India has been actively working on establishing trade agreements (FTAs) with partners both at a bilateral and regional level to boost domestic manufacturing driven by exports. These efforts, under the umbrella of India’s Free Trade Agreements (FTAs), aim to strengthen the nation’s economic ties, enhance market access, and drive significant growth in various sectors. 

These FTAs cover a range of topics including reducing tariffs that impact the manufacturing and agricultural sectors overseeing services trade regulations digital issues, like data storage rules protecting intellectual property rights that may affect access to medicine and promoting investments while ensuring facilitation and protection. 

Over the five years India has sealed 13 FTAs with its trade partners. Some notable deals include the India Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA) the India UAE Comprehensive Partnership Agreement (CEPA) since May 2022 and the India Australia Economic Cooperation and Trade Agreement (IndAus ECTA) in force since December 29 2022. 

Furthermore India is currently in talks, with the UK, Canada, the EU and Israel to finalize FTAs. 

List of major free trade agreements 

Major Free Trade Agreements 

ASEAN-India Free Trade Area:

The ASEAN India Trade Area (AIFTA) has created a free trade market that benefits a population spanning ASEAN and India with a combined GDP of US$4.8 trillion. This agreement has led to the reduction of tariffs, on a range of products including items like palm oil, pepper, black tea and coffee. 

Asia Pacific Trade Agreement: 

The Asia Pacific Trade Agreement (APTA) also known as the Bangkok Agreement includes countries such as Bangladesh, India, Laos, China, Mongolia, South Korea and Sri Lanka. APTA aims to promote growth among its member nations through trade and investment liberalization measures covering goods and services to boost trade and economic cooperation. 

India-Japan Comprehensive Economic Partnership Agreement: 

The India Japan Comprehensive Economic Partnership Agreement (CEPA) has removed duties on 90% of goods traded between the two countries. Various sectors like textiles, pharmaceuticals, agriculture products, tea, petrochemicals,cement and jewelry benefit, from these reduced duties. 

India and South Korea Economic Partnership Agreement:

In the economic partnership agreement, between India and South Korea South Korea has cut tariffs on 17 goods while India has reduced import duties on 11 products. The deal also relaxes restrictions on investments in both countries and enhances market access for Indian service sectors such as IT, engineering and finance in South Korea. 

India Singapore Economic Partnership Deal: 

The economic partnership agreement between India and Singapore has resulted in the reduction or elimination of tariffs on items. This pact also eliminates tariff barriers deals with taxation issues simplifies regulations and promotes cooperation among financial institutions in both countries. 

Asian Free Trade Area (SAFTA):

The South Asian Free Trade Area (SAFTA) is designed to eliminate customs duties, on all traded goods.

SAFTA classifies Bangladesh, Bhutan, Maldives and Nepal as the Contracting States (LDCs) while India, Pakistan and Sri Lanka are categorized as Non Least Developed Contracting States (NLDCs).

According to the SAFTA Agreement there is a tariff reduction plan in place. NLDCs are expected to lower tariffs to 20% within two years while LDCs will reduce them to 30%. Over the five years (six for Sri Lanka) non LDCs will decrease tariffs from 20% to 0-5% whereas LDCs will do so over an eight year period. NLDCs aim to reduce tariffs on L.D.C. Products to 0-5% within three years. This plan applies to all tariff lines except those listed as items, by member states.

India-UAE Comprehensive Economic Partnership Agreement (CEPA):

Regarding the India UAE Comprehensive Economic Partnership Agreement (CEPA) it is expected to have an impact on around US$26 billion worth of goods that currently face a 5% import duty in the UAE. The UAE has committed to removing duties on 97% of its tariff lines, which make up 99% of imports from India. This move will result in 90% of India’s exports to the UAE becoming duty free immediately after the CEPA is put into effect. The UAEs offer of zero duty market access includes sectors like gems and jewelry textiles, leather goods, footwear, sports equipment, plastics, furniture, agriculture and wood products, engineering goods, pharmaceuticals, medical devices and automobiles. Additionally the UAE could potentially become a location for sourcing capital goods and intermediates for enhanced value added exports, to Africa and Europe. 

