With President Donald Trump indicating that the US is “pretty close” to reaching a trade deal with India and the India-European Union (EU) trade agreement seemingly in sight, India could soon be implementing 12 bilateral free trade agreements (FTAs).
This marks a complete turnaround in India’s trade policies, from an FTA-sceptic before negotiations of the first of its major agreements with ASEAN (Association of Southeast Asian Nations) members were initiated in 2003, to one that is among the most active in signing bilateral trade deals.
India is now either implementing an FTA with each of the G7 countries or is engaged in negotiations to conclude one. It has FTA engagements with every East Asian country, barring China, and is engaged in at least a preferential trade agreement with countries in every region, except in Africa.
The recent series of FTAs, either being implemented or nearing completion, has been significant. Since 2022, agreements have been signed with the UAE, the UK, the European Free Trade Association (EFTA), and Mauritius, and an early harvest deal was completed with Australia, with the expectation that a comprehensive deal would be signed in the near future.
While negotiations are ongoing with Canada, Israel, and New Zealand, those with the two major economies, the US, and the EU have attracted most attention. India’s FTAs, including the ones being implemented or under negotiations, accounted for nearly 57% of its total trade in 2024-25, and almost 71% of exports.
Exports to the UK, the EU, the US, and Australia have grown impressively, driven by two industries, namely mobile phones and petroleum products; pharmaceuticals were also instrumental in increasing exports to the US. Mobile phone exports to the US grew spectacularly over the past five years.
The share of this product in India’s exports to the US increased from less than 5% in 2019-20 to over 18% in 2024-25. As much as 42% of India’s mobile phone exports went to the US last fiscal, increasing further to 67% during April-August of 2025-26.
Petroleum product exports to the EU, the UK, and the US have increased since India upped its reliance on cheap Russian crude, showing that the Western alliance continued to “indirectly” import Russian oil. The EU, which accounted for 13% of India’s petroleum product exports in 2021-22, increased its share to almost 24% in 2024-25.
The US was India’s third-largest market for petroleum products in 2022-23, pulling back its imports only in 2024-25.
While exports to the UK, the EU, and the US remained quite buoyant, imports from these countries were not quite so, resulting in a trade surplus with each of these partners.
The surplus with the UK trebled since the end of the previous decade, while the surplus increased by almost 2.5 times with the US. With the EU, India was able to turn a small deficit into a surplus that grew to $15 billion in 2024-25. However, FTAs with the ASEAN members, South Korea, and Japan—with whom India finalised its first three major FTAs—did not produce the expected benefits, namely helping India to substantially expand its presence in these markets.
In fact, exports to these countries remained sluggish during the decade and a half of the implementation of the three FTAs, while imports increased consistently. Thus, India’s trade deficit with these countries increased from $15 billion in 2010-11, or less than 13% of the overall deficit, to $73 billion, or 26% of the overall deficit.
Not surprisingly, the present government had prioritised a review of these FTAs to identify the reasons for the widening of India’s trade deficit. Reviews of the agreements with ASEAN and Korea are ongoing.
What does the future portend for India’s FTAs with major trade partners, especially from its market access perspective? India’s exports to the UK, the EU, and the US must respond to two sets of challenges if it has to maintain even moderate levels of trade surpluses with these partners.
First, President Trump’s policies could be disruptive, particularly for mobile phone and petroleum exports. In response to Trump’s pressure on American companies to invest domestically, Apple has promised investments of $600 billion over four years so “that iPhones sold in the United States of America are also made in America”.
Apple’s move to establish manufacturing facilities in the US to serve its domestic market could jeopardise a sizeable share of India’s mobile exports. India’s exports of petroleum products could also be affected if India yields to President Trump’s pressure to stop importing crude oil from Russia.
Secondly, trade surpluses with the US and the EU, in particular, could be dented to a significant extent as India prepares to open its market at the end of the ongoing FTA negotiations. Of course, this could change if India can leverage the market openings offered by its partner countries well enough to maintain its exports, something it could not do with its FTA partners in East Asia.
The silver lining is that there are indications that exports to India’s FTA partner countries in East Asia could improve significantly. Automobile exports to Japan increased almost three-fold in 2024-25 as compared to the previous year, as Japanese companies are using India as a production base for several vehicles, which are exported to the Asian nation.
Moreover, each of these countries has seen progressively higher levels of mobile phone exports in recent years, which is a positive augury. India must leverage these developments while reviewing the FTAs with its East Asian partners to push for substantially improved market access in these countries.
The writer is a distinguished professor at the Council for Social Development, New Delhi
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