India’s 2025 Policy Push: Enhancing Ease of Doing Business, Global Trade, and Attracting Foreign Direct Investment in India
India Announces PLI Scheme for Passive Electronics
On March 28, 2025, India introduced an INR 229.19 billion Production Linked Investment (PLI) Scheme to enhance and boost domestic manufacturing of passive electronic components thereby reducing reliance on imported components even for global players.
The Central Government has approved this initiative, which is expected to attract significant investments from both domestic and international stakeholders which will improve the country’s standing in the global electronics supply chain. Passive electronic components include resistors, capacitors, inductors, transformers, etc.
This marks the first move in India to include these passive electronic components under a dedicated PLI scheme, redefining the strategic approach towards the sector in India. The segment will be a part of the PLI scheme, which will be implemented over six years.
It is anticipated that the PLI scheme will enhance domestic value addition, enabling the expansion of operations by Indian manufacturers and improving global competitiveness. Key sectors expected to benefit include telecom, consumer electronics, automobiles, medical devices, and power, among others.
This initiative is a strategic step toward boosting domestic manufacturing and strengthening India’s role in the global electronics supply chain.
India Launches DGFT Global Tariff and Trade Helpdesk to Support Exporters and Importers
On April 11, 2025, the Directorate General of Foreign Trade (DGFT), under the Union Ministry of Commerce and Industry, launched the Global Tariff and Trade Helpdesk. This dedicated online platform is designed to assist Indian businesses in navigating emerging global trade challenges.
The helpdesk serves as a central point of contact for exporters and importers, addressing a broad range of trade-related concerns, including:
– Difficulties in export or import operations
– Sudden surges in imports or instances of commodity dumping
– Delays in EXIM clearance processes
– Disruptions in supply chains or logistics
– Financial, banking, or transactional constraints
– Compliance with evolving global regulatory requirements
This initiative aims to enhance coordination between trade stakeholders and central government agencies, ensuring that policy responses remain responsive to real-time trade developments.
Cap on Compounding Penalty for Non-Reporting Contraventions under FEMA, 1999 – A Significant Step Towards Ease of Doing Business in India
Existing Provisions for Compounding of Contraventions under FEMA, 1999:
Section 13 of the FEMA Act, 1999, empowers the Adjudicating Authority to impose penalties on contravention of the provisions of the FEMA framework, 1999.
The penalty for such contraventions shall be as follows:
– Up to 3 times the sum involved in the transaction, where the amount involved is quantifiable, or
– Up to INR 0.2 million, where the amount is not readily quantifiable.
– If there is a continuous contravention, the penalty shall extend to INR 5000 for every day after the first day during which the contravention continues.
Amendment in Provisions for Compounding of Contraventions under FEMA, 1999:
Capping the penalty for all other non-reporting contraventions-
On April 24, 2025, the Reserve Bank of India (RBI) made a further amendment to the existing provisions by adding a discretionary power to the compounding authority, provided the authority is satisfied based on the nature of the contravention, exceptional circumstances/facts involved in the concerned case, and in the public interest.
The key amendments include:
– The maximum compounding amount imposed for select contraventions may be capped at INR 2,00,000 for contravention of each provision.
– For all other non-reporting contraventions, a fixed compounding amount of INR 50,000 and a variable compounding amount depending on the duration of the contravention, ranging between 0.5% to 0.75% of the amount involved in the contravention.
Why This is a Significant Step Towards Ease of Doing Business in India:
These amendments indicate the RBI’s efforts to expedite the compounding process, ensuring greater efficiency and time effectiveness. As a result, this marks a significant step towards enhancing the ease of doing business in India by simplifying regulatory compliance for entities.
India-Australia Outline 2025 Trade Plan; India-UK Deal Concluded, NZ Pact Talks Ongoing
India-Australia Deepen Economic Ties with Ambitious 2025 Roadmap
In 2022, India and Australia implemented the first phase of a free trade agreement, the Australia-India Economic Cooperation and Trade Agreement (ECTA). According to industry experts, the agreement, which came into force in December, has provided significant financial benefits to Australian businesses.
Over the past years, India has expanded its presence through investments in Australia, showcasing increased confidence in Australia’s economy with a view to extending bilateral ties. According to data from the Australian Department of Foreign Affairs and Trade (DFAT), India ranked 15th among foreign investors in Australia in 2023.
To further strengthen bilateral trade ties, both countries are actively working toward finalizing a more comprehensive pact, the Comprehensive Economic Cooperation Agreement (CECA). This agreement is expected to unlock additional economic opportunities.
