IAS/UPSC Coaching Institute  

13 Dec 2025 : FTAs for a start

 Editorial 1: ​​FTAs for a start

Context

Sustained benefits from trade agreements depend on strong and continuous export support

 

Introduction

India’s expanding network of Free Trade Agreements (FTAs) reflects an urgent push to counter rising protectionism, diversify markets, and strengthen global integration. While negotiations with major partners such as the US and EUgather pace, past experiences show that trade deals alone cannot guarantee success without addressing structural weaknesses, sectoral readiness, and exporter capabilities.

 

India’s FTA Landscape

  • As per the World Trade Organization, India has entered into 20 regional/free trade agreements.
  • This figure excludes recent deals with the United Kingdom (signed in July) and EFTA (effective from October).
  • Ongoing negotiations include talks with the United States, European Union, Canada, and the Southern African Customs Union.
  • Facing US tariffs of up to 50% on key exports, India is pushing to fast-track trade agreements.
  • Reports of re-engagement with RCEP remain limited to consultative discussions, as India has not accepted accession after exiting in 2019 due to concerns over agriculture and rules of origin.
  • True trade diversification requires deep structural reforms, stronger productive capacity, and integration into global value chains.

 

Lessons from Earlier FTAs

  • Commerce Ministry data show that FTAs with ASEAN, Japan, and South Korea have led to adverse trade balances for India.
  • India’s trade deficit with ASEAN rose sharply from about $10 billion (2017) to nearly $44 billion (2023).
  • With Japan, imports of capital-intensive, high-value goods have outpaced India’s export growth.
  • Key gaps included weak negotiation of non-tariff barriers, quality standards, certifications, and rules of origin.
  • FTAs were often not aligned with India’s sectoral strengths, and industry consultations were inadequate.
  • Limited domestic awareness meant Indian firms under-utilised preferences, while partner countries benefitted more.

 

Course Correction and Recent Success

  • Reviews of FTAs with ASEAN, Japan, and Korea have led to some policy recalibration.
  • The India–UAE CEPA reflects a more balanced approach, with non-oil trade reaching about $100 billion in FY25 (DGFT data).

 

Strategic Focus for Future Negotiations

  • With the United States, negotiations must be shaped by inputs from services, seafood, engineering goods, and textiles exporters.
  • With the European Union, priority should be given to carbon-intensive sectors such as iron and steel and cement, especially in light of the Carbon Border Adjustment Mechanism (CBAM).

 

Beyond Signing Agreements

  • A trade agreement is only the first step.
  • Sustained gains depend on supporting exporters through standards compliance, infrastructure upgrades, technology adoption, and market intelligence.
  • Without this follow-through, FTAs risk remaining under-utilised rather than transformative.

 

Conclusion

For FTAs to deliver lasting gains, India must move beyond signing agreements to building competitive industries, aligning standards and regulations, and supporting exporters through infrastructure, technology, and market intelligence. Only a holistic strategy can translate trade diplomacy into sustainable economic growth.