India has focused on partners with whom trade complementarities are already strong, logistics are efficient, and economic interests are aligned.
The results are clear: between fiscal years 2020–21 and 2024–25, India’s merchandise trade with strategic partners covered by FTAs grew by 92%, compared to 41.5% growth in India’s total merchandise trade with the rest of the world.
This marks a clear break with past trade strategies. India is increasingly choosing partners with whom bilateral trade was already expanding and where agreements can amplify an existing dynamic, rather than attempting to build new trade relationships from scratch. FTAs are thus being used to consolidate and accelerate trade corridors that already show strong potential.
Between fiscal year 2020–21 and 2024–25, India’s total trade with countries covered by FTAs signed since 2021 increased by 92%, far outpacing the 41.5% growth in India’s overall trade. The share of these partners in India’s total trade basket rose from approximately 11–12% in FY 2021 to nearly 16.5% in 2025. This shift reflects a deliberate strategy to prioritise bilateral economies with high trade intensity, trade-oriented and aligned with India’s strengths in manufacturing, energy processing, pharmaceuticals, services and investment-driven growth.
European Free Trade Association (EFTA): investment commitments, not just tariffs
In 2024, India signed a trade agreement with the EFTA countries. A growth in merchandise trade of approximately 19% underestimates the importance of the agreement. Imports from EFTA are concentrated in high-value goods such as gold, precision instruments and chemicals, keeping trade volumes relatively stable.
The real value lies in the investment commitments incorporated into the agreement, technological collaboration and the creation of highly skilled jobs. The India-EFTA pact marks a transition from the view of FTAs as mere tariff instruments to their use as vehicles for capital formation and industrial modernisation.
It should be noted that on 27 January 2026, India and the European Union announced the conclusion of negotiations for a free trade agreement, defined as the “mother of all agreements”, under which 93% of Indian exports will benefit from tariff-free access to the 27-country bloc, while imports of luxury cars and wines from the EU will become cheaper.
United Kingdom: a high-income partnership
India signed an FTA with the United Kingdom in 2025. Trade between India and the UK grew by 76% between 2021 and 2025, even before the formal conclusion of the agreement. The UK is a high-income, high-standard market, where India competes strongly in the pharmaceutical, textile, engineering goods, chemicals, automotive components and services sectors. The agreement improves market access, addresses barriers in services and professional mobility, and strengthens investment links in technology, finance, advanced manufacturing, and clean energy. It reflects India’s confidence to compete in developed markets without compromising its domestic economic policy space.
Australia: resources at the service of manufacturing and the pharmaceutical industry
India signed an FTA with Australia in 2022. Since then, bilateral trade has grown rapidly, increasing by 96% between fiscal years 2020–21 and 2024–25. Australia supplies coal, critical minerals, metallic minerals, and other essential energy inputs to India’s industrial base, while India exports refined petroleum products, pharmaceuticals, machinery, textiles, and consumer goods. The agreement also strengthens ties in services, particularly in education and professional services, and supports cooperation in clean energy and critical minerals. From a strategic perspective, Australia helps India diversify supply chains and secure key resources for long-term growth.
New Zealand: clear complementarities
India signed an FTA with New Zealand in 2025. Trade grew by around 50% from a relatively small base, reflecting niche but well-defined complementarities. India exports pharmaceuticals, machinery and manufactured goods, while importing wool, agricultural products, metals and raw materials. The agreement is carefully calibrated: it balances market access with domestic sensitivities, especially in the agricultural sector, and includes an investment dimension that signals confidence in India’s medium-term growth prospects.
Mauritius: small trade volumes, high strategic value
The India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement functions primarily as a gateway agreement. Based on services, investment facilitation and financial cooperation, it formalises an already very close economic relationship. Although trade in goods grew by around 13% between 2021 and 2025, the importance of the agreement lies in strengthening regulatory cooperation and the institutional infrastructure that supports cross-border investment and services.
United Arab Emirates: the crown jewel of India’s FTA strategy
India signed an FTA with the United Arab Emirates in 2022. Bilateral trade grew from $43 billion in fiscal year 2021 to over $100 billion in 2025, an expansion of 131% in four years. India exports petroleum products, gems and jewellery, machinery, food, textiles and manufactured goods, while importing crude oil, petrochemicals, precious metals and intermediate goods. The UAE’s role as a global logistics hub amplifies these flows, while strong links in services and investment reinforce the partnership. This agreement demonstrates how trade intensity, logistics efficiency and sector alignment can generate scale and resilience.
Oman: energy, logistics and proximity
India signed an FTA with Oman in 2025, with bilateral trade increasing by 95% in four years. The relationship is based on energy imports, food, machinery, metals and logistics services. Geographical proximity and historical trade links give this corridor intrinsic strength, and the comprehensive nature of the agreement consolidates an already rapidly growing trade trajectory.
Conclusion: FTAs as accelerators, not experiments
India’s recent FTAs are not speculative exercises. They are rooted in trade corridors that were already growing rapidly during the post-COVID recovery. The 92% growth in trade with these partners — more than double India’s global trade growth — demonstrates that India signs agreements where complementarities are real, logistics are efficient, and economic interests are aligned.
As tariff commitments deepen, services provisions mature, and investments transform into new productive capacity, India’s trade with FTA partners signed since 2021 is set to more than double again by 2030. In a fragmented global context, India’s strategy of signing free trade agreements where trade already thrives could prove to be its most resilient and economically sound move.