The aforesaid comprehensive agreement focuses on four key sectors clean energy, education and skills, agribusiness, and tourism which are expected to serve as the primary source of future growth and cooperation between the two countries.
By leveraging Australia’s expertise in renewable energy, promoting educational and vocational training programs, expanding agribusiness collaboration, and strengthening the tourism industry, it is believed that stronger future growth can be achieved.
India-UK Trade Pact
On May 6, 2025, India achieved a major milestone with the successful conclusion of the India–UK Free Trade Agreement (FTA). This landmark agreement marks a new chapter in the economic relationship between the two nations, fostering a closer and more dynamic trade partnership. The primary objective of the FTA is to attract greater investment, leading to increased job creation, enhanced economic collaboration, and the establishment of a robust strategic alliance between India and the United Kingdom
The following sectors have a significant impact due to this FTA.
Automobiles:
Tariffs on UK luxury cars and EVs will be reduced from 100% to 10% over five years, under a defined quota system. This will increase the imports of automobiles from the UK, enhancing opportunities for UK businesses to expand in India’s growing market and thereby contributing to the growth of the economy of both nations.
Alcoholic Beverages:
Import duties on UK whisky and gin will be halved from 150% to 75% initially, and then further down to 40% by the tenth year of the agreement, boosting UK spirits exports. This move could also open doors for Indian liquor manufacturers in overseas markets.
Cosmetics & Personal Care:
India will eliminate tariffs on UK cosmetics and personal care items, allowing cheaper and wider access to premium UK products. This will enable UK businesses to have access to the large customer base of India with increasing discretionary purchasing power.
Pharmaceuticals & Medical Devices:
India will cut tariffs on UK medical and pharma goods, with both countries agreeing to align regulatory standards. Accordingly, India will have access to high-quality premium medicines from the UK, and UK businesses will be able to expand into India and take advantage of its rapidly growing economy.
Textiles & Apparel:
UK businesses and consumers will also have increased access to tariff-free imports from India as the textiles will get duty-free access to the UK, aiming to double the exports of apparel from India, currently from 5.5% to 10% of the total UK imports of apparel This will enhance India’s competitiveness, especially against Bangladesh, allowing us to capture a greater market share from both Bangladesh and China. It will also increase India’s exports of gems and jewellery to the UK market, supporting a major boost in exporters in India.
Food & Agriculture:
Animal products, vegetable and oil products, and processed food products, which are currently subject to duties of up to 20%, will have around 99% of tariffs exempt from duties. Tariffs on UK food items like cheese and processed goods will be reduced, accelerating the imports of such goods and expanding product choice in Indian markets. Also, the businesses and citizens from across the UK will be able to capitalise on such benefits.
Services & Professional Mobility:
The deal facilitates mutual recognition of qualifications and eases visa access for professionals, including IT workers, chefs, and yoga instructors. Indian employees working in the UK to be exempt from social security payments for up to three years, easing cost burdens and encouraging cross-border talent exchange.
Notably, as per the terms of this FTA, the UK’s proposed carbon tax under the Carbon Border Adjustment Mechanism (CBAM) is set to roll out in 2027. According to the Global Trade Research Initiative (GTRI), the true test of this agreement will lie in how the FTA manages the implications of this carbon tax, because if CBAM is still levied on Indian exports while UK imports continue to enjoy duty-free access, this will no longer remain a mutually beneficial agreement. Instead, it would result in the UK benefiting more, turning the deal into a one-sided gain.
The FTA is anticipated to double India-UK bilateral trade by 2030 and stimulate GDP growth through improved goods, services, and investment flows. This milestone will significantly accelerate the growth trajectory of both importers and exporters across the two economies. This economic deal as a bridge to strengthen long-term investment flows, drive innovation, enhance trade financing, and liberalize the services sector. This strategic partnership will fuel economic growth for both the UK and India while unlocking new opportunities for exporters and importers in both nations. Ultimately, it establishes a foundation for sustained bilateral prosperity and long-term stability for investors.
India-New Zealand Trade Pact
On May 1, 2025, both countries concluded the first round of discussions and are set to expedite bilateral negotiations for a mutually beneficial trade pact. India and New Zealand are formulating a trade pact with the objective of reducing reliance on traditional markets and diversifying trade partnerships. New Zealand is seeking greater market access for its agro-based products, while India aims to secure market access for Indian goods and professionals.
