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New Delhi: The idea of India as a significant player in the global trade market has received a new lease of life thanks to a series of Free Trade Agreements (FTAs) that are reshaping India’s trade landscape. Such deals can substantially contribute to India’s aim of becoming a $1 trillion merchandise exporter by 2030, says a recent report from Yes Securities.
The report comes at a time when global supply chains are undergoing significant changes. Businesses around the globe are seeking to shift manufacturing locations and diversify their geographic footprint. This change has given countries like India a chance to gain a foothold in global trade.
What is remarkable is that the role of the FTAs in supporting this transition is growing. Although trade agreements tend to be associated with reduced tariff barriers, they have so much more to do with them. They can help to enhance market accessibility, drive investment, and enable domestic manufacturers to better connect with global value chains.
India has recently entered into various trade pacts, including with the UAE and Australia, and is holding talks with key trading partners like the European Union, New Zealand, and Oman. The agreements should give Indian businesses improved access to global markets and boost the competitiveness of local goods.
Sectors expected to benefit include electronics, pharmaceuticals, and the engineering goods industry, according to the Yes Securities report. The industries currently have a solid manufacturing presence in India and are expected to see demand rise in key markets in a post-trade-barrier environment.
The electronics industry is a good example. India has become a significant smartphone manufacturing hub over the last few years, with its production of components like screens and batteries. Global companies have invested in the country, and local production has been encouraged through government schemes such as the Production Linked Incentive (PLI). FTAs may contribute to further enhancing this momentum by creating new export opportunities.
Likewise, India’s pharmaceutical industry, which supplies medicines to the rest of the world, can reap the benefits of greater market access and improved trade relations. The increased international presence is likely to benefit engineering goods as well, which is another top export category.
Meanwhile, trade deals will not determine India’s export fate. The need for enhanced logistics, infrastructure, product quality, and compliance with international standards have been consistently emphasized by industry experts. Competitive pricing and solid supply chains remain crucial for exporters seeking sustained growth.
The report also states that FTAs can help foster greater confidence among businesses and, in turn, private investment. Favorable prospects for continued access to foreign markets tend to encourage companies to increase production capacity and to invest in new production facilities. This can provide broader economic gains, like job creation, and boost industrialization.
India’s export performance has already demonstrated its resilience amid global economic uncertainties. Policymakers see trade pacts as a key component of a larger plan to maintain this progress and bolster the nation’s position in international trade.
Many things can be said about the current phase, which marks a change in how India has been trading. The focus is not just on safeguarding domestic markets, but increasingly on strengthening linkages with international economies and an active role in global value chains.
To achieve $1 trillion in exports, ongoing policy support, investment, and improvements in manufacturing competitiveness are necessary. But an increasing number of trade relations, growing industrial strength and positive shifts in the world’s supply chain provide a better base than India had in earlier decades.
Although there are hurdles, the latest report indicates that India’s expanding network of free-trade agreements may help catalyze export-led growth to help secure India’s ambitious economic goals in the coming years.
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