Arun Arora
NEW DELHI: INDIA has accelerated its trade liberalisation, shifting from caution to proactive engagement by signing multiple Free Trade Agreements (FTAs) and Comprehensive Economic Partnership Agreements (CEPAs). With 13 active FTAs and eight major pacts since 2021 – including Mauritius (CECPA 2021), UAE (CEPA 2022), Australia (ECTA 2022), EFTA (TEPA 2024), UK (CETA 2025), Oman (CEPA 2025), New Zealand (FTA 2025), and the EU (FTA early 2026) – these form a strategic network spanning the Middle East, IndoPacific, Europe, and Africa. From India’s viewpoint, they drive export diversification, FDI inflows, supply-chain resilience, and countermeasures against global protectionism, particularly amid elevated US tariffs on many nations.
Tangible benefits
The recent FTAs have delivered tangible benefits. The India-UAE CEPA surged non-oil trade and gem & jewellery exports (up over 60 per cent in periods), nearing the $100-billion bilateral target. The Australia ECTA saw high utilisation ( around 84 pc), granting zero-duty access for nearly all Indian goods by early 2026 and pushing trade past AUD 50 billion.
The CETA with the UK provides duty-free entry for 99 per cent of Indian exports (textiles, gems, pharmaceuticals, engineering) and services gains (IT, professionals), projecting ~around $34-billion annual uplift. The EFTA’s $100- billion investment pledge over 15 years is anticipated to create one million jobs. Certificate of Origin issuances rose sharply in FY24-25, indicating improved utilisation. Goods and services exports reached a record $825 billion in FY24-25 (up 6 per cent) with continued momentum into 2025, reducing dependence on traditional markets.
The most recent India-US Interim Trade Agreement framework (announced on February 2) marks a significant addition. It slashes US reciprocal tariffs on Indian goods from punitive levels (up to 50 per cent) to 18 percent, effective immediately, with zero duties on key items like generic pharmaceuticals, gems & diamonds, and aircraft parts. This covers textiles, apparel, leather, footwear, chemicals, and machinery – boosting competitiveness in India’s largest export market post-China. Commerce Minister Piyush Goyal highlighted this as a major relief for exporters, especially MSMEs, enhancing price edge and job creation in labour-intensive sectors amid global fragmentation.
Challenges, lessons
Gains vary across deals. Older FTAs (ASEAN, Japan and South Korea) widened deficits as imports outpaced exports, stressing agriculture, dairy, and SMEs. Competitive pressures and Rules of Origin compliance persist. The US pact involves India reducing tariffs on US industrial goods and select agriculture (tree nuts, fruits, soybean oil), raising concerns for domestic farmers and sensitive sectors despite safeguards. Newer agreements incorporate stronger protections and services/investment chapters, but success demands domestic reforms – PLI schemes, logistics upgrades, and manufacturing enhancements—to translate access into sustained growth.
In sum, the FTAs, including the timely US interim deal, align the ‘Atmanirbhar Bharat’ mission with global integration. They improve competitiveness, attract technology/capital, generate jobs, and advance the $2-trillion export goal. High utilisation in recent pacts, ongoing older-FTA updates, and the US tariff reset position India positively. Prudent negotiation, efficient enforcement, and ecosystem support will maximise the country’s potential as a manufacturing and services hub in a multipolar world.
