Can India really kill red tape?

In today’s Finshots, we talk about the Draft Digital Trade Facilitation Bill 2026.

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The Story

India has spent the better part of the last decade improving its business environment. And these improvements came in waves. First, company incorporation was simplified by the Companies Act, 2013. Next, insolvency rules were tightened under the Insolvency and Bankruptcy Code, 2016. And in 2017, various indirect taxes were unified under VAT.

All this has led to one thing: An increased ease of doing business in the country.

Yet some businesses complain that the everyday friction of doing business in India remains stubbornly high, and surprisingly antiquated.

We are not talking about corruption scandals or sweeping policy failures, but what usually lies in the daily operations of some industries. One of them is moving goods across the border.

You see, when an Indian exporter prepares a shipment, the physical logistics can be ready in a few days, but the administrative logistics often take longer. This is because trading is as much about documentation as it is about the current position.

If you want to import or export goods from India, you need specific documentation. And a lot of it. Here are some examples:

You need a bill of lading to prove that the shipment exists and has been loaded. An import-export code to legally engage in cross-border trade. A DGFT (Directorate General of Foreign Trade) declaration to confirm compliance with India’s foreign trade policy. An export order setting out commercial terms between the buyer and seller.

Add to this the commercial invoices, certificates of origin, customs declarations, and much, much more. Each document serves a regulatory or commercial function. And together they form a compliance structure that can delay transactions even when the goods themselves are ready to move immediately.

Take the bill of lading. At its core, it is a receipt issued by the shipping company that confirms that goods have been loaded onto a vessel. But it is also a document of title, which means that whoever holds it can claim the goods. This makes it a legally powerful and sensitive document.

Then there is the DGFT clearance, which ensures that the deal is in line with India’s foreign trade policy. Certain goods are restricted, some require licenses, and others may qualify for incentives. This statement brings the shipment within that policy framework.

Now imagine these documents being issued digitally abroad. Suppose a certificate of origin is generated overseas or a shipping document bears a foreign digital signature.

Currently, this does not automatically guarantee acceptance by Indian authorities. And if our legal frameworks do not recognize the authenticity of those foreign digital credentials, businesses may be required to recreate the document domestically, secure fresh attestations, or even revalidate signatures under Indian systems.

It’s a big headache!

And that is precisely the bottleneck Draft Digital Trade Facilitation Bill 2026 try to address

The Union Budget 2026 again highlighted how ease of doing business is central to India’s growth. In addition to tax certainty, litigation reduction and investor access, digitization has been highlighted as a structural lever.

But digitization without legal support has limits. This is because a document created electronically does not meaningfully reduce friction if the law still privileges its paper equivalent. The draft bill on the facilitation of digital trade focuses precisely on correcting that imbalance.

His proposal is simple: electronic trade documents should have the same legal status as their paper counterparts. If an electronic waybill, certificate of origin, invoice or customs declaration meets defined reliability standards, it should not require a parallel physical version merely for formal validity.

This matters because trade documentation works on trust. Historically, this trust was established by physical possession, ink signatures and official seals. But the bill shifts that logic to digital insurance.

It proposes a framework for the recognition of electronic signatures, digital identities and accredited trust service providers (government-recognised organizations that issue and manage digital signatures and electronic certificates). In practical terms, this means that authenticity will be determined by online cryptographic validation rather than physical inspection.

One of the most consequential elements of the concept is the approach to cross-border recognition. If a foreign-issued electronic document or digital signature meets standards comparable to India’s reliability thresholds, it can be recognized without the need for domestic duplication. This addresses the structural problem that currently forces businesses to regenerate or revalidate documents simply because they originated abroad.

It is also worth noting that we are not starting from scratch. Article 19 of the Information Technology (IT) Act, 2000 Let the central government already recognize foreign certification authorities, provided their “reliability standards” are comparable to India’s.

So, in theory, this means that foreign digital signatures can be accepted within India. But in practice, this provision does not create a sector-specific, operational framework tailored to trade documentation.

Recognition under the IT Act also requires formal notification, and it does not automatically integrate with the customs department. Thus, while the IT Act establishes the legal possibility of cross-border digital trust, it has not built the institutional linkage necessary for trade recognition.

The Draft Digital Trade Facilitation Bill fills that gap by creating a separate system or rules that clearly define what “trust” means in the trade ecosystem and ensure that countries formally recognize each other’s digital documents.

The emphasis here is not on eliminating regulation, but on eliminating red tape. Each document will continue to serve its regulatory purpose. And customs authorities will still verify compliance. What changes is the verification mechanism. Instead of treating digital documentation as a convenience layered on top of paper systems, the bill seeks to make digital documentation the primary legal tool.

In theory, this allows clearance processes to become less dependent on manual verification steps. As a result, working capital cycles are shortened when goods spend less time waiting for documentation alignment.

That was pretty much the concept currently under discussion. But we took it a step further and thought about how its goals could be made more practical using distributed ledger technology (a shared digital record system not controlled by a single authority). For example, smart contracts (self-executing agreements written in code) on a blockchain (a type of distributed ledger that stores data in secure, linked blocks) could potentially serve as a complementary layer to digital trade documentation.

For example, when a bill of lading is generated, it will be time-stamped, hashed (turned into a unique digital fingerprint that proves it has not been altered) and immutably recorded. Any modification will create a visible audit trail rather than overwriting the original record. Customs officials, banks financing the shipment, insurers and port authorities could access the same verified version in real time, eliminating the need for repeated submissions or manual cross-checks.

Another advantage is that if no party can retroactively modify records without consensus, the scope for “informal intervention” is greatly reduced (in simple terms, what we are trying to say is that smart contracts can reduce corruption).

India has already experimented with blockchain-based solutions in public infrastructure, including efforts to improve access to clean water. Applying a similar architecture to trade documentation can reduce disputes, improve transparency and build trust between trading partners. The Draft Bill does not require such systems, but its recognition of digital trust frameworks creates room for them to develop.

Ultimately, the draft bill on the facilitation of digital trade should be seen as fundamental reform. This addresses one of the oldest sources of friction in Indian trade: the bias towards paper. If passed and effectively implemented, the Bill will align India’s trade processes more closely with our Digital India ambitions. But for now it’s just a concept, and we’ll have to wait and see how it moves forward after public consultation.

Of course, it cannot immediately solve every procedural challenge. But there’s no denying that it has the potential to remove one of the most persistent and avoidable obstacles in India’s commerce ecosystem, bringing day-to-day commerce closer to the realities of a digital economy.

Until then…

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