INTRODUCTION

• Indiaà currently has 15 FTAs covering 27 countries, with negotiations underway for agreements with 42 additional countries.
• FTAs could soon account for nearly 75% of India’s exports= making their effectiveness crucial for economic growth.

Key Opportunities from India’s FTAs

• FTAsà Grant duty-free access to large markets such as the EU, UK, and Australia.
• Removes tariff disadvantages faced by Indian exporters vis-à-vis competitors like Bangladesh and Vietnam= Level Playing Field
• Enhances India’s attractiveness as an alternative global manufacturing hub amid supply-chain diversification.
• Unlocks India’s estimated $160 billion export headroom in labour-intensive sectors such as apparel, footwear, and electronics.

Challenges in India’s FTAs

• Imports from FTA partners àOften grow faster than exports
• India’s trade deficit with ASEAN, Japan, and South Korea has widened significantly since the FTAs came into force.
• Only about 20–30% of eligible Indian exports use FTA benefits due to low tariff advantages and complex compliance requirements.
• Higher duties on raw materials and inputs than on finished goods increase production costs for Indian manufacturers.
• FTAs may encourage firms to “Make in ASEAN, Sell in India“àshifting investment, jobs, and value addition away from India.
• Cheap duty-free imports can weaken domestic manufacturing competitiveness and discourage local industrial expansion.