Its recommendations are binding vs advisory
Consider the following statements regarding the WTO Appellate Body: (a) It has been non-functional since 2019 due to US blocking new appointments (b) India is a member of the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) Which of the statements given above is/are correct? (CSE Prelims pattern)
Which of the following is NOT covered under India's Production Linked Incentive (PLI) scheme? (CSE Prelims pattern — tests sector knowledge)
Mains
What are anti-dumping duties? How do they differ from safeguard duties and countervailing duties? Discuss India's experience with the use of these trade remedy instruments. (CSE Mains GS3 pattern)
Discuss the significance of India's Free Trade Agreements (FTAs) with the UAE, Australia, and the EFTA bloc. Do these agreements help or hurt India's manufacturing sector? (CSE Mains GS3 2023 pattern)
"India's exit from RCEP in 2019 was driven by concerns about China's dominance and inadequate safeguards for domestic industry." Evaluate the decision in the context of India's trade policy priorities. (CSE Mains GS3)
How does the Foreign Trade Policy 2023-28 differ from its predecessor? What structural reforms does it seek to introduce in India's export promotion architecture? (CSE Mains GS3 pattern)
Cross-paper relevance
- GS3 — Indian Economy (primary) — Anti-dumping duties, countervailing measures, WTO dispute settlement, RoDTEP, trade deficit, FTAs, PLI scheme
- GS2 — International Relations: WTO membership, trade negotiations, India's stand on agriculture subsidies
- GS3 — MSMEs: export promotion for small manufacturers, trade facilitation
- Essay — "Protectionism vs. free trade: India's trade policy dilemma"; "Make in India: manufacturing ambition meets global supply chain reality"
Recent Developments (2024–2026)
WTO MC13 (Abu Dhabi, February 2024) and MC14 (Yaoundé, March 2026)
MC13 — Abu Dhabi (26 Feb – 2 March 2024): Key outcomes: (1) Dispute settlement reform — no agreement to restore the Appellate Body (non-functional since December 2019); (2) E-commerce customs duties moratorium extended provisionally until MC14 or 31 March 2026 (whichever earlier) — first time tied to a sunset clause; (3) Agriculture — no breakthrough on India's long-standing demand for a Permanent Solution on public stockholding; (4) Fisheries subsidies Phase 2 — no agreement.
MC14 — Yaoundé, Cameroon (26–30 March 2026): The 14th Ministerial Conference produced a mixed outcome:
| Issue | MC14 Outcome |
|---|---|
| E-commerce moratorium | Expired 30 March 2026 for the first time since 1998 — no consensus on multilateral extension; Brazil and Turkey blocked renewal; 66 members (~70% of global trade) agreed to a plurilateral E-Commerce Agreement instead |
| Agriculture (PSH) | No agreement — India's demand for permanent solution on public stockholding unresolved |
| Fisheries subsidies | Commitment to continue negotiations towards MC15; no Phase 2 deal |
| Dispute settlement | Incremental progress; MPIA expanded to 61 members (60% of global trade) as of March 2026 |
| Overall | No overarching ministerial declaration; "Yaoundé Package" discussions to continue in Geneva at General Council (May 2026) |
India's key positions: (1) Appellate Body restoration (as opposed to plurilateral workarounds like MPIA — India has NOT joined MPIA); (2) Permanent Solution for public stockholding under AoA; (3) Opposition to incorporating investment facilitation plurilaterals into WTO rules without consensus.
UPSC angle: MC13 (Abu Dhabi, Feb 2024) + MC14 (Yaoundé, March 2026) are paired exam items. Critical points: e-commerce moratorium expired at MC14; MPIA now 61 members (India not among them); India's food stockholding "Peace Clause vs. permanent solution" debate ongoing.
Foreign Trade Policy 2023-28 — Shift from Incentives to Facilitation
India's Foreign Trade Policy (FTP) 2023-28 (released 31 March 2023, replacing FTP 2015-20) represents a paradigm shift — from incentive-based export promotion to a process-automation and facilitation model. Key features: (1) RoDTEP (Remission of Duties and Taxes on Exported Products) — the WTO-compliant replacement for the scrapped MEIS — is the main export incentive; (2) Amnesty Scheme for resolving EPCG/advance authorisation defaults; (3) Districts as Export Hubs (DEH) — identifying products for each district and promoting them; (4) Target of $2 trillion in goods and services exports by 2030.
