What Happened
- India has secured preferential access to nearly 70% of global trade markets through nine Free Trade Agreements with 38 developed nations.
- These pacts aim to boost self-reliance and economic development by 2047 (Viksit Bharat target year).
- Sensitive sectors including dairy, farming, and GM foods have been protected across all agreements.
- Key labour-intensive industries such as textiles and leather are set to gain significant new market entry -- Indian cotton products can now enter the UK and New Zealand duty-free.
- Markets worth nearly Rs 45 lakh crore are opening for Indian goods through these agreements.
Static Topic Bridges
India's FTA Architecture -- From ASEAN to Developed Economies
India's FTA strategy has undergone a fundamental transformation. The first phase (2005-2015) focused primarily on agreements with Asian neighbours -- ASEAN FTA (2010), South Korea CEPA (2010), Japan CEPA (2011), and bilateral PTAs with Sri Lanka, Thailand, and Nepal. These agreements drew criticism for widening India's trade deficit, particularly with ASEAN and South Korea. India's withdrawal from RCEP (Regional Comprehensive Economic Partnership) in November 2019 reflected concerns about Chinese goods flooding Indian markets. The second phase (2021-2026) pivoted toward FTAs with developed economies -- UAE CEPA (2022), Australia ECTA (2022), Mauritius CECPA (2021), followed by UK, EU, New Zealand, Oman, and US in 2025-26.
- ASEAN-India FTA (2010): India's trade deficit with ASEAN widened from $5 billion (2010) to $25 billion (2022)
- RCEP withdrawal (November 2019): Concerns about China's manufacturing competitiveness and dairy imports from Australia/NZ
- India-UAE CEPA (May 2022): First FTA with a Gulf nation; covered goods, services, investment; bilateral trade target: $100 billion
- India-Australia ECTA (December 2022): Early harvest; 85% of Australian goods at zero duty
- Total 9 FTAs with developed nations: a structural shift from South-South to North-South trade agreements
Connection to this news: The 9 FTAs represent India's most ambitious trade liberalisation phase since 1991, strategically targeting developed-nation markets where Indian exporters can capture higher-value segments while protecting vulnerable domestic sectors.
Textile and Leather Sector -- Export Competitiveness
India's textile industry is one of the oldest and largest globally, contributing approximately 2.3% to GDP and 12% to export earnings. India is the world's second-largest textile manufacturer after China. The sector employs over 45 million people directly and 100 million in allied sectors. Leather is another key labour-intensive export sector, with India producing about 13% of the world's leather and employing approximately 4 million workers. Both sectors face stiff competition from Bangladesh, Vietnam, and Ethiopia in global markets, particularly due to the latter's preferential access through GSP and EBA (Everything But Arms) schemes.
- India's textile exports: approximately $35 billion (2024-25)
- Key markets: US (27%), EU (18%), Bangladesh, UAE
- Leather exports: approximately $5.5 billion (2024-25); major hubs: Tamil Nadu, UP, West Bengal
- Competitors: Bangladesh (EU EBA, zero duty), Vietnam (CPTPP, EU-Vietnam FTA), Ethiopia (AGOA)
- PLI Scheme for Textiles: Rs 10,683 crore (launched 2021) for man-made fibre and technical textiles
Connection to this news: Duty-free access for Indian cotton products to UK and New Zealand markets through FTAs directly addresses the tariff disadvantage Indian textiles face compared to competitors who already enjoy preferential access in these markets.
Rules of Origin and Trade Deflection Prevention
Rules of Origin (RoO) are criteria used to determine the country where a product was manufactured or substantially transformed. They are essential in FTAs to prevent trade deflection -- where goods from non-FTA countries are routed through an FTA partner to exploit preferential tariffs. India's FTAs typically require a minimum value addition of 35-40% within the originating country and/or a change in tariff heading. The Self-Certification scheme, adopted under the India-UAE CEPA, allows approved exporters to certify origin themselves, reducing compliance costs.
- Two types: Preferential (under FTAs) and Non-preferential (for MFN trade, anti-dumping)
- Value addition criterion: typically 35-40% domestic content in India's FTAs
- Change in Tariff Classification (CTC): product must undergo sufficient processing to change its HS code classification
- Product-Specific Rules (PSRs): tailored RoO for sensitive products in each FTA
- CAROTAR Rules 2020: India's Customs (Administration of Rules of Origin under Trade Agreements) Rules to verify origin claims
Connection to this news: With 9 FTAs covering 38 countries, robust Rules of Origin become critical to ensure that Indian exports genuinely qualify for preferential tariffs and that third-country goods do not exploit India's FTA network for duty-free entry.
Key Facts & Data
- Total FTAs: 9, covering 38 developed nations and approximately 70% of global trade markets
- Markets opening for Indian goods: approximately Rs 45 lakh crore
- US textile market: Rs 9 lakh crore; EU textile market: Rs 22 lakh crore
- Indian cotton products: now duty-free in UK and New Zealand
- RCEP withdrawal: November 2019 (15 countries, but India opted out)
- India's merchandise exports target: $2 trillion by 2030 (as per National Foreign Trade Policy)