India's Bold Moves in Global Trade: What You Need to Know
Strengthening Economic Ties Amid Global Challenges
New Delhi: This year, India has intensified its pursuit of new economic and trade alliances in response to increasing global market uncertainties, particularly those stemming from US tariff issues.
India has successfully signed three significant free trade agreements (FTAs) with the UK, New Zealand, and Oman, while discussions with the European Union (EU) are ongoing. These agreements are expected to boost trade, enhance competitiveness, attract high-quality foreign investments, and provide better access to advanced technologies and markets.
The agreements have been structured to ensure fair terms for India, allowing greater access for its manufactured goods and skilled labor. Simultaneously, the government has taken measures to shield the agricultural sector from foreign competition, safeguarding the livelihoods of farmers.
In July, India finalized a Comprehensive Economic and Trade Agreement (CETA) with the UK, granting duty-free access to 99% of its exports to the UK, which encompasses nearly the entire trade value. This is particularly advantageous for labor-intensive industries such as textiles, leather, marine products, gems, engineering goods, chemicals, and auto components.
Importantly, the CETA also addresses services, a vital component of India's economy. In 2023, India exported over $19.8 billion in services to the UK, and the CETA is set to further enhance this figure.
Moreover, for the first time, the CETA facilitates easier mobility for professionals in sectors like IT, healthcare, finance, and education, allowing smoother entry for various service providers.
India's trade agreement with the EFTA countries—Switzerland, Norway, Iceland, and Liechtenstein—was operationalized in October after being signed in 2024. This agreement enhances market access for over 99% of India's exports to these nations, including pharmaceuticals and engineering goods. The EFTA countries have also pledged to invest $100 billion in India, which is expected to create one million jobs.
The recently signed India-New Zealand FTA will eliminate duties on 100% of India's exports, benefiting farmers, MSMEs, artisans, and women-led enterprises, while also creating opportunities in labor-intensive sectors like textiles and footwear.
Additionally, sectors such as engineering, manufacturing, automobiles, electronics, and pharmaceuticals are poised to gain from this agreement. New Zealand has committed to facilitating $20 billion in foreign direct investment (FDI) into India over the next 15 years, focusing on manufacturing, infrastructure, and job creation.
The FTA also opens new avenues for India's services sector, including IT, finance, education, and tourism. New Zealand's first-ever annexes on health and student mobility present unprecedented opportunities for Indian professionals and students.
During Prime Minister Narendra Modi's visit to Muscat, India and Oman signed the Comprehensive Economic Partnership Agreement (CEPA), which unlocks new economic prospects in the Gulf region.
The CEPA offers significant tariff concessions from Oman, providing zero-duty access on 98.08% of its tariff lines, covering 99.38% of India's exports to Oman. Major labor-intensive sectors such as gems, textiles, and pharmaceuticals will benefit from full tariff elimination.
The services sector, a key driver of India's economy, will also reap extensive benefits. Oman imports a substantial amount of global services, with India's share at 5.31%, indicating considerable potential for Indian service providers.
The agreement includes a comprehensive services package, with Oman making significant commitments across various sectors, including IT, business services, and health services.
According to Commerce and Trade Minister Piyush Goyal, more nations are eager to strengthen ties with a resurgent and ambitious India, as the country's growing consumer demand and rapid economic growth create significant trade opportunities.