India's biggest trade bet comes with six red flags

Published 9 June 2026 · local

Live Events Trade deficits widening much faster with key FTA partners Tariff asymmetry lies at the heart of the problem Why Indian exporters barely use

Live Events Trade deficits widening much faster with key FTA partners Tariff asymmetry lies at the heart of the problem Why Indian exporters barely use FTA benefits FTAs worsening India's inverted duty structure Manufacturing may be shifting abroad New-generation FTAs increasingly shape domestic policy Government procurement concerns Intellectual property and pharmaceutical concerns Data exclusivity pressures Digital trade and data sovereignty EU carbon measures could neutralise FTA gains Competitiveness, not FTAs alone, will determine outcomes as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel India's free trade agreement playbook is expanding rapidly, but a new report suggests the results are becoming harder to celebrate.As New Delhi pursues trade deals across Europe, the Gulf and North America, a report by the Global Trade Research Initiative (GTRI) warns that several structural weaknesses are deepening. Rising trade deficits, limited use of FTA benefits by exporters, manufacturing distortions and growing regulatory burdens are among the issues that could erode the gains from India's widening network of trade agreements.The findings are outlined in GTRI's FTA Report Card 2026, which evaluates the performance of existing agreements and highlights risks that could influence future negotiations.The report comes at a crucial juncture for India's trade policy. The country has 15 operational FTAs covering 27 countries, while another nine agreements involving 42 countries are awaiting implementation, nearing conclusion or under negotiation. Together, these 69 countries account for 75.3% of India's exports and 65.5% of its imports.With FTAs increasingly central to India's trade strategy, GTRI argues that the focus has been disproportionately on the pace and scale of deal-making rather than on measurable economic outcomes.The report identifies six challenges that policymakers can no longer afford to overlook: widening trade deficits, low utilisation of preferential market access by Indian exporters, worsening inverted duty structures, the shifting of manufacturing activity to partner countries, expanding obligations under new-generation trade agreements, and emerging carbon-linked trade barriers, particularly from the European Union.The report's most prominent concern is the sharp deterioration in India's trade balance with several countries that have long-standing FTAs with India.According to GTRI, India's trade deficit with ASEAN countries increased by 381.4% between the pre-FTA period of 2007–09 and 2023–25. The deficit with South Korea rose by 267.9%, while the gap with Japan expanded by 317.9%.The numbers reveal a significant divergence from global trends. During the same period, India's trade deficit with the rest of the world increased by 142.2%.The report notes that over the past three years, India's average annual trade deficit with ASEAN, Japan and South Korea has reached roughly $62 billion.A closer look at the data shows the scale of the change.With ASEAN, India's average annual trade deficit widened from $6.8 billion before the FTA to $33 billion in 2023–25. With South Korea, it expanded from $4 billion to $14.7 billion. In Japan's case, the deficit increased from $3.4 billion to $14.2 billion.The trend is also visible in India's newer trade agreements.In FY2025, India exported $48.6 billion worth of goods to the UAE, Australia, Mauritius and EFTA countries combined.