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Informist, Friday, Mar. 28, 2025

NEW DELHI – The shift in global trade and supply chains creates an opportunity for India to strengthen its presence in major global trade regions, a NITI Aayog report released on Friday said. Currently, the share of India's trade in regions that make up 77% of world trade is just 8%, "presenting opportunities for growth in high-value markets", the report said. 

As geopolitical tensions and global trade wars rise, Western nations are increasingly shifting their supply chains to politically aligned nations--a strategy now referred to as ‘friendshoring'. "While this shift (in global trade) disrupts traditional trade patterns, it creates new opportunities for emerging economies like India, particularly in sectors such as pharmaceuticals, IT services, and manufacturing," NITI Aayog's Trade Watch quarterly report for Jul-Sept said.

Fragmentation in global trade has heightened in recent months with US President Donald Trump imposing tariffs on several countries and sectors. Trump has also announced imposition of reciprocal tariffs, including on India, from Tuesday. "While they (tariffs) may offer short-term relief, they raise costs, distort resource allocation, and weaken long-term competitiveness across countries," the report said. 

Even as the evolving global trade scenario presents opportunities, India faces increasing competition from Vietnam, Mexico, and Poland. This competition, along with stringent labor and environmental regulations, necessitate India to enhance its ease of doing business, trade infrastructure, and regulatory alignment to capitalise on these shifts effectively, the report said. 

Another opportunity for India comes from the expansion of the BRICS alliance. The group, which initially included Brazil, Russia, India, China, and South Africa, expanded in 2024 to include nations like Saudi Arabia, the United Arab Emirates, Egypt, Iran, and Argentina.

"This expansion presents both opportunities and challenges for India," the report said. "While deeper trade ties within BRICS can enhance economic cooperation, India's trade balance with China remains a concern." For all members of the group to benefit in a balanced manner will require "carefully structured internal trade policies, particularly in sectors where China holds a dominant position," the NITI Aayog said. 

The government think tank will present a detailed analysis of the impact of the US reciprocal tariffs on India in the next issue of the report. "Ongoing trade policy shifts continue to reshape India's economic strategy, bringing both challenges and opportunities."  End

Reported by Shubham Rana

Edited by Vandana Hingorani

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