Analysing India’s trade bottlenecks

📌 Summary:

• India–U.K. trade deal (CETA) came into force on July 15, 2026
• Same day, India banned import of goods made using forced labour, to avoid unfavourable treatment from the U.S. under Section 301
• A day later, U.S. Senators proposed a bipartisan Bill to levy up to 100% tariff on India and others for buying Russian crude
• Net effect: India–U.S. trade is being buffeted by successive bottlenecks (tariff threats, non-tariff conditions)
• Contrast with China: without any trade deal, China has become India largest trading partner
  • H1 2026 imports from China up 21.8%; exports up 37.2% (on a small base)
  • Trade deficit with China was $116 billion last year; already topped $67 billion in H1 2026 and likely to rise
• Structural asymmetry: imports from China are high- and low-tech items, while India exports are mostly low-value-added goods

🎯 UPSC Relevance: GS2/GS3 — India external trade strategy, FTAs (CETA), trade deficit with China, coercive use of tariffs (Section 301) and secondary sanctions on Russian crude.

📝 Prelims Facts:

• India–U.K. CETA entered into force on 15 July 2026
• Section 301 = U.S. trade law used to act against unfair foreign trade practices
• China is India largest trading partner; bilateral trade deficit ~$116 bn (2025)

🔑 Key Term: Section 301 — a provision of the U.S. Trade Act, 1974 that lets the U.S. investigate and retaliate (via tariffs) against countries deemed to follow unfair trade practices.