India's electronic goods exports rose to USD 38.58 billion in FY25 and smartphone exports touched $13.4 billion in H1 FY26 (April–September 2025), a 59% jump year-on-year (IBEF, Nov 2025). Mobile phone production is projected to reach $75 billion (total) and $30 billion (exports) by end of FY2025-26 (ICEA, Jan 2026).
UPSC angle: FTP 2023-28 key features (RoDTEP, Districts as Export Hubs, $2 trillion target), the replacement of MEIS by RoDTEP (WTO-compliant reasons), and DGTR's role in anti-dumping investigations are standard Prelims and Mains trade policy topics.
India-US Tariff Escalation and Framework Trade Deal (2025–2026)
A significant new development in India's trade environment: the US imposed a 26% reciprocal tariff on India on 2 April 2025, then paused it for 90 days (effective 9 April 2025) while retaining the 10% baseline tariff. In August 2025, an additional 25% secondary tariff (penalising India's purchases of Russian oil) raised total US tariffs on Indian goods to ~50% (from 27 August 2025). A framework trade deal was announced via a US-India Joint Statement on 6 February 2026:
| Element | Detail |
|---|---|
| Tariff | US reciprocal tariff on Indian goods reduced to 18% (from ~50%) |
| India's purchase commitment | India to buy USD 500 billion of US energy, aircraft, tech, coking coal over 5 years |
| India's concessions | Tariff reductions/eliminations on US industrial goods, food, agri products (DDGs, tree nuts, soybean oil, wine) |
| "Mission 500" | Both sides aim for USD 500 billion bilateral trade (goods + services) — currently ~$130–140 billion |
| Status (May 2026) | Framework agreed; negotiations on full interim trade agreement ongoing |
UPSC angle: India-US tariff trajectory — 26% (April 2025) → 50% (August 2025) → 18% (February 2026 framework deal) — and the USD 500 billion purchase commitment are critical GS2 and GS3 current affairs items for Prelims 2027 and Mains 2026.
RELIEF Scheme (March 2026) — Emergency Export Support
The government launched the RELIEF (Resilience & Logistics Intervention for Export Facilitation) scheme in March 2026 under the Export Promotion Mission (EPM) framework, with an outlay of ₹497 crore. The scheme was designed to shield exporters — especially MSMEs — from extraordinary freight and insurance cost escalations due to ongoing maritime disruptions (Houthi attacks in the Red Sea / Strait of Hormuz rerouting):
- 100% risk coverage for ECGC-covered exporters (14 Feb – 15 March 2026); 95% coverage (16 March – 15 June 2026)
- 50% reimbursement of war risk surcharges and freight surcharges (capped at ₹50 lakh per exporter)
- Eligible destinations: UAE, Saudi Arabia, Kuwait, Qatar, Oman, Bahrain, Iraq, Iran, Israel, Yemen, Egypt, Jordan
- Implementing agency: ECGC (Export Credit Guarantee Corporation of India, under Ministry of Commerce)
UPSC angle: RELIEF scheme (March 2026, ₹497 crore, ECGC) connects FTP 2023-28's facilitation orientation with supply chain resilience — a novel export insurance instrument triggered by geopolitical disruption.
Anti-Dumping and Safeguard Measures — India Among Top Users
India is one of the most active users of anti-dumping measures globally — initiating approximately 40-50 new anti-dumping investigations per year, primarily against China (electrical equipment, chemicals, steel products). The DGTR (Directorate General of Trade Remedies) — an attached office of the Department of Commerce, Ministry of Commerce & Industry (not DPIIT) — conducts investigations. In 2024-25, India imposed anti-dumping duties on several Chinese products including solar glass, BOPP films, and chemical intermediates.
India also imposed safeguard duties on solar cells/modules in 2023 (subsequently modified) and countervailing duties on certain Chinese items. These measures are challenged at WTO — India-Solar Cells (DS456) being one of the most significant — where the Appellate Body ruled against India's Domestic Content Requirements (DCR) under the Jawaharlal Nehru National Solar Mission. The DCR case illustrates the tension between trade law and renewable energy promotion policy.
UPSC angle: DGTR (under Department of Commerce, MoCI — not DPIIT), anti-dumping mechanism (under GATT Article VI), the India-Solar Cells WTO dispute (DS456 — DCR vs ISCM), and India's position as a frequent user of trade remedy measures are UPSC Mains GS3 standard topics.
