Summary
• India has signed 20 Free Trade Agreements (World Trade Organization data), excluding the recent agreements with the United Kingdom and the European Free Trade Association.
• Trade negotiations are ongoing with the United States, European Union, Canada and Southern African Customs Union, accelerated by United States tariffs of up to 50% on certain Indian exports.
• India exited the Regional Comprehensive Economic Partnership in 2019 due to risks to agriculture and weak rules of origin.
Problem with past FTAs
• Agreements with the Association of Southeast Asian Nations, Japan and South Korea led to rising trade deficits.
• ASEAN trade deficit increased from about 10 billion US dollars in 2017 to around 44 billion US dollars in 2023.
• Imports of high-value goods grew faster than India’s exports.
Reasons for weak outcomes
• Poor handling of standards, certifications, non-tariff barriers and rules of origin.
• FTAs not aligned with India’s export capabilities.
• Limited industry consultation and low utilisation of FTA benefits.
Positive signal
• India–United Arab Emirates Comprehensive Economic Partnership Agreement performed better.
• Non-oil bilateral trade reached about 100 billion US dollars in Financial Year 2025 (Directorate General of Foreign Trade).
Key focus areas ahead
• United States: services, engineering goods, textiles, seafood.
• European Union: iron, steel and cement due to the Carbon Border Adjustment Mechanism.
Conclusion
Free Trade Agreements are only an entry point. Without strengthening export competitiveness, standards compliance and domestic support systems, they risk widening trade deficits instead of boosting growth.
