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India's FTA Pivot: From Signing Deals to Delivering Export Gains in 2026

A GTRI report emphasizes that India must now focus on translating its 18 existing FTAs into tangible export growth, particularly in key sectors like electronics and textiles. The 2026 trade outlook is challenging due to US tariff pressures and the EU's incoming Carbon Border Adjustment Mechanism (CBAM), which is already impacting steel exports. While merchandise exports may remain flat, services exports are a bright spot, expected to cross $400 billion. Ultimately, India's trade performance will depend less on external opportunities and more on domestic execution, including product quality upgrades and cost reduction.

Key Points: India Must Shift FTA Focus to Export Gains Amid Tough 2026 Trade

  • Shift from FTA talks to execution
  • Tough 2026 outlook with US tariffs & EU CBAM
  • Focus on electronics, engineering, textiles exports
  • Domestic execution key to growth
3 min read

With more than 18 FTAs so far, India must shift focus to deliver export gains amid tough 2026 trade outlook: GTRI

GTRI report urges India to ensure existing FTAs boost exports in electronics, engineering & textiles as global protectionism and CBAM pose major 2026 challenges.

"With 18 FTAs already signed and more possible in 2026, India's priority must shift from signing deals to making FTAs deliver real export gains. - Global Trade Research Initiative"

New Delhi, December 25

With 18 free trade agreements already signed and more likely in 2026, India's priority must now move from negotiating new deals to ensuring existing FTAs translate into real export gains, particularly in electronics, engineering and textiles, highlighted a report by the Global Trade Research Initiative.

The report said India's total exports stood at USD 825 billion in FY25 and are expected to rise only marginally to around USD 850 billion in FY26, reflecting a challenging global trade environment.

Merchandise exports are likely to remain flat in FY26 due to weak global demand and rising protectionism, while services exports may cross USD 400 billion, providing the only meaningful cushion to India's overall trade performance.

It stated, "With 18 FTAs already signed and more possible in 2026, India's priority must shift from signing deals to making FTAs deliver real export gains".

According to GTRI, India is entering 2026 facing one of the toughest global trade environments in years.

Rising protectionism in advanced economies, weakening global demand and new climate-linked trade barriers are converging at a time when India is attempting to scale up exports.

As a result, the outlook is less about expansion and more about the challenge of holding ground.

The United States has emerged as a key pressure point. Under President Donald Trump, Washington has sidelined World Trade Organization disciplines in favour of steep unilateral tariffs.

India's exports to the U.S. fell by about 21 per cent between May and November 2025 under the current 50 per cent tariff regime.

GTRI warned that unless the U.S. rolls back the additional 25 per cent penalty tariff linked to India's Russian oil purchases or concludes a trade deal, exports to India's largest market risk further erosion.

Europe presents a different but equally costly challenge. The European Union is set to activate its Carbon Border Adjustment Mechanism (CBAM) from January 1, 2026, effectively imposing a carbon tax on imports.

Even before payments begin, compliance and reporting requirements have already pushed India's steel exports to the EU down by about 24 per cent. From 2026, EU importers will price Indian goods inclusive of CBAM costs, with payments to be settled through certificate surrender in 2027.

Despite these headwinds, there are signs of resilience. The report noted that even as exports to the U.S. declined, India's exports to the rest of the world rose by about 5.5 per cent, indicating gradual diversification of export markets.

With limited influence over global geopolitics, GTRI said India's strategy for 2026 must turn inward. Export growth will depend on upgrading product quality, moving up the value chain and lowering costs.

"In 2026, India's trade performance will be decided less by external opportunities and more by domestic execution," the report said.

- ANI

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Reader Comments

A
Arjun K
The EU's CBAM is a huge worry for our steel and aluminium industries. We need massive investment in green manufacturing, not just for exports but for our own future. Time to walk the talk on 'Make in India' with sustainable tech. 🇮🇳
R
Rohit P
21% drop in exports to the US is alarming! Trump's tariffs are hurting, but we also need to ask if our products are competitive enough. We can't just rely on cheap labor anymore. Quality and branding matter.
S
Sarah B
The silver lining is the 5.5% growth in exports to the rest of the world. Diversification is happening, which is crucial. We should double down on markets in Africa, Latin America, and our own neighborhood. Less dependency on the West is good in the long run.
V
Vikram M
"Domestic execution" – that's the key phrase. Our logistics costs are still too high, and getting clearances is a headache. Before asking for more FTAs, fix the ground-level issues for exporters. Ease of doing business needs to be real, not just on paper.
K
Karthik V
Services exports crossing $400 billion is the real hero here! 💪 Our IT and professional services are world-class and less vulnerable to these tariffs and carbon taxes. We need to promote this strength even more while fixing the goods export problem.
N

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