india-s-focus-should-be-on-fta-implementation

India’s next major priority in the free trade agreement (FTA) space should focus on effective implementation and enabling exporters to fully utilise the benefits of these agreements, according to trade experts. They emphasised that the gap between negotiated market access and actual utilisation remains India’s biggest weakness in trade policy.

Experts noted that India’s FTA utilisation rate has historically remained around 25 per cent, significantly lower than the 70-80 per cent seen in many developed economies. Bridging this gap, they said, could become one of the most impactful trade policy reforms for the country.
The immediate focus now should be on ensuring that the advantages secured through trade negotiations are translated into real claims and export gains at the border.

“Hence, India’s next FTA priority should be practical implementation — helping exporters utilise these agreements effectively, tackle emerging trade barriers, and convert negotiated market access into sustained export growth,” said Gulzar Didwania, Partner at Deloitte India.

India has already operationalised trade agreements with countries and blocs including Singapore, Japan, South Korea, the UAE, Australia, ASEAN, and the EFTA grouping. It has also concluded negotiations for FTAs with Oman, New Zealand, the European Union, and the UK.
Didwania stressed that the policy narrative must now shift from merely signing FTAs to ensuring their active utilisation.

 

Also read: Consumer affairs ministry amends legal metrology rules

“India has already achieved major market-access gains, including duty-free access for 99 per cent of Indian exports to the UK under CETA and preferential access covering more than 99 per cent of India’s exports by trade value under the India-EU FTA,” he said.

He added that FTAs could also help shield India’s merchandise exports from geopolitical disruptions by opening alternative trade routes and improving access to strategically important markets.

According to Didwania, India should continue diversifying its export destinations and product mix while integrating more deeply into global value chains and strengthening domestic manufacturing competitiveness to reduce dependence on external shocks. Rudra Kumar Pandey also highlighted FTA utilisation as the country’s most urgent trade priority.

“The gap between negotiated market access and actual usage remains India’s weakest link,” he said, while noting that utilisation rates under the Australia ECTA have already touched 84 per cent. However, he pointed out that awareness among MSMEs remains limited and certification infrastructure is still underdeveloped across most agreements.

“Every export-oriented business must clearly understand the preferential access available under FTAs and have the necessary documentation and compliance mechanisms to benefit from them,” Pandey said.

He further noted that sectors where India has secured the most significant tariff concessions — including textiles, leather, engineering goods, pharmaceuticals, and marine products — now require targeted production-linked incentive (PLI)-type support to build manufacturing capacity and meet international quality benchmarks.

Pandey also stressed the importance of faster regulatory upgrades and standards alignment to satisfy compliance requirements in partner markets. This includes strengthening domestic certification systems, pursuing mutual recognition agreements that allow Indian testing and conformity assessments to be accepted abroad, and establishing carbon accounting systems that will increasingly become necessary for access to European markets.

“The firms likely to benefit the most from FTAs will be those capable of meeting partner-country standards on quality, traceability, and sustainability. Government support in the form of technical assistance and soft financing for MSMEs will therefore be crucial,” he said.

He also observed that India’s export profile is gradually moving toward higher-value manufacturing. Electronics, for instance, has increased its share in India’s export basket from 3.3 per cent to 7.9 per cent over the past decade, while machinery exports have grown from 3.8 per cent to 6.9 per cent. Smartphones have now emerged as India’s top export product.

At the same time, Pandey warned that this transition exposes India to new structural risks. High-value manufacturing sectors continue to depend heavily on imported inputs from China and East Asia, including electronic components, active pharmaceutical ingredients, chemicals, and non-ferrous metals.

Any disruption in the supply of these intermediates could directly affect India’s manufacturing and export capabilities, he said. He also pointed out that competing in developed markets such as the EU, UK, and US for advanced manufactured products requires access to sophisticated production technologies and capital equipment that India currently does not produce at scale.

“The best strategy is to treat the FTA network as India’s external market framework while focusing domestic policy efforts on building a strong production ecosystem capable of fully leveraging these agreements,” Pandey said.  He further emphasised the need to reduce input costs by maintaining lower tariffs on intermediates and capital goods so Indian manufacturers can remain globally competitive.

In addition, India must invest heavily in standards and certification infrastructure to ensure exporters can meet compliance requirements in overseas markets without incurring excessive costs. “It also means directing investment toward technology upgradation in sectors where India’s existing capabilities are already close to meeting FTA-driven market opportunities, allowing the country to maximise returns on investment,” he added.