India’s expansive network of Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) serves as a critical bulwark against escalating global trade tensions, particularly the high US tariffs imposed under President Trump. Comprising around 13 FTAs and 6 PTAs with over 50 partner countries and blocs, including the landmark EU agreement signed in January 2026, ASEAN, UAE, Australia, Japan, and EFTA, these pacts provide preferential market access and shield key sectors such as textiles, pharmaceuticals, and metals from duties as high as 50%.
While often touted as linking India to one-third of the global population through trade, the real value lies in diversified export avenues and strategic import security, balancing $434 billion in 2024 merchandise exports against $698 billion in imports. However, implementation challenges, such as varying EU national regulations that are delaying the full rollout until early 2027, underscore the complexities ahead.
Evolution and Scope of India’s FTA Framework
India’s FTA journey began with early pacts such as the ASEAN Comprehensive Economic Cooperation Agreement in 2009, followed by Comprehensive Economic Partnership Agreements (CEPAs) with South Korea (2010) and Japan (2011). Recent developments include the UAE CEPA (2022), the Australia ECTA (2022), and the EU FTA, positioning India as a multi-aligned player in a multipolar world. These agreements progressively eliminate or reduce tariffs on goods, services, and investments, covering populations exceeding 2.5 billion across developed and emerging markets.
The EU deal stands out, with the bloc committing to zero tariffs on 99.5% of Indian goods over seven years, including immediate cuts on textiles (up to 12%), apparel (4%), leather and footwear (17%), gems and jewellery (4%), marine products (up to 26%), chemicals (12.8%), plastics and rubber (6.5%), and base metals (10%).
In reciprocity, India slashes auto tariffs from 110% to 10% over five years (with quotas for 250,000 vehicles), wine duties from 150% to 20-30%, machinery tariffs by up to 44%, chemicals tariffs to 22%, pharmaceuticals tariffs to 11%, and fully waives tariffs on aircraft and spacecraft. Processed foods and olive oil also drop to zero.
Yet critics who decry the deal as unviable because it must be negotiated with 27 individual countries fundamentally miss the bulwark of the EU’s constitutional framework, which mandates an across-the-board approval process at the bloc level, ensuring unified implementation despite national variations, rather than fragmented bilateral hurdles.
Experts note it’s too early to predict outcomes given disparate regulatory frameworks, potentially pushing full rollout into 2027. This multi-alignment is essential and, in a manner, the “mother of all deals,” as hyped, a pragmatic step forward.
These pacts now account for 30-40% of India’s trade, fortifying resilience amid US protectionism while enabling defence and manufacturing self-reliance.
Dominant Export Sectors: Performance and FTA Leverage
India’s exports remain robust, led by mineral fuels and oils at $74.27 billion, representing 17.1% of the total $434 billion in 2024. Refined petroleum finds ready markets in the UAE and EU hubs under CEPA benefits.
Electrical and electronic equipment follows at $39.36 billion (9.1%), with smartphones and components surging to Australia and Japan.
Machinery and boilers contribute $32.01 billion (7.4%), underpinned by engineering goods, which accounted for 26.7% in FY25, and amplified by EFTA and ASEAN duty concessions.
Gems and precious stones shine at $29.25 billion (6.7%), routed through UAE polishing centres, while pharmaceuticals a global strength reach $22.98 billion (5.3%), with generics gaining EU and ASEAN entry following tariff reductions.
Vehicles add $21.75 billion (5.0%), organic chemicals $20.69 billion (4.8%), cereals $11.93 billion (2.7%), iron and steel $10.18 billion (2.3%), and textiles/apparel roughly 3.6% combined. The EU alone absorbed $75.85 billion, or 17% of exports, highlighting the pact’s potential to double bilateral trade by 2032 through labour-intensive sectors.
Critical Import Dependencies: Fuels and High-Tech Inflows
Imports, which fuel domestic industry, are dominated by mineral fuels and oils at $217.94 billion (31.2% of the $698 billion total), primarily crude from Russia, the UAE, and Iraq, secured via energy-focused FTAs.
Imports of gems and precious stones totalled $89.44 billion (12.8%) and support the export jewellery value chain.
Electrical equipment ($83.47 billion, 12.0%) and machinery ($60.76 billion, 8.7%) sourced from South Korea, Japan, and other countries highlight supply chain vulnerabilities that are eased by tech FTAs.
Organic chemicals ($25.65 billion, 3.7%), plastics ($21.61 billion, 3.1%), iron and steel ($17.42 billion, 2.5%), and edible oils ($16.75 billion, 2.4%) support pharma and manufacturing. Aircraft ($9.66 billion), vehicles ($7.78 billion), and fertilisers ($7.71 billion) address gaps in aviation, automotive, and agriculture, with EU cuts on aircraft now benefiting defence aviation.
Defence Trade: From Imports to Export Powerhouse
India’s defence exports have skyrocketed to approximately $2.76 billion in FY25, a 34-fold increase since FY14, and now reach over 100 countries with ammunition, weaponry, subsystems, and components.
Private firms lead this surge, with public sector units supporting them. FTAs play a pivotal role: EU zero aircraft tariffs and EFTA machinery cuts supply avionics for indigenous platforms such as Tejas fighters and BrahMos missiles.
QUAD-aligned pacts with Australia and Japan secure critical minerals, reducing China’s dependence on semiconductors for radars. UAE CEPA facilitates the transfer of dual-use technologies, while ongoing UK-Canada talks target artillery and sensors. This offsets the historical 60-70% reliance on imports and aims to reach $6 billion by 2029 amid border tensions.
Shielding Against the US Tariff Onslaught
President Trump’s tariffs up to 50% on textiles (90% US-bound), autos, pharma, and steel prompted swift Indian countermeasures. Since May 2025, FTAs with the EU, UK, Oman, and New Zealand have been signed, redirecting textiles, gems, and leather to tariff-free zones. Production-linked incentive (PLI) schemes are expanding in electronics and steel, complemented by Budget 2026’s focus on skilling, R&D, and manufacturing hubs. No retaliatory duties; instead, safeguards against Chinese dumping and diplomatic multi-alignment blunt shocks.
US exports dipped marginally (1.83). FTAs offer clear advantages, but demand realism. In terms of market access, tariff eliminations are set to double EU trade and enable broad multi-alignment, though disparate EU rules across member states risk delaying full benefits until 2027.
On resilience, the masses’ ability to endure sanctions as demonstrated after nuclear tests combined with a unified national effort, provides strength. Yet elite frailties expose vulnerabilities within BRICS groupings, and leadership credibility gaps on global issues undermine cohesion. Strategically, these pacts bolster defence supply chains through key alliances, but gaps in moral authority within the Global South remain a notable weakness.
Pros and Cons: A Balanced Assessment
Internal reforms remain essential; no nation thrives in isolation. This duality underscores FTAs as pragmatic tools rather than panaceas, demanding firmness and inclusiveness in the face of 2026 challenges.
Opportunities, Risks, and the 2026 Horizon
Opportunities abound EU pacts could boost steel exports by billions; defence scales amid QUAD interoperability. Risks persist agri sensitivities (EU dairy barriers), rules-of-origin evasion, and implementation lags. 2026 demands firmness, traditional inclusiveness, and internal corrections for unhindered progress.
In sum, India’s FTAs weave together trade, defence, and diplomacy into a framework of resilience. EU ties and incentives aim to achieve $500 billion in exports by 2027, sustaining 7%+ GDP growth. As challenges mount, a united republic marches forward.