Key Challenges faced by India

• Limited success in capturing 'China-Plus-One' benefits: Countries like Vietnam, Thailand, Cambodia, and Malaysia have gained more from the China+1 strategy. 
  • Cheaper labor, simplified tax laws and lower tariffs and proactive signing of Free Trade Agreements (FTAs) are the key reasons for success of these countries.
• CBAM Impact: Carbon Border Adjustment Mechanism (CBAM) will impose carbon taxes on imports like cement, steel, and fertilizers starting in 2026. 
  • India’s iron and steel industry, making up 23.5% of EU exports, faces significant risks. 
• Declining Trade Share: India’s share in global trade for labor-intensive sectors has dropped despite a strong workforce. 
• West Asia Instability Oil price hikes ($10 per barrel) could worsen India’s Current Account Deficit (CAD) by 0.5% of GDP, increasing inflation.
  •  Declining agricultural exports to key markets like Iran (e.g., basmati rice, tea) add to trade challenges.

The report calls for evidence-based policy-making to address structural inefficiencies, enhance value addition and promote entrepreneurship to secure a leadership position for India in international Trade