India faces a complex balancing act between protectionist measures and multilateral trade commitments in 2025. Rising global trade tensions, domestic industry protection demands, and WTO obligations create policy dilemmas. India's exit from RCEP, selective FTA negotiations, and increasing tariffs on certain imports reflect protectionist tendencies. Simultaneously, participation in WTO reforms, bilateral trade agreements, and export promotion schemes demonstrate multilateral engagement. The challenge lies in protecting domestic manufacturers while maintaining international trade relationships and export competitiveness.

India's trade policy in 2025 reflects the tension between protecting domestic industries and engaging with global markets. The government has adopted a calibrated approach—increasing tariffs on electronics, automobiles, and textiles to boost manufacturing under PLI schemes, while negotiating FTAs with UAE, Australia, and EU. This selective protectionism aims to reduce import dependence and create jobs, especially after COVID-19 exposed supply chain vulnerabilities. However, retaliatory tariffs from trading partners and WTO dispute settlement cases pose challenges. India's withdrawal from RCEP exemplifies this dilemma—avoiding Chinese competition but missing Southeast Asian market integration. The policy success depends on whether temporary protection translates into globally competitive industries. Export promotion through schemes like RoDTEP attempts to balance protectionist measures, but concerns remain about long-term competitiveness and innovation stagnation behind tariff walls.