What Happened
- An analysis published in mid-February 2026 argued that after years of struggling to establish itself as a credible manufacturing and export destination, India's brand is experiencing a revival driven by its recently signed Free Trade Agreements.
- In 2025–26, India signed a series of landmark trade deals: the India-UK CETA (July 2025), the India-Oman CEPA (December 2025), the India-New Zealand FTA (December 2025), the India-EU FTA (January 2026), and a framework for an interim trade agreement with the US (February 2026).
- The FTAs are unlocking preferential market access for Indian exporters — particularly in labour-intensive sectors like textiles, leather, gems, and marine products, as well as high-value sectors like pharmaceuticals, IT services, and engineering goods.
- The commentary argues that India's manufacturing credibility — long hampered by infrastructure gaps, logistics costs, regulatory complexity, and inconsistent policy — is being rehabilitated through the discipline and market access that FTAs bring.
- India's target is $500 billion+ in annual exports by 2030, up from approximately $437 billion in 2024-25.
Static Topic Bridges
Free Trade Agreements: Concepts, Types, and India's FTA History
A Free Trade Agreement (FTA) is a treaty between two or more countries to reduce or eliminate tariffs, quotas, and other trade barriers on goods and services traded between the signatories. FTAs come in different forms based on depth of integration.
- Preferential Trade Agreement (PTA): Reduces tariffs on select goods; limited scope. Example: India-Mercosur PTA.
- Free Trade Agreement (FTA): Eliminates tariffs on most goods; broader scope. Example: India-ASEAN FTA (2010).
- Comprehensive Economic Partnership Agreement (CEPA): Covers goods, services, investments, and other areas. Example: India-UAE CEPA (2022), India-Oman CEPA (2025).
- Comprehensive Economic and Trade Agreement (CETA): Widest scope, covering goods, services, investment, IP, government procurement. Example: India-UK CETA (2025).
- India's FTA history has been cautious: it avoided major deals for years, fearing import competition, particularly from China (via RCEP which India exited in 2019). The 2022 India-UAE CEPA marked a strategic pivot towards active FTA engagement.
- India's withdrawal from RCEP (Regional Comprehensive Economic Partnership) in 2019 was driven by concerns about Chinese manufacturing flooding Indian markets through ASEAN FTA routes.
Connection to this news: The current FTA wave represents India's most aggressive trade liberalisation push since 1991, signalling a strategic confidence that Indian industry can compete internationally — and a recognition that market access agreements are essential for export-led growth.
India's Manufacturing Competitiveness and the China+1 Strategy
The "China+1" strategy refers to the global business trend of diversifying supply chains to include at least one additional manufacturing location outside China, driven by geopolitical risks, COVID-19 supply disruptions, rising Chinese labour costs, and western government industrial policy (US Chips Act, EU Critical Raw Materials Act).
- India has positioned itself as the primary beneficiary of the China+1 shift, particularly in electronics, textiles, pharmaceuticals, and auto components.
- Key obstacles India faces: logistics costs (India ranks 38th on the World Bank Logistics Performance Index 2023), infrastructure gaps (particularly inland connectivity), labour law complexity, and land acquisition challenges.
- Production Linked Incentive (PLI) schemes, launched from 2020, cover 14 sectors with total outlay of ₹1.97 lakh crore, offering performance-linked financial incentives to attract manufacturing investment.
- India's merchandise export composition remains skewed towards petroleum products (~22%), gems & jewellery (~14%), and engineering goods (~25%); FTAs are targeted at diversifying this mix.
- The India-UK CETA's pharmaceutical provisions (mutual recognition of GMP, fast-track market access) and textile duty elimination are expected to accelerate India's export diversification.
Connection to this news: FTAs turbocharge the China+1 opportunity by ensuring that goods manufactured in India enjoy preferential access to key markets, making the investment case for relocating supply chains to India more financially compelling.
Trade Policy, WTO, and Multilateralism vs. Bilateralism
India's shift towards bilateral FTAs raises questions about its commitment to the multilateral trading system under the World Trade Organization (WTO), which operates on the Most Favoured Nation (MFN) principle.
- The WTO's MFN principle (Article I of GATT) requires that any tariff concession granted to one trading partner must be extended to all WTO members — unless covered by an FTA exception (Article XXIV of GATT), which allows bilateral/regional FTAs if they cover "substantially all trade."
- India has historically been a strong advocate for multilateralism at the WTO (particularly on agriculture subsidies and TRIPS flexibilities for medicines), while simultaneously pursuing bilateral deals.
- The WTO's Appellate Body has been paralysed since December 2019 due to the US blocking the appointment of new members; this has weakened dispute resolution and accelerated the bilateral FTA trend globally.
- India's India-EU FTA negotiations (relaunched 2022, concluded 2026) were particularly significant — the EU is India's largest trading bloc partner, with bilateral trade exceeding $130 billion in 2024.
- FTAs can create "trade diversion" (shifting imports from efficient third-country producers to less efficient FTA partners merely due to tariff advantages) — an economic welfare concern that India must monitor.
Connection to this news: As India signs an expanding web of bilateral FTAs, it must balance the economic benefits of preferential market access against potential WTO compatibility concerns, trade diversion risks, and pressure on domestic industries facing competition from FTA partners.
Key Facts & Data
- India-UK CETA: signed July 24, 2025; 99% of Indian exports duty-free to UK; covers textiles, pharma, gems, marine products, IT services
- India-Oman CEPA: signed December 2025; 98% of Indian exports (textiles, gems, engineering, food) duty-free
- India-New Zealand FTA: announced December 22, 2025
- India-EU FTA: concluded January 2026; EU is India's largest trading bloc partner (~$130 billion bilateral trade)
- India-US interim trade framework: February 7, 2026
- India's merchandise exports 2024-25: ~$437 billion; target $500+ billion by 2030
- India exited RCEP negotiations: November 2019 (concerns about China trade diversion)
- PLI schemes: 14 sectors, total outlay ₹1.97 lakh crore
- India-UAE CEPA: signed February 2022; India's first major CEPA after UAE
- WTO MFN principle: Article I of GATT 1994; FTA exception under Article XXIV
- WTO Appellate Body non-functional since December 2019 (US blocking appointments)
- India's World Bank Logistics Performance Index rank: 38 (2023)