Exam Strategy
For Prelims:
- Know the full form and function of DGTR (Directorate General of Trade Remedies) — tests regularly
- Three trade remedies: Anti-dumping (unfair pricing), CVD (subsidies), Safeguards (import surge) — know the distinction
- MEIS was replaced by RoDTEP — MEIS was WTO-incompatible; RoDTEP is structured as tax remission
- FTA timeline: UAE CEPA (in force May 2022) → Australia ECTA (in force Dec 2022) → EFTA TEPA (signed March 2024; in force 1 Oct 2025) → Oman CEPA (signed 18 Dec 2025) → India-UK CETA (signed 24 July 2025; expected in force May–June 2026) → India-EU FTA (negotiations concluded 27 Jan 2026; ratification ~2027)
- RCEP exit: November 2019 Bangkok summit — India cited China trade deficit, inadequate safeguards, dairy concerns
- WTO Appellate Body non-functional since December 2019
For Mains:
- Trade remedy structure: Organise answers around three instruments (ADD, CVD, Safeguards) + WTO framework + India's DGTR mechanism
- FTP 2023-28: $2 trillion exports by 2030; dynamic policy; RoDTEP as successor to MEIS
- PLI scheme: 14 sectors, ~₹1.97 lakh crore — link to China+1 strategy and Make in India
- WTO disputes: Know the public stockholding/food security case and Peace Clause — frequently tested
- RCEP exit reasons: Prepare a balanced answer — what India gained (protection from import surge) and what it potentially lost (supply chain integration, market access)
- CAD management: Connect merchandise deficit, services surplus, remittances, oil price sensitivity
- Use data: India total exports $863.11 billion FY26 (+4.59%; revised, DGCI&S/PIB May 2026); merchandise exports $441.78 billion; merchandise deficit $333.19 billion; services exports $421.32 billion (+8.71%); services surplus ~$216.9 billion; overall trade deficit ~$116.3 billion (FY26); FY25 comparisons: total exports $825.26 billion, merchandise deficit $282.83 billion, services exports $387.55 billion
Key Terms
Rules of Origin
- Definition: Rules of Origin (RoO) are the criteria used to determine the "economic nationality" — the country of origin — of a traded good, deciding where it was made for purposes of applying trade policy measures such as preferential tariffs, quotas, anti-dumping duties and origin marking.
- Context: Because most goods today are made from inputs sourced across several countries, a clear test is needed to fix a single country of origin. The World Trade Organization classifies these tests as preferential (used under Free Trade Agreements and the Generalised System of Preferences to grant tariff concessions) and non-preferential (used for most-favoured-nation treatment, anti-dumping/countervailing duties and safeguards). In India, Rules of Origin gained sharp policy focus after concerns that imports were being routed through FTA partner countries to evade duties, leading to a dedicated statutory and enforcement framework.
- UPSC Relevance: Rules of Origin is a foundational GS3 economy concept that underpins UPSC questions on India's trade policy, FTAs (such as India-UAE CEPA, India-Australia ECTA), the WTO framework, and protection of domestic industry. For Prelims, candidates should know the preferential vs non-preferential distinction, the WTO Agreement on Rules of Origin, the "wholly obtained" and "substantial transformation" criteria, and India's CAROTAR 2020/Section 28DA framework. For Mains, it is relevant to debates on balancing trade facilitation with curbing FTA misuse and import dumping. No direct PYQ exists on this exact term; it is best treated as a foundational concept supporting questions on trade agreements and WTO.
Free Trade Agreement (FTA)
- Definition: A Free Trade Agreement (FTA) is a treaty between two or more countries (or trading blocs) to eliminate or substantially reduce customs tariffs and non-tariff barriers on "substantially all" trade between them, while each member retains its own independent tariff structure towards non-members.
- Context: FTAs are permitted under Article XXIV of the GATT 1994 as an exception to the WTO's Most-Favoured-Nation (MFN) principle, which otherwise requires a country to extend any trade concession to all WTO members equally. Modern FTAs go beyond goods to cover services, investment, rules of origin, intellectual property and dispute settlement; deeper versions are branded CEPA or CECA. India has expanded its FTA network rapidly, with the India-EFTA TEPA (its first FTA with four developed European nations) entering into force on 1 October 2025 and the India-UK CETA signed on 24 July 2025.
- UPSC Relevance: FTAs are a recurring GS3 theme under "effects of liberalisation on the economy" and "external sector / India and its trade agreements," and overlap with GS2 international relations. Prelims questions typically test the distinction between PTA, FTA, CEPA/CECA, customs union and common market, and the WTO/GATT Article XXIV linkage; Mains questions examine the costs and benefits of FTAs for Indian industry, agriculture and the trade deficit. This is a foundational concept that underpins questions on the WTO, balance of payments, MFN/MSP and India's recent trade diplomacy. (No verified PYQ is cited for this exact term.)
