Mapping India's FTA Policy

Overview of India's Trade Engagement

As of August 2025, India's trade architecture consists of thirteen operational Free Trade Agreements (FTAs), six Preferential Trade Agreements (PTAs), several Bilateral Investment Treaties (BITs), and an active pipeline of regional and bilateral negotiations. This evolving network reflects a calculated shift in India's foreign trade strategy from a purely tariff-reduction approach to one that integrates market access with investment facilitation, technology cooperation, and supply chain resilience.

The trade data for FY 2023–24 and FY 2024–25 demonstrates this shift in action. Merchandise exports grew from USD 451 billion to USD 465 billion, with engineering goods, pharmaceuticals, and Agri-commodities benefiting the most from preferential access under FTAs. Imports also rose, from USD 714 billion to USD 728 billion, driven mainly by crude oil, electronics, and gold. However, the trade deficit remained steady at approximately USD 263 billion, suggesting that while inbound flows have increased, the benefits of improved outbound market access are beginning to balance import growth. This stability is further supported by a global moderation in commodity prices and India's growing ability to leverage FTAs to expand its export base.

Understanding India's Trade Agreements

India's trade agreements fall into distinct categories, each serving a specific purpose in the broader trade ecosystem. Free Trade Agreements (FTAs) are the most comprehensive, eliminating or significantly reducing tariffs across a wide range of goods and services. The India–ASEAN FTA is a prominent example, providing deep tariff cuts on hundreds of products. Preferential Trade Agreements (PTAs), on the other hand, are narrower in scope, offering tariff concessions on a limited set of goods, such as the India–MERCOSUR PTA.

Comprehensive Economic Partnership Agreements (CEPAs) and Comprehensive Economic Cooperation Agreements (CECAs) extend beyond goods trade, covering services, investment, intellectual property rights, and regulatory cooperation. The India–Japan CEPA is a case in point, encompassing wide-ranging economic collaboration. Bilateral Investment Treaties (BITs) are focused on securing investment flows by providing legal protections to foreign investors and ensuring fair treatment, as seen in the recently concluded India–UAE BIT. Finally, Regional Trade Agreements (RTAs) involve multiple countries in a common framework, such as the SAARC Agreement, which fosters regional trade integration.

Exporter Utilisation and Sectoral Gains

The tangible benefits of India's FTAs are increasingly evident in the behaviour of exporters. According to the Directorate General of Foreign Trade (DGFT), the number of Certificates of Origin (CoOs) issued to Indian exporters rose from approximately 2.4 million in FY 2023–24 to around 2.8 million in FY 2024–25. This surge indicates that more businesses are actively claiming preferential tariff benefits, which translates directly into greater competitiveness abroad.

Engineering goods exporters have leveraged FTAs to penetrate markets in Japan, ASEAN, and the United Kingdom, particularly in automotive components and heavy machinery. Pharmaceutical companies have expanded exports to the Gulf Cooperation Council (GCC) region and African FTA partners, aided by reduced tariffs and faster regulatory approvals. Processed food and Agri-product exporters have also benefited, especially in ASEAN and SAARC markets, although they face increasing non-tariff barriers such as stringent sanitary and phytosanitary (SPS) standards.

Ongoing Negotiations and Strategic Focus

India is actively negotiating several high-impact agreements. The India–Canada CEPA talks, while stalled over agricultural market access, digital trade, and mobility provisions, remain strategically crucial given Canada's large Indian diaspora and complementary resource base. Negotiations with the GCC are in advanced stages, with the potential to remove tariffs on petrochemicals, jewellery, and processed food sectors, where India holds substantial competitive advantages.

The upgrade of the India–Australia Economic Cooperation and Trade Agreement (ECTA) aims to deepen commitments in services, critical minerals, and emerging technologies, potentially opening avenues for joint research and manufacturing partnerships. These negotiations underscore India's dual-track approach: securing better terms with developed markets while strengthening economic links with resource-rich partners.

