New Delhi: India’s trade with countries under Free Trade Agreements (FTAs) has expanded sharply over the past two decades, even as reliance on non-FTA partners has declined, according to a latest report by the National Institution for Transforming India (NITI) Aayog.
The share of India’s trade with FTA partners rose nearly six-fold, from 4.6 percent in 2006 to 28.8 percent in 2024. In contrast, the share of non-FTA partners fell from 95.4 percent to 71.2 percent during the same period.
“FTA partners have emerged as a key driver of India’s trade integration, with their share in total trade rising sharply from 4.6 percent in 2006 to 28.8 percent in 2024, reflecting deeper economic linkages and expanding market access under trade agreements,” read the Trade Watch Quarterly report (Q3 FY2025-26), released Monday.
The surge in trade has largely been driven by countries such as Singapore, Sri Lanka, the United Arab Emirates, Japan, South Korea and the ASEAN (Association of Southeast Asian Nations) region.
The report highlights that FTAs help smoothen cross-border movement of intermediate goods and strengthen production networks. This, in turn, allows countries to access technology, specialise in production and integrate more deeply with the global economy.
“FTAs are associated with strong, positive trade creation and have thus emerged as one of the most powerful instruments for accelerating economic growth and enhancing competitiveness,” the report states.
India is currently negotiating or advancing trade agreements with key partners including the United States, Israel, the Gulf Cooperation Council (GCC), Canada and Mexico. At the same time, it is reviewing and upgrading existing agreements such as the one with the Association of Southeast Asian Nations (ASEAN).
However, the report flags that geopolitical developments in West Asia have affected the pace of talks on the proposed India-GCC FTA, underlining how regional conditions can influence trade diplomacy.
Taken together, these developments signal India’s shift towards a more outward-looking trade strategy. “By forging partnerships across advanced and emerging economies, India is positioning itself more firmly within global production networks and value chains,” the report states.
At the launch of the report, NITI Aayog Vice Chairperson Suman Bery cautioned against viewing FTAs as one-sided arrangements. “FTAs are not a one-way street, nor should they be, the way that we are seeing them as a tool for market access, others are seeing it as a tool for market access to us,” he said.
Despite the long-term rise, recent quarterly data shows some pressure on exports to FTA partners. India’s exports to FTA countries stood at $40.26 billion in Q3 FY2025-26, down 7 percent year-on-year. In contrast, imports from FTA partners, grew 6 percent to $70.98 billion during the same period.
Overall trade picture
India’s total merchandise and services trade grew 5.3 percent year-on-year to $1.37 trillion during April-December period of FY 2025-26. A strong services surplus helped offset a widening merchandise trade deficit, keeping the external balance stable.
In Q3 alone, merchandise exports rose 1.6 percent to $110.48 billion, while imports grew faster at 7.9 percent to $202.33 billion. Services exports increased 7.8 percent to $111.2 billion, while imports grew 2.8 percent to $53.7 billion.
India’s top 10 export markets accounted for about half (50.5 percent) of total merchandise exports in the quarter, totalling $55.8 billion.
Five of these markets posted growth. Spain stood out, with exports surging 79 percent, driven by strong demand for refined petroleum products.
During the quarter, exports to China also grew sharply—up 65.8 percent—on the back of higher shipments of petroleum products, engineering and electronic goods, chemicals, iron ore and marine products.
However, exports declined in the remaining five top markets, including Singapore, the Netherlands, the United Kingdom, Saudi Arabia and Bangladesh.
“The decline in exports to the Netherlands was primarily driven by a sharp drop in petroleum products, along with weakened demand for key commodities such as telecom instruments and electronic components,” the report states.
(Edited by Nardeep Singh Dahiya)
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