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Economics April 21, 2026 5 min read Daily brief · #9 of 11

FTA partners drive India’s trade surge as reliance on non-FTA countries dips, says NITI Aayog report

NITI Aayog released the seventh edition of its Trade Watch Quarterly report covering October–December (Q3) of FY 2025-26, highlighting a dramatic rise in Ind...

GS Paper 2 (International Relations) GS Paper 3 (Indian Economy)

What Happened

  • NITI Aayog released the seventh edition of its Trade Watch Quarterly report covering October–December (Q3) of FY 2025-26, highlighting a dramatic rise in India's trade engagement with Free Trade Agreement (FTA) partners.
  • The share of India's total trade conducted with FTA partners rose nearly six-fold — from 4.6% in 2006 to 28.8% in 2024 — reflecting deeper economic integration through negotiated market access.
  • However, recent quarterly data signals caution: exports to FTA partners stood at $40.26 billion in Q3 FY2025-26, a 7% year-on-year decline, while imports from FTA partners grew 6% to $70.98 billion in the same period.
  • The report warns that India's export basket remains concentrated in high-risk sectors such as gold and platinum jewellery, pointing to an unresolved diversification challenge.
  • India is actively negotiating or advancing FTAs with the United States, Israel, the Gulf Cooperation Council (GCC), Canada, and Mexico, though the West Asia conflict has delayed the timeline for the India-GCC FTA negotiations.

Static Topic Bridges

A Free Trade Agreement is a pact between two or more nations to reduce or eliminate barriers to trade in goods and services. Depending on their scope, these agreements are categorised as FTAs (goods only), Comprehensive Economic Partnership Agreements (CEPAs, covering goods, services, and investment), Comprehensive Economic Cooperation Agreements (CECAs), or Preferential Trade Agreements (PTAs, partial tariff reductions only).

  • India has signed 13 Regional Trade Agreements (RTAs) to date, with major partners including ASEAN (Trade in Goods Agreement, 2009), South Korea (CEPA, in force 2010), Japan (CEPA, in force 2011), UAE (CEPA, in force 2022), and Mauritius (CECPA, 2021).
  • The India-UK FTA was formally signed on July 24, 2025, after more than three years of negotiations.
  • India-UAE CEPA — negotiated in a record 88 days — resulted in 97% of UAE tariff lines covering 99% of Indian imports becoming duty-free.
  • FTAs are governed by Article XXIV of the General Agreement on Tariffs and Trade (GATT) under the WTO framework.

Connection to this news: NITI Aayog's report directly tracks how these signed agreements have shaped trade flows, showing a six-fold increase in FTA-partner trade share since 2006, while flagging that recent export trends demand course correction.

Trade Watch Quarterly — NITI Aayog's Monitoring Role

NITI Aayog's Trade Watch Quarterly is a periodic publication that monitors India's external trade performance, examines the impact of trade agreements, and provides granular data on bilateral and multilateral trade flows. It serves as a key policy input for the Ministry of Commerce and Industry in calibrating ongoing negotiations.

  • The seventh edition covers Q3 FY 2025-26 (October–December 2025).
  • The report uses a combination of DGCI&S (Directorate General of Commercial Intelligence and Statistics) data and partner-country data to compute FTA share metrics.
  • Unlike macroeconomic surveys, Trade Watch Quarterly specifically isolates the trade performance attributable to FTA partners versus non-FTA partners.

Connection to this news: This edition's headline finding — the 4.6% to 28.8% rise in FTA trade share over 18 years — provides a long-run basis for evaluating the efficacy of India's trade agreement strategy.

Trade Deficit, Export Concentration, and Diversification Risk

A trade deficit with FTA partners arises when imports from those partners grow faster than exports. Export concentration — where a few products account for a disproportionate share of outbound trade — amplifies vulnerability to demand shifts, commodity price swings, or geopolitical disruptions.

  • In Q3 FY2025-26, India's FTA trade deficit widened as imports rose 6% to $70.98 billion while exports fell 7% to $40.26 billion.
  • Gold and platinum jewellery are flagged as primary concentration risks in India's FTA export basket, making overall export performance sensitive to global luxury demand and metal prices.
  • Export diversification into manufacturing, electronics, and pharmaceuticals is a stated objective of India's Production Linked Incentive (PLI) scheme.

Connection to this news: The NITI Aayog report's caution on export concentration underlines that trade volume gains from FTAs can coexist with structural weaknesses, a recurring theme in UPSC Mains discussions on trade policy.

Ongoing FTA Negotiations — Strategic and Economic Dimensions

India's current FTA pipeline reflects both economic priorities and geopolitical positioning. The US negotiations focus on securing preferential access for Indian goods amid tariff uncertainty; the GCC FTA targets India's largest remittance source region; the Canada CEPA pursues technology and services linkages.

  • India–GCC FTA: Terms of Reference (ToR) were signed in early 2026 to formally launch negotiations; the first negotiating round is expected in the second half of 2026 following delays due to the West Asia conflict.
  • India–Israel FTA: First round of negotiations was held in February 2026.
  • India–Canada CEPA: ToR for the Comprehensive Economic Partnership Agreement have been signed; formal negotiations are advancing.
  • India–US: Discussions centre on a limited trade deal covering tariff reductions on specific goods categories.

Connection to this news: The report contextualises ongoing negotiations against the backdrop of India's existing FTA performance, providing policymakers with evidence on what mix of partner types and agreement structures has driven trade growth.

Key Facts & Data

  • FTA trade share: 4.6% in 2006 → 28.8% in 2024 (nearly six-fold increase)
  • Exports to FTA partners (Q3 FY26): $40.26 billion (down 7% YoY)
  • Imports from FTA partners (Q3 FY26): $70.98 billion (up 6% YoY)
  • India has signed 13 Regional Trade Agreements to date
  • India-UK FTA signed: July 24, 2025
  • India-UAE CEPA (2022): 97% of UAE tariff lines offering duty-free access to Indian goods
  • India-ASEAN Trade in Goods Agreement: in force since 2010; covers a market of ~1.8 billion people
  • NITI Aayog Trade Watch Quarterly seventh edition covers Q3 FY 2025-26 (Oct–Dec 2025)
  • Key risk flagged: export basket concentration in gold and platinum jewellery
  • GCC first negotiating round expected: second half of 2026
  • India-Israel FTA: first round of negotiations held February 2026
On this page
  1. What Happened
  2. Static Topic Bridges
  3. Free Trade Agreements (FTAs) — Types and Legal Framework
  4. Trade Watch Quarterly — NITI Aayog's Monitoring Role
  5. Trade Deficit, Export Concentration, and Diversification Risk
  6. Ongoing FTA Negotiations — Strategic and Economic Dimensions
  7. Key Facts & Data
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