In what could be a landmark year for India’s trade landscape, 2026 is shaping up to be pivotal, with the country recently finalizing two major trade agreements that signify a major shift in its economic policy and international engagement. Before March even began, India completed what has been hailed as the "mother of all trade deals" with the European Union (EU) and the "father of all trade deals" with the United States (US). Despite enthusiasm surrounding these agreements, there remain significant reservations about the interim nature of the deal with the US, which critics argue is heavily skewed in America’s favor.
These recent agreements mark India’s tenth free trade agreement (FTA) since 2014, highlighting a decisive departure from the protectionist policies that had previously stalled trade negotiations with many countries for years. In addition to these landmark deals, India has also agreed to initiate talks for an FTA with the Gulf Cooperation Council (GCC), a bloc of six nations that together account for roughly 15% of India’s global trade. Taken together, these developments indicate a clear directional shift toward greater economic openness and global integration.
However, experts caution that while these FTAs are directionally positive and can open new avenues for trade, they are not a panacea for accelerating export growth. More profound structural reforms are needed to fully capitalize on the potential benefits of these agreements. Sumedha Dasgupta, an analyst at the Economist Intelligence Unit, pointed out that the success of any FTA depends heavily on its utilization. Historically, India’s utilization rate of FTAs has been quite low—only about 25%—compared to utilization rates of 70% to 80% in developed economies. This low uptake is largely due to the heavy administrative burden on exporters, especially small and medium-sized enterprises, who face complex paperwork, audit risks, and a general lack of awareness about the specific provisions and benefits of these agreements.
Data from consultancy EY provides a telling illustration of this problem. Between 2017 and 2022, India’s exports to its FTA partners rose by 31%, but imports from those countries surged by 82%, highlighting an "alarming failure" to fully leverage preferential market access. However, a government review found that more recent FTAs signed since 2023, such as those with Australia and the United Arab Emirates, have demonstrated stronger export growth. This improvement has been attributed to better trade infrastructure and more efficient mechanisms for resolving disputes, indicating that reforms and investments in trade facilitation can have a tangible impact.
Despite these encouraging signs, significant challenges remain in the execution phase of these agreements. Kiran Kotla, CEO of Dista, a company specializing in export compliance and documentation, noted that while FTAs create theoretical opportunities, the practical implementation often breaks down. Among the biggest issues exporters face are the complex Rules of Origin (RoO) requirements, high documentation costs, and non-tariff barriers such as varying testing and labeling regulations, as well as inconsistent customs interpretations. Many exporters who technically qualify for tariff reductions still end up paying full duties because the process of proving eligibility is slow, risky, and expensive.
The Rules of Origin, in particular, are a sticking point. These rules require exporters to demonstrate that their goods are substantially manufactured or value-added in India rather than simply assembled from imported components. Under previous arrangements, the government issued origin certificates, but the new EU deal requires exporters to self-certify their products’ origin. According to the Delhi-based think tank Global Trade and Research Initiative (GTRI), this shift places the legal and financial risks squarely on the exporters’ shoulders. Incorrect claims can lead to severe penalties and recovery actions, meaning the success of the India-EU FTA will hinge on how well exporters understand and comply with these complex rules.
Beyond these procedural and regulatory challenges, more fundamental structural issues also need to be addressed if India is to compete effectively with Asian peers such as Vietnam in the lucrative US and EU markets. According to Kiran Kotla, competitiveness is ultimately achieved through operational excellence rather than just treaty negotiations. Vietnam’s success, for instance, is driven by factors like speed, predictability, and deep integration into global supply chains—not just tariff advantages. This translates into faster logistics, consistent customs clearance, reliable infrastructure, and lower transaction costs.
India’s manufacturing sector has not kept pace with this model. Unlike Vietnam or Bangladesh, which have aggressively pursued export-oriented manufacturing with export promotion policies and large-scale foreign direct