The problem with India’s free trade agreement strategy
Over the past few years, India has shown its great interest in trade diplomacy to promote its economic and strategic interest thereby steadily weaving an
Over the past few years, India has shown its great interest in trade diplomacy to promote its economic and strategic interest thereby steadily weaving an expanding network of bilateral free trade agreements to secure greater market access while reinforcing its broader economic and strategic partnership. India’s new founded enthusiasm in external engagement has culminated in trade agreements with United Arab Emirates, Australia, Oman, the United Kingdom, the European Union, and most recently, New Zealand. Its imperatives to enhance market access continue to extend the reach of its trade architecture through ongoing trade talks with United States, Gulf countries and Canada, highlighting a decisive shift towards bilateralism as vehicle of market access and value chain integration and economic dynamism.
There is an emerging view among policymakers, trade diplomats and geopolitical analyst that FTAs are indispensable instruments of greater market access, integration in global value chains, industrial dynamism and a source of competitiveness. India’s expanding network of FTAs is hailed as a hallmark of economic statecraft. However, the enthusiasm on enhanced market access through trade agreements and GVC integration is founded on set of implicit assumptions and dominant narratives that continue to maintain a striking analytical silence. The standard argument that FTAs stimulate export growth and GVC integration warrants a far more nuanced view.
India’s FTA experience with Asian economies have been not be favorable. India’s trade with key FTA partners such as Association of Southeast Asian Nations (ASEAN), South Korea, Japan and Singapore has become increasingly import-driven, resulting in widening trade deficits. Data shows that India’s trade deficit with ASEAN increased sharply from US$10.4 billion in 2012 to US$51.2 billion in 2025, driven by rapidly rising imports. In the same manner, imports increased at much faster pace than exports in case of Japan and South Korea.
India’s trade surplus has turned into trade deficit in case of Singapore after signing the trade agreement exhibiting weakening export competitiveness.
The BriefWire