​FTAs for a start: On India and trade pacts

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.

Overall Analysis

The editorial evaluates India’s growing engagement with free trade agreements (FTAs) and cautions against viewing them as a standalone solution to trade challenges. It opens with a factual overview of India’s existing and ongoing trade negotiations, establishing the urgency created by rising American tariffs and global trade uncertainties. The language here is neutral and data-driven, framing FTAs as tools rather than achievements in themselves.

The argument then turns critical by examining the outcomes of earlier FTAs with ASEAN, Japan and South Korea. By citing widening trade deficits and import-heavy patterns, the editorial challenges the assumption that FTAs automatically boost exports. The author attributes these imbalances to structural shortcomings—poor negotiation of non-tariff barriers, weak alignment with India’s sectoral strengths, and inadequate domestic preparedness. The language is analytical and precise, highlighting policy lapses without resorting to rhetoric.

In the latter part, the tone becomes corrective and forward-looking. The editorial acknowledges course correction through the India-UAE trade pact, using it as evidence that better-designed agreements can yield balanced results. It then offers specific prescriptions for ongoing negotiations with the U.S. and the EU, stressing sector-specific consultations and awareness of climate-linked trade measures like the Carbon Border Adjustment Mechanism. The closing lines reinforce the central thesis: FTAs are only a starting point, and their success depends on sustained domestic reforms, exporter support, and integration into global value chains.

Overall, the editorial uses measured language, empirical evidence, and policy reasoning to argue for strategic depth rather than haste in India’s trade diplomacy.

Important Vocabulary (5)

1. Accession – the act of formally joining an agreement or organisation.
2. Diversification – expansion into varied areas to reduce dependence on a single sector or market.
3. Non-tariff barriers – trade restrictions other than customs duties, such as standards or regulations.
4. Course correction – a change in approach to improve outcomes.
5. Arduous – requiring sustained effort and hard work.

Conclusion & Tone

The editorial concludes that while FTAs are necessary in a challenging global trade environment, they are insufficient without deep domestic reforms and sector-specific support. Sustainable trade gains will come only if India strengthens its productive capacity alongside external agreements.

Tone: Analytical, pragmatic, and policy-oriented.