India has been upbeat about expanding economic relations with other nations, especially the Global North. For India, trade deals and free trade agreements hold immense potential to tackle emerging disruptions and heightened protectionism. India’s recent FTA signing spree includes the India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement in 2021; the India-UAE Comprehensive Economic Partnership Agreement; the India-Australia Economic Cooperation and Trade Agreement in 2022; the Trade and Economic Partnership Agreement between India and the governments of the European Free Trade Association States in 2024; and the recent India-United Kingdom Free Trade Agreement in 2025. India’s strategic interest can also be understood in terms of strengthening the manufacturing base and an intent to boost foreign direct investment inflows. Given the increasing threats faced by supply chains and delays in access to critical resources, India is keen to become an important cog in the global supply chain by 2030.
On May 6, India and the UK signed a historic trade deal. Experts posit that the agreement certainly came at an opportune moment for both parties. Given the UK’s exit from the EU in 2020, London is keen to strike new partnerships to access fresh markets and enhance the competitiveness of its businesses. For India, this deal comes at a time when it is looking to derisk economically from China. This deal has the potential to boost trade in goods and services from $56.7 billion to $112 billion by 2030 between the two countries. Remittances from Indians in the UK also contribute majorly to India’s gross domestic product, comprising about 3.3% and amounting to $130 billion, as of 2024.
A swift finalisation of the India-UK deal definitely impacts New Delhi’s other FTAs that are in the making. The staggered trajectory faced by India-EU trade negotiations may possibly see the light of day later this year. As per sources, negotiations are focused on “removing tariff and non-tariff barriers on trade in goods, services trade, bilateral investment, rules of origin, sanitary and phytosanitary measures, and technical barriers to trade.” An India-EU FTA can potentially mitigate the economic risks of rising geopolitical tensions by bolstering capacities in climate-resilient technologies, Artificial Intelligence, infrastructure, connectivity, energy transition and so on. EU’s normative power, along with its high standards, regulatory mechanisms and ability to attract private financing models, can be tapped into through a partnership in various sectors.
The multilateral trade regime is rapidly eroding, especially in the face of the Trump 2.0 administration. The West is finding ways to dismantle the system to suit its own interests. Amidst this crumbling structure, Global South countries like India are applying cautious optimism towards trade pacts. Despite India inking multiple bilateral FTAs in the span of four years, New Delhi has remained wary of trade agreements at the multilateral level. To date, India has inked 13 regional trade agreements, including the Asia Pacific Trade Agreement in 1975; the ASEAN-India Free Trade Area in 2003 and the Agreement on South Asian Free Trade Area in 2006. New Delhi’s cagey approach to RTAs is also to maintain strategic oversight on China. Perceptible roadblocks also come in the form of elimination of tariffs to attract foreign investments for an export-driven economy for India; conflicting opinions on rules of origin from both sides; regulatory obstacles and quality control orders for manufacturing facilities; technical barriers to trade and sanitary and phytosanitary standards, to name a few.
Given India’s centrality to global geopolitics, it is critical to put in place an enabling mechanism that unites the diverse set of developing countries from the Global South. Trade agreements with like-minded partners can be shaped to bring more regulatory certainty rather than mere regulatory cooperation. India can set a precedent by distinguishing between barriers and opportunities with trade partners to safeguard against protectionism, especially amidst a defunct multilateral order.
Swati Prabhu is Fellow, Observer Research Foundation