In recent years, New Delhi has used free-trade agreements (FTAs) and bilateral trade deals as an important tool to increase its geo-economic influence. This marks a major shift for a country dependent on domestic consumption.

In 2025 alone, India signed major trade agreements with the United Kingdom, Oman and New Zealand, while negotiations resulted in an important FTA with the European Union in January 2026. Although no formal agreement has been signed yet, India and the US have also formally announced a trade deal. The US has agreed to reduce tariffs on Indian exports to 18% from 50%. According to analysis by the International Institute for Strategic Studies (IISS), trade agreements have now become a core component of India’s economic and strategic toolkit.

Since 2021, India has inked multiple trade agreements after signing none in the previous decade. Its growing economic size has improved bargaining power, with GDP estimated at about $4.1 trillion in 2025, more than double its 2011 level. India is projected to become the world’s fourth-largest economy in 2026.

Trade diversification is vital for India because goods exports have lagged behind services exports. In FY2024–25, goods exports rose marginally to $437.7bn, while services exports jumped 13.6% to $387.5bn.

India has maintained high trade barriers despite opening up its economy in 1991. However, policy has shifted since 2021 towards cutting trade barriers through FTAs, preferential deals and broader economic cooperation agreement covering investment, services mobility and regulatory cooperation.

India’s earlier pacts with East and Southeast Asian economies yielded mixed results, often widening trade deficits with partners such as South Korea and Japan. Exports to ASEAN markets even declined in FY2024–25. As a result, India is renegotiating older agreements with ASEAN, Japan and South Korea to improve export competitiveness.

According to IISS, a major inflection point in policy was India’s withdrawal from the Regional Comprehensive Economic Partnership (RCEP) negotiations in 2019 due to concerns over import surges, particularly from China, and political sensitivity around agriculture and dairy.

Instead of joining large trade blocs, India has pursued bilateral agreements where it has greater negotiating leverage. With the New Zealand agreement coming into force in 2026, India will have trade deals with 14 of the 15 RCEP members, excluding China. However, bilateral deals do not offer the same integrated market advantages as bloc membership.

Recent agreements are broader in scope than deals signed previously. The 2022 agreement with the UAE aims to raise non-oil trade to $100bn by 2030. Talks with Australia seek to expand an interim pact into a full agreement aimed at doubling trade by 2028.

The UK agreement, signed in 2025, is India’s first comprehensive deal with a major Western economy and targets doubling bilateral trade by 2030, with duty-free access for nearly all Indian exports. Oman and New Zealand have also opened almost their entire markets to Indian exports, though dairy remains protected in line with India’s longstanding sensitivities around agriculture.

Attention in 2026 is now focused on concluding a trade deal with the United States, India’s largest export market. In FY2024–25, exports to the US reached $86.5bn, or 20% of India’s total goods exports. Exports to the EU accounted for 17%, making the January 2026 EU agreement especially significant.

The India–EU FTA, concluded after negotiations that began in 2007, is the biggest trade agreement either side has signed in terms of goods coverage. It grants India preferential access across most tariff lines, benefiting sectors such as pharmaceuticals, textiles, machinery and agriculture while also improving services access.

Beyond major markets, India is pursuing agreements across the Gulf, Eurasia and Latin America. Talks are under way with Bahrain and Qatar while negotiations with the Eurasian Economic Union started in late 2025. India is also seeking expanded agreements with Chile and Peru, partly to secure access to critical minerals.

Parallel to trade negotiations, India has initiated domestic reforms to improve investment conditions, including tax and labour law changes and easing quality control rules that had disrupted supply chains.

Looking ahead, India’s experience from recent negotiations is expected to give a major boost to future deals. If ongoing discussions conclude successfully, India would have trade agreements with almost all G20 members except China and Turkiye.

IISC argues that trade agreements alone will not guarantee success. Infrastructure corridors such as the India–Middle East–Europe Economic Corridor could boost connectivity but remain slow to operationalise. Domestic industries will also need to adapt to increased foreign competition at home.

Ultimately, trade deals represent only the first step. Achieving India’s goal of becoming a developed nation by 2047 will depend on domestic economic reforms, improved ease of doing business and the ability of Indian firms to capitalise on expanded market access. Planned tariff and customs simplification measures in the upcoming Union Budget are expected to further support this transition.