An important aspect of this deal is the inclusion of a section, on Pharmaceuticals, which aims to simplify the process for accessing pharmaceutical products. It allows for registration and marketing approval within 90 days for products that have been sanctioned by bodies in the United States, United Kingdom, European Union and Japan. 

India Australia Comprehensive Economic Partnership Agreement (CEPA):

Australia officially endorsed the India Australia Economic Cooperation and Trade Agreement (ECTA) on November 22. As per this agreement Australia will abolish tariffs on all of its tariff lines encompassing a range of sectors totaling 6,000. In return India will eliminate tariffs on 90% of exports that include meat, wool, cotton, seafood, nuts and avocados. The pact is anticipated to promote trade liberalization enhance market access opportunities and enable movement of people between both nations. It is poised to benefit exporters, businesses, employees as consumers in both countries. The implementation of this trade deal is forecasted to generate around one million job opportunities in labor sectors like textiles and apparel industries along with specific agricultural produce categories, like fish products, leather goods, footwear, furniture, sports equipment, jewelry, machinery, electrical appliances, and railway carriages. 

Preferential Trade (PTAs) 

India’s Preferential Trade Agreements (PTAs) aim to enhance trade relationships with other nations by reducing tariffs and opening up new market opportunities. These agreements have strengthened India’s position as a favorable destination for both exporters and importers. 

Key strategic advantages of PTAs for India’s growth include enhanced technology transfer, greater economic integration, and alignment with national standards. Essentially, a PTA is a formal accord between countries that offers preferential access to certain products by lowering tariffs and easing other trade barriers. 

India has entered into six specific Preferential Trade Agreements: 

• Asia Pacific Trade Agreement (APTA) 
• Global System of Trade Preferences (GSTP) 
• SAARC Preferential Trading Agreement (SAPTA) 
• India-Afghanistan PTA 
• India-MERCOSUR PTA 
• – India-Chile PTA 

Double Tax Avoidance Agreements (DTAAs) 

India boasts one of the networks of tax treaties aimed at preventing double taxation and curbing tax evasion. With, over 94 DTAAs and eight limited DTAAs in place Indias efforts in this area surpass Chinas 110 agreements and Vietnams 80. These tax treaties serve to establish a system for determining which country has the right to levy taxes on types of income between the countries involved. 

Impact of Free Trade Agreements 

• The implementation of Indias FTAs has played a role in driving its growth. Notably India witnessed an increase in merchandise exports from USD 330 billion in 2019 20 to USD 418 billion in 2021 22 reflecting a growth rate of 27% attributed to FTAs. 
• The textile industry experienced an upsurge with exports growing by 15% to reach USD 44 billion in the year 2021 22. Similarly the pharmaceutical sector recorded an increase of 18% amounting to USD 24.6 billion during the period. 
• In the year 2021 22 India saw a surge in total trade volume by as much as 21% reaching USD 1.27 trillion underscoring the positive impact of FTAs on expanding trade opportunities. 
• Through FTAs Indian products have become more competitive globally due to significant tariff reductions ranging from 80% to full elimination, on various goods. 
• Customers benefit from decreased tariffs leading to a drop, in the tariff rate from 13.5 percent in 2017 to 10.2 percent, in 2021. 

Future of India’s Free Trade Agreements 

India is currently, in talks to set up Free Trade Agreements (FTAs) with the UK, Canada and the EU. The focus of these agreements will be on sectors like services, digital trade and sustainable development. It is anticipated that the FTA with the UK could increase trade by USD 15 billion by 2030. Moving forward upcoming FTAs are likely to prioritize advancements in trade. Forecasts suggest that the digital economy could contribute an USD 1 trillion to Indias GDP by 2025. 

The shift towards supply chains and the impact of events such, as US China trade tensions are influencing Indias FTA strategies to ensure they align with global trade trends.