India's Strategic Response to Global Trade Protectionism: UPSC Current Affairs Story Arc

Overview

This arc tracks India's dual-track strategy to combat rising global protectionism in 2025. It began with a formal legal challenge at the WTO against major economies' trade barriers. However, recognizing that international litigation is slow, the government simultaneously pivot to internal strengthening. The Directorate General of Foreign Trade (DGFT) drastically scaled up an 'Export Promotion Mission' (EPM) from a modest ₹2,250 crore proposal to a robust ₹25,060 crore six-year plan. By December 2025, this evolved into a comprehensive digital and financial framework, including a ₹20,000 crore credit guarantee scheme, designed to insulate sectors like textiles and chemicals from aggressive foreign tariffs.

How This Story Evolved

India complains of protectionism at WTO (June) → DGFT refines Export Promotion Mission in response to tariffs (Aug) → Govt approves Mission with ₹25,060 Cr outlay (Dec)

1. 2025-06-01: India's Concerns over Trade Protectionism at WTO
   More details

   UPSC Angle: India's Concerns over Trade Protectionism at WTO.

   Key Facts:

   • India filed a notice at the WTO on June 1st, 2025, regarding rising trade protectionism.
   • The notice initiates a consultation phase under WTO dispute settlement mechanisms.
   • World Trade Organization (WTO)
2. 2025-08-14: New Export Promotion Mission
   More details

   UPSC Angle: New Export Promotion Mission with ₹2,250 crore outlay presented by DGFT.

   Key Facts:

   • Outlay: ₹2,250 crore
   • Announced in: Union Budget on February 1, 2025
   • Developed in response to: High US tariffs (50%) on Indian goods
3. 2025-12-08: Export Promotion Mission Approved with ₹25,060 Crore Outlay
   More details

   UPSC Angle: Government approves Export Promotion Mission with ₹25,060 crore outlay.

   Key Facts:

   • EPM budget: ₹25,060 crore.
   • EPM duration: Six years, from FY 2025-26 to FY 2030-31.
   • Export Promotion Mission (EPM) outlay: ₹25,060 crore
   • Timeframe: FY 2025–26 to FY 2030–31
   • Launch announced: Union Budget 2025–26
   • Implementation: Directorate General of Foreign Trade (DGFT)
   • Backed by: ₹20,000 crore Credit Guarantee Scheme for Exporters
   • RBI provided regulatory relief
   • Focus on: MSMEs, labour-intensive sectors, tariff-hit sectors, low-export districts

Genesis

Trigger

India formally filed a notice at the World Trade Organization (WTO) on June 1, 2025, registering concerns over protectionist measures and initiating a consultation phase.

Why Now

The move was catalyzed by specific 'high-tariff' walls, most notably 50% US tariffs on Indian textiles, chemicals, leather, and footwear, which threatened to derail India's export growth targets.

Historical Context

This follows a long-standing pattern where India's previous schemes like MEIS (Merchandise Exports from India Scheme) were challenged at the WTO, forcing India to shift toward WTO-compliant, production-linked, and credit-based support systems.

Key Turning Points

1. [2025-08-14] DGFT revision of the Export Promotion Mission

   It marked the shift from a generic budget allocation to a 'targeted' response specifically designed to counter 50% US tariffs.

   Before: A broad ₹2,250 crore outlay. After: A strategic, sector-specific refinement focusing on textiles, chemicals, and footwear.

2. [2025-12-08] Final Cabinet/Govt approval of the ₹25,060 Cr outlay

   It committed the state to a long-term (6-year) financial and digital roadmap.

   Before: Short-term budgetary plans. After: A 6-year structural commitment (FY 2025-26 to 2030-31).

Key Actors and Institutions

Key Institutions

• World Trade Organization (WTO)
• Directorate General of Foreign Trade (DGFT)
• Reserve Bank of India (RBI)
• Export Promotion Councils

Key Concepts

Trade Protectionism

Economic policy of restricting imports from other countries through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations.

Current Fact: India faced 50% tariffs from the US on goods like textiles and leather in August 2025.

WTO Dispute Settlement Mechanism

A rules-based process for resolving trade conflicts between member nations, starting with a 'consultation phase' and potentially leading to a panel adjudication.

Current Fact: India initiated this process by filing a formal notice on June 1, 2025.

Credit Guarantee Scheme

A type of financial insurance where a third party (the government) guarantees that a loan will be repaid to the lender if the borrower defaults, reducing risk for banks.

Current Fact: The EPM includes a massive ₹20,000 crore Credit Guarantee Scheme for Exporters approved in December 2025.

What Happens Next

Current Status

The Export Promotion Mission (EPM) has been officially approved with a total outlay of ₹25,060 crore as of December 8, 2025.

Likely Next

Rollout of the unified digital framework for exporters and the operationalization of the ₹20,000 crore Credit Guarantee Scheme starting FY 2025-26.

