India's FTAs set stage for $1 trillion export target: Report
New Delhi, June 13
India's new generation of Free Trade Agreements can act as a catalyst for manufacturing expansion, private capex revival and supply-chain integration, with Electronics, Pharmaceuticals and Engineering & Machinery Goods positioned as the strongest beneficiaries. Yes Securities said the agreements, combined with PLI schemes and "China+1" diversification, give India its clearest shot yet at achieving US$1 trillion in merchandise exports by 2030.
"India's recent wave of FTAs marks a fundamental shift in economic strategy from cautious protectionism toward deeper global trade integration," Yes Securities said in its report.
The report said FTAs are no longer just about tariffs. "These FTAs are not merely trade agreements but represent the foundation of a multi-year industrial and export-led growth cycle," Yes Securities noted. Agreements with the UAE, Australia, UK, EFTA, Oman, New Zealand and the EU are being implemented alongside industrial corridors, port upgrades and supply-chain localization. That mix, the brokerage said, makes India one of the few economies with the scale, labour force and domestic market size to absorb large manufacturing relocation.
The biggest transmission mechanism may be investment. "One of the strongest arguments in favor of FTAs is their potential ability to revive India's stagnant private investment cycle," Yes Securities said. With capacity utilization around 75%, companies lack confidence for large capex. Exports through FTAs can provide sustained demand, improve utilization and economies of scale, and eventually trigger stronger private-sector investment, mirroring the East Asian path where exports catalyzed manufacturing expansion and capital formation.
Services are expected to remain a parallel engine. India is targeting US$2 trillion in total exports by 2030, split evenly between merchandise and services. Yes Securities said UK and EU agreements improve access for IT services, consulting, engineering R&D and financial services, reinforcing India's edge in skilled labour and technology.
But the brokerage cautioned that market access alone is not enough. "The strongest counterargument is that India's primary challenge lies not in market access but in domestic competitiveness," it said. Merchandise exports grew at just 3.5% CAGR over 2015-2025. Structural bottlenecks like high logistics costs, expensive power, compliance complexity and lower labour productivity remain. Without fixing these, FTAs could widen trade deficits if imports rise faster than exports.
— ANI
Reader Comments
Interesting analysis. The EU FTA could be a game-changer for pharma exports—Indian generics are already competitive, but easier market access would help. However, I worry about the devil in the details: IP clauses in these FTAs might hurt our generic drug industry long-term. Hope the negotiators are careful.
$1 trillion by 2030? Sounds ambitious but doable. The real challenge is domestic competitiveness. We've seen how PLI schemes helped electronics (hello iPhone assembly!), but power costs and compliance burden still kill SMEs. If we can't even get basics right, FTAs are just paper promises. Fix the ground-level issues first!
For services exports, yes! IT and consulting have huge potential with UK and EU deals. But we also need to invest in skilling—our engineering graduates are numerous, but quality varies massively. Otherwise, these agreements just benefit a few MNCs while small service firms struggle to compete. 🤔
I work in engineering goods exports, and tariffs under UAE FTA have already helped. But the report is right—private capex is stuck because nobody wants to invest when demand is uncertain. FTAs can provide that demand stability. The East Asian model worked for Korea and China; India can replicate it, but only if we improve ease of doing business.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.