March 19 – India has increasingly focused on trade partners where complementarities are already strong, logistics are efficient, and economic interests are closely aligned.
The outcome is striking. Between the 2020–21 and 2024–25 fiscal years, India’s merchandise trade with strategic partners covered by free trade agreements grew by 92 per cent, compared with 41.5 per cent growth in its total merchandise trade with the rest of the world. This signals a clear departure from earlier trade strategies.
Rather than attempting to build entirely new commercial relationships from scratch, New Delhi is now prioritising partners with whom bilateral trade was already expanding and where agreements can reinforce an existing momentum. In this approach, FTAs are being used not simply to open markets, but to strengthen and accelerate trade corridors that already show strong promise.
Between FY 2020–21 and FY 2024–25, the share of countries covered by FTAs signed since 2021 rose from about 11–12 per cent of India’s total trade basket to nearly 16.5 per cent in 2025. The shift reflects a deliberate strategy to prioritise economies with high trade intensity and interests that align with India’s strengths in manufacturing, energy processing, pharmaceuticals, services and investment-led growth.
India’s 2024 trade agreement with the European Free Trade Association (EFTA) countries illustrates this new thinking. While merchandise trade growth of about 19 per cent may appear modest, that figure understates the broader significance of the deal. Imports from EFTA countries are concentrated in high-value items such as gold, precision instruments and chemicals, which tends to keep overall trade volumes relatively stable.
The real value of the agreement lies elsewhere — in its investment commitments, scope for technological collaboration, and potential to create highly skilled jobs. In that sense, the India-EFTA pact marks a shift away from viewing FTAs purely as tariff-reduction tools and towards treating them as instruments for capital formation and industrial modernisation.
This evolving approach is also reflected in India’s engagement with the European Union. On January 27, 2026, India and the EU announced the conclusion of negotiations for a free trade agreement described as the “mother of all agreements”. Under the deal, 93 per cent of Indian exports will enjoy tariff-free access to the 27-member bloc, while imports of luxury cars and wines from the EU are expected to become cheaper.
