Trade Agreements as Catalysts for Export Competitiveness

In today’s fast-evolving trade environment, exporters are increasingly recognising that market success is shaped by the broader frameworks that govern global commerce. As countries take another view on economic alignments and trade rules, these shifts are silently but deeply reshaping the way Indian businesses trade with the world. With this as a backdrop, India’s expanding trade partnerships were examined, not as agreements in isolation but as indicators of the direction in global demand, on regulatory openness, and on strategic trust. In this section, we examine how these emerging dynamics are presenting new opportunities to Indian exporters and what these mean for the future of global trade.

Trade Agreements as Catalysts for Export Competitiveness

One of the most visible shifts in India’s export landscape today is the growing role of trade agreements as business enablers. Trade agreements in the preceding years have shifted from being a mere policy background to the very forefront of India's export ambitions. With global markets growing more intertwined and highly competitive, Indian exporters are increasingly seeing these trade agreements not as formalities but practical tools that provide real opportunities in the form of easier access, simplified customs procedures, and better recognition for Indian skills and services.

With India escalating its efforts in trade, a subtle shift can be noticed in the way businesses especially MSMEs are approaching international markets. This section will discuss what recent trade agreements are beginning to do towards changing the realities on the ground for exporters and what this possibly could mean in the near term.

India’s global trade strategy has been evolving over the past decade, and it gained momentum in 2024–25, with key agreements signed and major negotiations accelerating. In March 2024, India inked the Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA – Switzerland, Norway, Iceland, Liechtenstein), its first FTA with a European bloc. Talks toward a Comprehensive Economic Cooperation Agreement (CECA) with Australia have also launched, building on the 2022 trade pact. Meanwhile, negotiations with the United Kingdom (UK) and the European Union (EU) have been fast-tracked.

The India–UK Free Trade Agreement (FTA) was concluded in May 2025, after three years of talks, and the India–EU FTA was re-launched in 2022, covering 23 chapters. Discussions are likewise ongoing with the Association of Southeast Asian Nations (ASEAN) and other partners (Sri Lanka, Peru, etc.) to expand market access. These efforts reflect India’s push to boost exports and integrate domestic producers into global value chains.

India–EFTA Trade and Economic Partnership

In the India–EFTA TEPA signed on March 10, 2024, the four EFTA countries committed to high-profile investments and market openings. Union Minister of Commerce and Industry Mr. Piyush Goyal noted that, for the first time in the history of FTAs, there is a binding commitment of Rs. 8,54,500 crore (US$ 100 billion) investment and one million jobs in India over 15 years. The EFTA is offering duty-free access on 92.2% of its tariff lines, covering 99.6% of India’s exports. India reciprocated by opening roughly 82.7% of its tariff lines to the EFTA, with exemptions for gold and other sensitive items. Critically, the agreement includes robust services and digital commitments: it explicitly improves market access for Indian Information Technology (IT), business and professional services through digital delivery and by easing entry for key personnel. The TEPA even provides mutual recognition for professions, including nursing, chartered accountancy and architecture, which should help India’s IT and engineering firms expand abroad. The agreement preserves protections for India’s priority sectors, for example, sensitivity clauses were maintained for pharmaceuticals and processed foods under India’s PLI schemes, while opening new export opportunities in 105 industrial sub-sectors. Overall, the TEPA is designed to give a boost to the Make in India initiative and open opportunities for Indian exporters to enter large European and international markets.

India-UK Comprehensive Economic and Trade Agreement (CETA)

India’s landmark Comprehensive Economic and Trade Agreement (CETA) with the UK, signed on July 24, 2025, has been hailed as the most comprehensive free trade deal ever entered into by India. Under this agreement, Indian exporters will enjoy zero-duty access to nearly 99% of tariff lines, covering almost 100% of bilateral trade value. In practice, this means immediate liberalisation for the labour-intensive and medium-technology sectors: textiles, leather goods, footwear, carpets, marine products, engineering and auto components, sports goods, gems and jewellery, and other manufacturing (many of which formerly faced UK duties (4-16%) will enter the UK duty-free. India’s services sectors also stand to gain: the UK pact includes commitments that expand market access for IT/ Information Technology enabled Services (ITeS), financial services, professional services, education and other business services. The India-UK FTA explicitly covers digital trade: it locks in robust provisions for digitally delivered services, facilitating cross-border data flows and e-commerce for Indian IT firms.

