Syllabus- GS 2- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Introduction:

India’s global trade integration entered a new phase in 2026, driven by expanding Free Trade Agreements (FTAs) and diversified partnerships. As per UNCTAD’s Trade and Development Report 2025, India ranks third among Global South economies in trade partnership diversity, surpassing all Global North nations, reflecting resilience amid tariff uncertainties.

Aligned with the Viksit Bharat vision, India’s trade strategy emphasizes export growth, global value chain integration, and employment generation

India’s New Trade Partnerships (2025–26)

1. India–EU FTA: The ‘Mother of All Deals’

Concluded in January 2026, the India–EU FTA is the most comprehensive agreement in India’s trade history. Key highlights include:

Preferential access across 97% of EU tariff lines, covering 99.5% of trade value.
Immediate duty elimination on 70.4% of tariff lines (90.7% of India’s exports), benefiting textiles, leather, footwear, tea, coffee, spices, gems & jewellery, and marine products.
Phased duty elimination (3–5 years) on 20.3% of tariff lines; tariff-rate quotas for processed foods, steel, and select shrimp/prawn products.
Exports worth over INR 2.87 lakh crore (USD 33 billion) from labour-intensive industries gain enhanced competitiveness.
Services: EU committed across 144 sub-sectors including IT/ITeS, professional, education, and business services. Sensitive sectors — dairy, meat, poultry, and cereals — remain fully safeguarded.

Key FTAs concluded in 2025–26 at a Glance

Agreement	Key Market Access	Notable Feature
India–EU FTA (Jan 2026)	97% tariff lines; 99.5% trade value	Mother of All Deals; USD 33B labour exports benefit
India–UK CETA (2025)	~99% of India’s exports duty-free	Double Contribution Convention; Rs. 4,000 cr savings
India–Oman CEPA (Dec 2025	Zero duty on 98.08% Oman tariff lines	First country to commit on AYUSH/traditional medicine
India–New Zealand FTA (2025)	100% tariff lines zero-duty from day 1	USD 20B investment; gateway to Oceania/Pacific
India–EFTA TEPA (Oct 2025)	92.2% tariff lines; 99.6% trade value	USD 100B FDI pledge; 1 million direct jobs

2. India-UK Comprehensive Economic and Trade Agreement (CETA)

Bilateral trade stands at USD 56 billion with a target to double by 2030. The agreement grants near-universal duty-free access (99% of exports). A first-of-its-kind Double Contribution Convention eliminates dual social security payments, saving Indian companies over ₹4,000 crore. Agriculture and processed food exports are projected to grow by over 50% in three years.

3. India-Oman Comprehensive Economic Partnership Agreement (CEPA)

Signed in December 2025, the CEPA opens zero-duty access on 98.08% of Oman’s tariff lines (99.38% of export value). Remarkably, it is the first agreement globally to extend commitments on traditional medicine (AYUSH) across all modes of supply — a significant win for India’s wellness sector.

4. India-New Zealand Free Trade Agreement (FTA)

India’s fastest-concluded FTA grants 100% zero-duty access for all Indian exports from day one, supporting farmers, MSMEs, and labour-intensive sectors. The agreement is backed by a USD 20 billion investment commitment over 15 years and positions India as a skilled workforce provider for Oceania and Pacific markets.

5. Previously Operationalised FTAs

India–UAE CEPA (2022) has already crossed the bilateral trade target of USD 100 billion in FY 2024-25. India–Australia ECTA (April 2022) has delivered 8% export growth in FY 2024-25, with full zero-duty access from January 2026. The India–Mauritius CECPA (2021) remains India’s first trade agreement with an African country, offering preferential access across 300+ product lines.

Domestic Enablers Strengthening Export Competitiveness

Trade agreements alone cannot deliver results without a supportive domestic ecosystem. India has deployed a multi-layered framework of policy, financial, and regulatory measures:

● Trade Connect ePlatform: A tariff explorer service enables exporters to access real-time FTA concession data, reducing information asymmetry.

● Export Promotion Mission (EPM): A comprehensive digitally driven framework designed to facilitate export initiatives and align domestic production with global demand.

● Credit Guarantee Scheme for Exporters: Provides financial assistance and liquidity support during periods of global uncertainty.

● RBI Measures: Extension of export credit tenor to 450 days; repatriation period extended from 9 to 15 months; shipment period against advance payments raised from 1 to 3 years — significantly easing the credit cycle for exporters.

● Union Budget 2026-27: Removal of ₹10 lakh value cap on courier exports; duty-free imports of inputs for leather/synthetic footwear and seafood processing; export time limit extended to 1 year for garment and footwear exporters; direct clearance of export cargo from factory premises via electronic sealing.

Together, these measures create an integrated support architecture ensuring liquidity, regulatory clarity, and operational flexibility for India’s export ecosystem

India’s Expanding Trade Negotiations

India is widening its trade outreach across regions:

● India–US Interim Agreement (Feb 2026): Framework for reciprocal trade, paving the way for a broader Bilateral Trade Agreement (BTA).

● India–Israel FTA: First round concluded; focus on fintech, agri-tech, AI, pharma, space, and defence.

● India–GCC FTA: Terms of Reference signed to begin talks on goods, services, and food/energy security.

● ASEAN–India AITIGA Review: Ongoing talks to unlock greater trade potential.

● India–Canada CEPA: Target to raise bilateral trade to USD 50 billion by 2030.

● India–Mexico: Discussions to expand trade and sectoral investment ties.

Challenges need to be addressed

Non-tariff barriers (NTBs) like differing standards, certifications, and sanitary norms continue to restrict India’s export potential despite tariff concessions.
Limited MSME integration into global value chains restricts the trickle-down benefits of FTAs to smaller enterprises.
Supply-side constraints in sunrise sectors like electronics and semiconductors reduce India’s ability to capitalise on new market access.
Trade deficit risks with partners like ASEAN highlight the need for careful calibration to prevent import surges in sensitive sectors.
Lack of awareness among exporters about FTA provisions, rules of origin, and preferential tariff utilisation reduces effective implementation.

Way Forward

Strengthen standards infrastructure (BIS, FSSAI, pharma regulators) to meet importing countries’ compliance requirements and reduce export rejections.
Develop dedicated export clusters integrating MSMEs with technology, logistics, and credit support to deepen GVC participation.
Expand supply-side capacity in electronics, defence, and green energy to convert FTA market access into actual export growth.
Conduct targeted outreach and capacity-building programmes to improve FTA utilisation rates among exporters, especially MSMEs.
Complement FTAs with Bilateral Investment Treaties (BITs) to attract quality FDI into manufacturing and protect Indian investments abroad.

Conclusion

India’s 2025–26 trade partnerships mark a shift from a reactive to a proactive global trade strategy. Landmark FTAs with the EU and UK, along with negotiations with the US, GCC, Israel, and ASEAN, position India as a trusted partner in the emerging multipolar trade order.

Backed by domestic reforms enhancing exporter competitiveness, India’s trade ecosystem is becoming more resilient and globally integrated. As India advances toward Viksit Bharat 2047, these partnerships serve as pillars of strategic autonomy and geopolitical influence.

Question for Practice: India’s recent Free Trade Agreements (2025–26) mark a shift towards a proactive and strategic trade policy.” Discuss how these trade partnerships can enhance India’s global integration and economic growth. Also examine the key challenges that need to be addressed for effective implementation

Source- PIB