Mega FTA wave to bring 60% of India's trade under preferential regime

India is on the cusp of a trade liberalisation milestone, with a cluster of Free Trade Agreements in various stages of negotiation set to bring 60% of the country's total trade under a preferential tariff framework, The Economic Times reported. The figure represents a dramatic expansion from the current coverage and would mark a turning point for an economy that has long been among the world's more protected large markets.

The deals in play span virtually every major trading bloc. Alongside the high-profile interim pact with the United States, India is in advanced stages of negotiations with the European Union and the United Kingdom — both of which have been in progress for years — as well as ongoing engagement with the Gulf Cooperation Council and other partners in Southeast Asia and beyond. Together, these agreements would cover a substantial majority of India's merchandise and services trade flows.

The shift reflects a strategic recalibration in New Delhi's trade posture, driven partly by the urgency of the U.S. tariff situation and partly by a broader recognition that India needs preferential access to grow its manufacturing exports and attract global supply chains relocating out of China. Sectors like textiles, pharmaceuticals, engineering goods and electronics stand to gain the most from reduced tariffs in key destination markets.

The challenge, however, lies in sequencing and domestic sensitivity. Opening markets to cheaper imports from the EU or the UK, for instance, carries political risk in sectors like agriculture, automobiles and dairy. How India manages those tradeoffs — through safeguards, sunset clauses or phased liberalisation — will determine whether the FTA wave becomes a growth catalyst or a source of political friction.