​FTAs for a start: On India and trade pacts Politics & News

According to the World Trade Organization, India has entered into 20 regional or free trade agreements (FTA). This count excludes the most recent pacts signed with the United Kingdom in July and with the European Free Trade Association (EFTA), which came into effect in October. Also under way are negotiations, most notably with the United States, the European Union, Canada and the Southern African Customs Union. With India now facing American tariffs of up to 50% on key exports, there are intensive efforts to fast-track these agreements. Some reports have even suggested discussions around a re-engagement with the Regional Comprehensive Economic Partnership, which India walked away from in 2019 over concerns related to farm sectors and rules of origin. However, New Delhi has not accepted accession; at most, it has explored consultative channels. Yet, trade diversification demands far more — a deep, deliberate transformation of the country’s productive sectors and integration into global value chains.

Commerce Ministry data show that some earlier FTAs — with ASEAN, Japan and South Korea — have tilted the trade balance sharply against India. The trade deficit with ASEAN widened from about $10 billion in 2017 to nearly $44 billion by 2023. A similar pattern holds for Japan — despite India’s exports rising, imports of high-value, capital-intensive goods have grown even faster. The reasons are structural and policy-driven. While FTAs opened the door, mutual recognition arrangements on quality standards, certifications, rules of origin and other non-tariff barriers were not adequately negotiated. Many FTAs were not custom-designed to reflect India’s sectoral strengths, nor were consultations with industry bodies sufficiently robust. The government did too little to popularise these agreements domestically, even as partner economies made full use of the preferential margins. A review of the ASEAN, Japan and Korea FTAs has brought some course correction. This is reflected in the more balanced outcomes under the India-UAE Comprehensive Economic Partnership Agreement — non-oil trade touched about $100 billion in FY25 (DGFT data). As India accelerates negotiations with the EU and the U.S., it must internalise these lessons. In the case of the U.S., consultations with services, seafood, engineering goods and textiles exporters must shape India’s negotiating stance. With the EU, the focus must be on carbon-intensive sectors such as iron and steel and cement, especially given the Carbon Border Adjustment Mechanism. A trade agreement is only the beginning. The arduous task of supporting India’s exporters — through standards, infrastructure, technology and market intelligence — must follow if these pacts are to deliver lasting gains.