Countries enter Free Trade Agreements because there are multiple benefits associated with FTA’s. It will increase efficiency, It also increases the allocation of resources. It also helps to gain access to goods that cant or will not be produced domestically. The international competition, the increased technology transfers, the ensuing economies of scale all lead to lower prices, increase on consumer choices and also increase economic growth.

Free Trade Agreements are expected to bring about structural changes leading towards efficiency and technological progress. India has 13 active Free Trade Agreements (FTAs) and has signed multiple agreements with different countries like European Union, Mauritius, UAE, UK, Australia etc. The agreements either reduce or eliminate import tariffs, non-tariff barriers, which promote trade and investments.

Types of Trade Agreements

1. Free Trade Agreements FTA’s agreements involve the reduction or elimination of tariffs on goods traded between trading countries.FTAs cover a broader range of products and typically use a negative list approach, specifying items that are excluded from tariff reductions. An example is the India- Sri Lanka Free Trade Agreement. FTAs are different from Preferential Trade Agreements (PTAs).

2. The Comprehensive Economic Cooperation Agreements and the Comprehensive Economic Partnership Agreements are often more extensive than Free Trade Agreements. CECA and CEPA often cover not only goods but also services, investment and regulation. Example – India-Korea CEPA India and Mauritius signed a CEPA in 2021. It was the first trade agreement between India and an African nation. The trade agreement covered goods, services, investment and intellectual property.

3. Then, there are Preferential Trade Agreements, which provide selective tariff reductions on specific goods rather than complete elimination of tariffs. Example – India-MERCOSUR PTA.

The author has selected a few Free Trade Agreements that India has signed to explain her points and justify the conclusions.

India-UAE: India-UAE have also signed Comprehensive Economic Partnership Agreement. The aim is to increase the bilateral trade between the two nations and to boost bilateral trade.

India- Australia: There is also an FTA between India and Australia for enhanced economic cooperation.

India-European Union: The India-European Free Trade Agreement has been hailed as ‘the Mother of All Deals’. It will come into effect in 2027. This FTA claims to protect small farmers, defence, counter-terrorism and cyber security etc. Tariffs on European cars will be brought down from 110% to 40% and then to 10%. The tariffs on wine is expected to be brought down. The tariff on Olive oil is to be brought down from 45% to 0%. It is expected to give a grand boost to our labour-intensive sectors like textiles, gems and jewellery, footwear, chemicals etc

India-GLC India has also entered into an agreement of Terms of Reference with GLC, a group of Gulf countries comprising of Oman, Saudi, Bahrain, Qatar, Kuwait, UAE. India secures $178 billion Trade deal with Gulf Nations.

India and New Zealand The Free Trade Agreement signed between India and New Zealand covers trade in goods, services and investment. Most of the exports to New Zealand from India will have zero tariffs. There would be zero duty access, mobility of workers. In 2024-2025, trade was $ 1.3 billion. It is expected to rise to 2.4 billion dollars. India gets access to key input – wooden logs, coals, metal works. There will also be cooperation in Ayush, horticulture etc .The idea is to ease quantitative import restrictions, easing customs procedure, improving market access for secure exports.

India-UK There would be tariff cuts for 99% exports to UK. 90% of U.K. exports to India would be able to get preferential access - 64% with immediate duty cut. It covers 100% of bilateral trade. There will be a reduction of tariffs on goods across key sectors. It improves market access for India and U.K. companies. It eases mobility of professionals through Visa and qualifications reforms. It boosts bilateral investments.

India-Oman

Oman will allow 99.3% of Indian goods, duty-free into Oman. The bilateral trade is expected to become greater than 10 billion dollars. The labour-intensive industries of India like Gems and Jewellery, Pharmacy, leather and footwear, textiles etc will get benefits. In 2024-2025, exports to Oman were 0.93% of our total exports.

Thus, India has signed multiple Free Trade Agreements with a number of countries and this sure to have a lasting impact on both India’s domestic market and increasing its global trade presence. Some agreements are in their nascent stages and others are almost complete. This enhanced economic cooperation is sure to have a greater multiplier effect and help all trading partners. Thus, one may safely assume that there will greater economic benefits to India because of signing various Free Trade Agreements as long as we don't open up our sensitive sectors like defence and agriculture to global forces.