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India has been on an FTA spree lately, with India operationalizing Free Trade Agreements (FTAs) with New Zealand, Australia and the UAE in 2025 alone. With this, India has now signed FTA agreements with nine countries in the past three years, taking the total FTAs to 38 countries.
“We have decided in FY27 let’s aspire for a $1 trillion exports target, 16-17 percent growth; this is not impossible with the FTAs coming up, logistics costs coming down along with states and ease of doing business,” Goyal said at the CII Annual Business Summit 2026 in New Delhi. This comes at a time when India’s exports reached an all-time high of $863 billion in FY26.
With these FTAs, there are hopes that we may reach the magic number of $1 trillion next year, but the reality is much different.
What are the FTAs meant to do?
In theory, FTAs reduce trade barriers between two countries, where each signatory allows preferential access to their markets by reducing tariffs or trade barriers. Ideally, these agreements aim to make imports and exports cheaper for the signatories, while allowing each member to sell goods at a competitive rate in each other’s markets. FTAs can be between two or more countries (a group of nations, like the EU, for example) and foster economic growth and market reach better for everyone concerned.
Do FTAs always succeed?
FTAs may or may not work, depending on a variety of factors. The US-Mexico-Canada agreement, which succeeded the long-established NAFTA trade bloc in 2020, has helped all three to integrate better in the regional economy. Following the agreement, Mexico is now the top source of US imports, with a staggering $791 billion worth of goods imported to the US. Similarly, the EU-Vietnam FTA signed in August 2020 has helped Vietnam record a trade surplus of about $22 billion with the EU, with its electronics and machinery exports accounting for more than half of the total imports to the EU.
For India, these FTAs offer select sectors the opportunity to sell their goods at lower prices. Until now, the UAE imposed a 5% import duty on Indian jewellery, and its removal has seen a 60% surge in exports, offering jewellery manufacturing hubs like Surat and Mumbai a chance to compete better in the international markets.
But not FTAs are signed with mutual benefits. For example, the FTA between New Zealand and India saw dissent from New Zealand’s MPs, who alleged being shortchanged. New Zealand’s Foreign Minister Winston Peters, had opposed the deal, saying it was ‘neither free nor fair’ as it was rushed and did not include the dairy sector, one of New Zealand’s biggest export sectors.
Back home, Indian politicians and farmers also opposed adding dairy products to the FTA, citing concerns that livelihoods would be affected by cheaper imports. Keeping that in mind, the commerce ministry under Piyush Goyal had kept out the sector in the FTA.
Many times, FTA concessions have been used as a backdoor to cheaper imports. The ASEAN-India FTA, signed in 2010, has been accused of allowing a flood of cheap Chinese imports with little or no duty paid, even as domestic producers have been left high and dry.
For the government, though, these concerns aren’t always taken into consideration before signing the deal, as the FTA is seen as a medium to boost exports rather than protect local producers.
Why these FTAs aren’t a reason to celebrate, yet
But these FTAs aren’t free passes to lucrative markets. At the same event, Chief Economic Advisor V Anantha Nageswaran warned that these FTAs are of value only when they are implemented and they could remain a promise on paper if compliance and quality measures don’t meet the prescribed norms.
Even with the already implemented FTAs, Indian exporters haven’t been able to take advantage of the lowered tariffs these FTAs bring to us. According to a report by the NITI Aayog, “Exports to FTA countries totalled $37.3 bn, reflecting a 20% y-o-y decline in Q4 FY25. India’s imports from its FTA partner countries totalled $68.4 bn in Q4 FY25, recording a 10% y-o-y increase,”
“India’s FTAs have delivered limited gains due to cautious liberalisation, weaker logistics and compliance reforms, and low utilisation of preferential tariffs amid complex rules of origin.” it further adds.
Overall, India has an abysmally low FTA utilization rate of 25%, which is the rate of how businesses take advantage of the low tariffs these FTAs bring with them. For most developed countries, it is close to 70%.
For India, signing a multitude of FTAs doesn’t add value, as these are just facilitators of trade, with much depending on the quality and compliance of the products sold. Until we are able to meet the stringent quality requirements these developed countries demand, the FTAs could actually harm local businesses, as they can allow cheaper imports to flood the markets, taking advantage of these deals.
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