India's FTA Strategy Shift: 92% Trade Surge with Key Partners

In a decisive departure from earlier trade strategies, India is increasingly choosing partners where bilateral trade was already expanding and where agreements can amplify existing momentum rather than attempting to create new trade relationships from scratch, the article by Anna Mahjar-Barducci in the Australian Institute of International Affairs observed.

Between FY 2020-21 and FY 2024-25, India's total trade with countries covered by FTAs signed since 2021 rose by 92 per cent, far outpacing the 41.5 per cent growth in India's global trade. The share of these partners in India's overall trade basket increased from roughly 11-12 per cent in FY 2021 to nearly 16.5 per cent by FY 2025.

This shift reflects a deliberate strategy of prioritising high-intensity, bilateral, trade-oriented economies aligned with India's strengths in manufacturing, energy processing, pharmaceuticals, services, and investment-led growth.

The article cites the examples of India's recent FTAs with Australia, New Zealand, the UK, and the EFTA countries to drive home this point.

It highlights that after India signed the FTA with Australia in 2022, bilateral trade has grown rapidly, increasing by 96 per cent between FY 2020-21 and FY 2024-25. Australia supplies coal, critical minerals, metal ores, and energy inputs central to India's industrial base, while India exports refined petroleum products, pharmaceuticals, machinery, textiles, and consumer goods. The agreement also strengthens services links, particularly in education and professional services, and supports cooperation in clean energy and critical minerals. Strategically, Australia helps India diversify supply chains and secure key resource inputs for long-term growth.

IT further states that after India signed an FTA with New Zealand in 2025, trade has risen by about 50 per cent from a small base, reflecting the complementarities. India exports pharmaceuticals, machinery, and manufactured goods, while importing wool, agricultural products, metals, and raw materials. The agreement is carefully calibrated, balancing market access with domestic sensitivities, particularly in agriculture, and includes an investment dimension that signals confidence in India's medium-term growth prospects, the article stated.

India signed an FTA with the UK in 2025. India-UK trade expanded by 76 per cent between FY 2021 and FY 2025, even before the agreement's formal conclusion. The UK is a high-income, high-standard market where India competes strongly in pharmaceuticals, textiles, engineering goods, chemicals, auto components, and services. The agreement improves market access, addresses barriers in services and professional mobility, and strengthens investment ties in technology, finance, advanced manufacturing, and clean energy. It reflects India's confidence in engaging developed markets without undermining domestic policy space, the article explains.

India signed a trade deal with the EFTA countries in 2024. Merchandise trade growth of around 19 per cent understates the agreement's significance. Imports from the EFTA are concentrated in high-value items such as gold, precision instruments, and chemicals, keeping trade volumes stable. The real value lies in embedded investment commitments, technology collaboration, and high-skill job creation. The India-EFTA pact marks a shift from viewing FTAs purely as tariff instruments to using them as vehicles for capital formation and industrial upgrading, the article added.

- IANS