What Happened
- Commerce and Industry Minister announced that India's recent trade deals with the US and EU open doors to a combined market worth nearly $55-60 trillion.
- India has safeguarded farmers' interests in its US trade deal, keeping over 95% of farm produce protected while gaining market access.
- Recent FTAs concluded with New Zealand, the UK, Oman, the EU, and the US were highlighted as balanced and fair agreements.
- The deals are designed to benefit farmers, MSMEs, and artisans while providing preferential access to developed markets.
- Under the India-US framework, the US will reduce tariffs on Indian goods from 50% to 18%, while India will eliminate or reduce duties on select US industrial and agricultural products.
Static Topic Bridges
Free Trade Agreements -- Types and India's FTA Strategy
A Free Trade Agreement (FTA) is a pact between two or more nations to reduce barriers to imports and exports. FTAs can vary in scope: Preferential Trade Agreements (PTAs) offer partial tariff reductions; Comprehensive Economic Partnership Agreements (CEPAs) cover goods, services, investments, and intellectual property; and interim/early harvest agreements address limited sectors before a full FTA. India historically avoided FTAs with developed nations, fearing domestic industry disruption. The shift to actively pursuing FTAs with developed economies marks a strategic reorientation post-2020.
- India's existing FTAs (pre-2025): ASEAN (2010), South Korea CEPA (2010), Japan CEPA (2011), India-UAE CEPA (2022), India-Australia ECTA (2022), India-Mauritius CECPA (2021)
- New FTAs in 2025-26: UK, EU, New Zealand, Oman, and US (interim agreement)
- Sensitive lists in FTAs: Products excluded from tariff reduction to protect domestic producers (e.g., dairy, rice, wheat, pulses)
- Rules of Origin: Criteria to determine the national source of a product, preventing third-country goods from benefiting from FTA tariffs
Connection to this news: India's 9 FTAs with 38 developed countries represent a departure from its earlier cautious approach. The strategy balances market access for competitive sectors (textiles, leather, IT) with protection of sensitive areas (dairy, farming, GM foods).
India-US Bilateral Trade Agreement (BTA) Framework
India and the US announced an interim trade agreement framework in February 2026, building on the bilateral trade relationship that was valued at approximately $191 billion in 2023-24. The framework envisages $500 billion in bilateral trade by 2030, covering energy (crude oil, LNG, LPG), technology products (GPUs, data centre equipment), coking coal, aircraft, and precious metals. The US reduced reciprocal tariffs from 25% to 18% on Indian goods effective February 7, 2026.
- India-US bilateral trade: approximately $191 billion (2023-24); target: $500 billion by 2030
- US tariff on Indian goods: reduced from 25% to 18% (effective February 7, 2026)
- India's key exports to US: IT services, textiles, pharmaceuticals, gems and jewellery
- India's key imports from US: crude oil, LNG, coking coal, defence equipment, aircraft
- Previous trade friction: GSP (Generalised System of Preferences) withdrawal by US in June 2019
Connection to this news: The India-US ITA is one of the 9 FTAs referenced, and represents the single largest market access expansion, given that the US economy is approximately $28 trillion in size.
Agricultural Trade Protection -- Sensitive Lists and Food Security
India has consistently protected its agricultural sector in trade negotiations, reflecting the sector's importance for livelihood security (employing approximately 42% of the workforce) and food security. Sensitive lists in FTAs exclude products from tariff liberalisation. The WTO's Agreement on Agriculture (AoA) governs global agricultural trade, distinguishing between domestic support measures (Amber, Blue, Green boxes) and market access provisions. India's positions on public stockholding for food security and special safeguard mechanisms (SSMs) remain key negotiating stances at the WTO.
- Agriculture's share in GDP: approximately 18% (2024-25); employment share: approximately 42%
- WTO AoA boxes: Green (non-distorting, unlimited), Blue (production-limiting, allowed), Amber (trade-distorting, capped by de minimis)
- India's de minimis support limit: 10% of value of agricultural production (developing country provision)
- Public stockholding: India invoked the Bali Peace Clause (2013) to protect MSP-based procurement from WTO subsidy caps
- In the India-EU FTA: dairy, rice, wheat, pulses, tea, coffee fully excluded from tariff concessions
Connection to this news: The protection of over 95% of farm produce in the US deal, and exclusion of dairy and cereals in the EU FTA, demonstrate India's consistent application of sensitive list strategies across all its recent trade agreements.
Key Facts & Data
- Total FTAs concluded: 9, covering 38 developed nations and approximately 70% of global trade markets
- India-US tariff reduction: 50% to 18% on Indian goods
- India-US trade target: $500 billion by 2030
- Sectors protected: dairy, farming, GM foods across all FTAs
- Sectors gaining market access: textiles, leather, electronics, IT services
- India's total merchandise exports (2024-25): approximately $437 billion