The agreement also significantly enhances mobility for Indian professionals. It eases visa rules and extends short-term visas for intra-corporate transfers, contractual service suppliers, and even independent professionals (e.g., yoga instructors, musicians, chefs). In a notable concession under the linked Double Contribution Convention, Indian workers in the UK and their employers are exempt from UK social security contributions for the first three years of an assignment. This social-security waiver is expected to save Indian companies approximately US$ 460 million annually, benefiting over 60,000 professionals with enhanced visa flexibility. The UK side, in turn, secures tariff cuts on key imports (whisky, cosmetics, medical devices, automobiles, etc.). India has agreed to cut tariffs on roughly 90% of UK export lines (with phased reductions; whisky duties will reduce from 150% to 75% and then to 40% over 10 years, while auto duties will fall from over 100% to 10% under quota for 10,000 units. The deal is broadly balanced and will open new opportunities for businesses on both sides. The bilateral trade is targeted to reach US$ 120 billion by 2030, with UK pledging £6 billion in new FDI and estimating an annual GDP boost of £4.8 billion.

Other Negotiations and Agreements

Other trade discussions also continue apace. India and the EU formally re-launched their FTA negotiations in mid-2022; as of late 2024, nine rounds have been completed covering market access, services, digital trade and sustainability chapters. Talks are underway with the ASEAN as well: ministers agreed in late 2024 to complete the review of the ASEAN–India Trade in Goods Agreement by 2025, aiming to make the pact more user-friendly and address any inequitable tariff liberalisation. Negotiations with Australia on a CECA are building on the 2022 Economic Cooperation & Trade Agreement, adding new chapters on trade facilitation, gender and labour, among others. At the multilateral level, India has also been active in forums such as the World Trade Organization (WTO) and the United States-led Indo-Pacific Economic Framework, promoting issues, including digital commerce, sustainable supply chains, and anti-dumping rules, that dovetail with its FTA agenda. In short, India’s trade diplomacy covers concluding landmark deals and deepening terms in ongoing talks.

Implications for Indian Businesses

By design, these trade agreements translate into concrete gains for Indian industries and Small and Medium-sized Enterprises (SMEs). Government data underline how much is at stake: for example, Micro, Small and Medium Enterprises (MSMEs) already account for roughly 46% of India’s export value, so broader market access directly supports millions of small exporters. In practical terms, the UK FTA alone guarantees duty-free entry into the UK market for 99% of Indian export lines. This would benefit premium engineering products such as automobiles and high-value items, and in turn yield cost savings for governments through cheaper procurement. Likewise, the EFTA TEPA and other deals ensure that most Indian goods, including textiles, handicrafts, gems, and auto components, face little or no tariff abroad. The agreements also explicitly support digital trade and services. For instance, the UK pact secures commitments on architecture, engineering and telecom services, while EFTA provides for improved digital delivery of services and Mode-4 mobility. These provisions will help India’s IT services and precision engineering firms, as well as new economy sectors, to plug into global value chains.

Crucially, the FTAs embed facilities for small players. Digital trade chapters and single-window platforms (like the new Trade Connect portal) help micro and small exporters navigate foreign regulations and buyers. Mobility provisions, e.g., visa relaxations and the UK’s social-security waiver, lower the barrier for Indian professionals, consultants, and skilled workers to serve overseas clients. The Indian government releases highlight that such measures, combined with domestic export support, are tailored to integrate MSMEs and artisans into global supply chains.

Disclaimer: This information has been collected through secondary research. The views expressed by the spokespersons are their own and do not necessarily reflect those of IBEF. IBEF is not responsible for any errors in the same.