Wildcards

A potential 'Trade War' escalation if the WTO consultation fails or if major economies retaliate against India's new credit guarantees as 'disguised subsidies'.

Why UPSC Cares

Syllabus Topics

• Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests
• Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

Essay Angles

• The decline of Multilateralism and the rise of Economic Nationalism.
• Strategic Autonomy in Trade: India's shield against global volatility.

Prelims Likely: Yes

Mains Likely: Yes

Trend Signal: rising

Exam Intelligence

Previous Year Question Connections

• Tested the 'Districts as Export Hubs' initiative and Foreign Trade Policy 2023. — The Export Promotion Mission is the 2025-26 operational evolution of the FTP-2023 goals.
• Tested India's ratification of the WTO's Trade Facilitation Agreement (TFA). — This arc shows India using WTO mechanisms (TFA context) to fight the very protectionism TFA was meant to reduce.

Prelims Angles

• The total outlay of the EPM (₹25,060 crore) and the specific amount for Credit Guarantees (₹20,000 crore).
• The timeframe of the Mission: Six years (FY 2025-26 to FY 2030-31).
• The specific role of DGFT as the implementing agency for the EPM digital framework.

Mains Preparation

Sample Question: Analyze the causal link between rising global trade protectionism and India's shift toward multi-billion dollar domestic export support missions. Does this signal a move away from WTO multilateralism?

Answer Structure: Intro: Define protectionism and mention the June 2025 WTO notice → Body 1: Impact of 50% tariffs on key sectors (textiles/chemicals) → Body 2: Components of the Export Promotion Mission (Digital framework, ₹25k Cr outlay) → Critical Analysis: Balancing WTO compliance with domestic industry protection → Way Forward: Deepening trade diplomacy while scaling internal resilience.

Essay Topic: From Global Integration to Strategic Resilience: The New Era of Indian Trade Policy.

Textbook Connections

Key Takeaway

India is responding to 'Tariff Wars' by combining WTO-level legal protests with massive domestic fiscal support (₹25k Cr) to ensure export competitiveness.

All Events in This Story (3 items)

1. 2025-06-01 [International Relations] — India's Concerns over Trade Protectionism at WTO
   On June 1st, 2025, India formally registered concerns at the World Trade Organization (WTO) about the increase in trade protectionist measures by major economies, emphasizing the need for a rules-based multilateral trading system. This move included filing a notice, signaling potential formal dispute resolution processes against trade barriers perceived to be in violation of WTO rules.
   More details

   UPSC Angle: India's Concerns over Trade Protectionism at WTO.

   Key Facts:

   • India filed a notice at the WTO on June 1st, 2025, regarding rising trade protectionism.
   • The notice initiates a consultation phase under WTO dispute settlement mechanisms.
   • World Trade Organization (WTO)
2. 2025-08-14 [Schemes & Programs] — New Export Promotion Mission
   Announced in the Union Budget on February 1, 2025, the New Export Promotion Mission, with an outlay of ₹2,250 crore, was presented by the Directorate General of Foreign Trade (DGFT) to export councils. It was developed in response to high US tariffs (50%) on Indian goods, impacting sectors like textiles, chemicals, leather, and footwear, with the government revising its plans to make them more targeted.
   More details

   UPSC Angle: New Export Promotion Mission with ₹2,250 crore outlay presented by DGFT.

   Key Facts:

   • Outlay: ₹2,250 crore
   • Announced in: Union Budget on February 1, 2025
   • Developed in response to: High US tariffs (50%) on Indian goods
3. 2025-12-08 [Economy] — Export Promotion Mission Approved with ₹25,060 Crore Outlay
   The government has approved the Export Promotion Mission (EPM) with a financial commitment of ₹25,060 crore for FY 2025-26 to FY 2030-31. The mission, announced in the Union Budget 2025-26, serves as a unified digital framework to support exports, implemented through the Directorate General of Foreign Trade (DGFT). It is backed by a ₹20,000 crore Credit Guarantee Scheme for Exporters and regulatory relief from the Reserve Bank of India (RBI).
   More details

   UPSC Angle: Government approves Export Promotion Mission with ₹25,060 crore outlay.

   Key Facts:

   • EPM budget: ₹25,060 crore.
   • EPM duration: Six years, from FY 2025-26 to FY 2030-31.
   • Export Promotion Mission (EPM) outlay: ₹25,060 crore
   • Timeframe: FY 2025–26 to FY 2030–31
   • Launch announced: Union Budget 2025–26
   • Implementation: Directorate General of Foreign Trade (DGFT)
   • Backed by: ₹20,000 crore Credit Guarantee Scheme for Exporters
   • RBI provided regulatory relief
   • Focus on: MSMEs, labour-intensive sectors, tariff-hit sectors, low-export districts