INDIA'S Journey to THIRD GDP Nation on VISION : Story Extract - 9 : The New Era of Free Trade Agreements (FTAs)

 The New Era of Free Trade Agreements (FTAs)

India is proactively pursuing a new generation of strategic Free Trade Agreements (FTAs) to support its export-oriented economy and integrate more deeply into global value chains. This approach reflects a clear evolution from its earlier, more cautious stance. The experience with the ASEAN-India FTA serves as a valuable case study in this evolution. While the agreement created one of the world's largest free trade areas and led to a significant increase in bilateral trade, India has consistently run a persistent and increasing trade deficit with ASEAN. Critics argue that the agreement has been flawed, acting as a conduit for cheap Chinese goods and failing to address non-tariff barriers, which has adversely affected domestic sectors like rubber, coffee, and marine products.  

Learning from the shortcomings of earlier agreements, India has adopted a new, pragmatic, and "high-quality" approach to its recent trade deals. This is evident in several recent and upcoming agreements:  

• India-UAE CEPA (2022): This landmark Comprehensive Economic Partnership Agreement (CEPA) aims to boost bilateral trade to a target of $100 billion by 2030 by eliminating tariffs on a wide range of goods and services. The agreement is a model for India's future trade deals, focusing on a comprehensive framework that includes digital trade and regulatory cooperation.  

• India-Australia CECA (2022 interim, CECA under negotiation): The interim Economic Cooperation and Trade Agreement (ECTA) implemented in December 2022 eliminated tariffs on 96.4% of India’s exports to Australia. Negotiations for a more comprehensive agreement (CECA) are ongoing, with a focus on a future-ready framework that ensures a balanced outcome for both sides.  

• India-UK CETA (2025): The signing of the Comprehensive Economic and Trade Agreement (CETA) on July 24, 2025, is expected to be a landmark pact. It will grant India duty-free access on 99% of its export tariff lines to the UK, with the goal of doubling bilateral trade by 2030. The agreement is expected to lower import duties on key products like Scotch whisky and cars in India while benefiting labor-intensive Indian exports like leather and textiles.  

India’s approach to FTAs has matured significantly. The early, flawed ASEAN agreement, which led to a persistent trade deficit, taught valuable lessons. This experience is the direct cause that has led to a more cautious, strategic, and "high-quality" approach to new FTAs. The new agreements with Australia and the UK explicitly protect sensitive domestic sectors like dairy and medical devices, a clear reflection of this refined strategy. This pragmatic approach is essential for ensuring that trade agreements contribute meaningfully to India's economic growth without compromising domestic industry.