Bilateral Investment Treaties: Balancing Protection and Sovereignty

Since adopting its 2016 Model BIT, India has been careful to ensure that investment protection does not compromise its regulatory space. The India–UAE BIT, concluded in 2024, offers robust investor safeguards alongside expedited dispute resolution mechanisms, which are expected to boost UAE investment in Indian infrastructure and logistics. Similarly, the 2023 India–Uzbekistan BIT focuses on manufacturing and textiles, sectors where Uzbekistan's raw material strengths align with India's production capabilities.

Ongoing BIT negotiations with the European Union, the United States, and several African nations could further integrate India into global investment flows if investor protection clauses are balanced with policy flexibility.

Preferential Trade Agreements and Regional Outreach

India's PTAs continue to serve as stepping stones toward deeper trade integration. The SAARC PTA fosters intra-regional trade through mutual tariff concessions, although its impact remains limited by political constraints. The India–MERCOSUR PTA provides reduced duties on over 450 tariff lines, covering pharmaceuticals, chemicals, and engineering goods. The India–Chile PTA, expanded in 2017, now covers over 1,000 products and has led to notable growth in India's exports of textiles and industrial machinery to Latin America.

Proposed agreements, such as the BIMSTEC FTA, aim to connect the economies of South and Southeast Asia more closely, while the India–SACU PTA could open Southern African markets to Indian pharmaceuticals, textiles, and machinery exports.

The India–UK FTA and Vision 2035: A New Model for Trade Partnerships

One of the most significant developments in 2025 has been the signing of the India–UK Comprehensive Economic and Trade Agreement (CETA) in July, accompanied by the launch of the Vision 2035 framework. This partnership is built on five pillars: trade growth, technological innovation, multilateral cooperation, connectivity, and climate action.

The agreement eliminates tariffs on 90% of goods, establishes mutual recognition of professional qualifications, and facilitates digital trade. These provisions are expected to significantly enhance both inbound and outbound trade. For example, engineering goods exports from India to the UK and GCC markets have grown by 8%, while inbound flows of high-tech machinery from the UK and the EU have increased; however, compliance with technical standards remains a challenge. Pharmaceuticals have seen a 12% increase in exports to Africa and the GCC, while inbound specialty chemical imports from the EU and UK continue to be influenced by India's local manufacturing policies.

For Indian businesses abroad, challenges persist in navigating the complex rules of origin, meeting SPS requirements for agricultural exports, and overcoming service market access barriers in sectors such as IT and professional consultancy. Conversely, foreign businesses in India, particularly those from the UK, ASEAN, and the UAE, are leveraging FTAs to establish operations in the electronics manufacturing, legal and accounting services, and petrochemical sectors.

Analysis: Inbound for Export and Import Business

From an export perspective, India's growing FTA network is enabling sector-specific gains by reducing tariff burdens, facilitating regulatory cooperation, and opening new markets. Engineering goods and pharmaceuticals have been the prime beneficiaries, leveraging preferential market access to increase competitiveness. However, sectors such as agriculture must adapt to stricter SPS norms to fully leverage these agreements.

From an import perspective, liberalized trade terms ensure steady access to critical inputs, such as crude oil, high-tech machinery, and specialty chemicals. While this supports domestic manufacturing and infrastructure growth, it also intensifies competition for local producers in areas such as edible oils and electronics. The stable trade deficit suggests that India is balancing these inflows with expanding export volumes, but long-term competitiveness will depend on maintaining value-added production domestically.

Conclusion

India's trade landscape in 2025 reflects a maturing strategy, one that balances tariff liberalization with sector-specific safeguards, embraces foreign investment under clear rules, and leverages strategic partnerships to achieve technology and sustainability goals. The shift from 2023–24 to 2025 shows an apparent increase in FTA utilisation, measurable export growth in key sectors, and a broader integration of trade policy with industrial and investment objectives.

The India–UK Vision 2035 framework, anchored in the BRISK model (Business, Research, Innovation, Science, and Knowledge), represents a new generation of FTAs that blend traditional market access with collaborative growth strategies. If replicated in other negotiations, this model could position India as both a major global exporter and a preferred investment destination in the coming decade.

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