India’s recent trade breakthroughs with the European Union and the United States represent more than tariff reductions — they signal the country’s emergence as a confident, competitive economy ready to lead on the global stage, Prime Minister Narendra Modi said in a wide-ranging interview to PTI.

The India-EU Free Trade Agreement (FTA), concluded in January 2026 after nearly two decades of negotiations, and the February tariff breakthrough with the US form the centrepiece of what Modi described as a “sharp uptick” in India’s global economic engagement.

Modi drew a contrast between his government’s trade achievements and what he characterised as the “uncertainty and inconsistency” of previous administrations.

“During the years of the UPA government, they tried to secure some trade deals. Yet the journey was marked by uncertainty and inconsistency,” Modi said. “Talks would begin and then break down. In the end, despite prolonged negotiations, very little of real substance was achieved.”

The Prime Minister attributed the recent successes to economic reforms that strengthened India’s negotiating position.

“We led an economic resurgence through our policy-driven governance, strengthened our economic fundamentals and created a rules-based system,” he said. “As a confident, competitive and fast-growing economy, many nations saw the benefits of pursuing trade agreements with us.”

India now has FTAs with 38 partner nations, spanning continents and economies of varying sizes — what Modi called “an unprecedented milestone in India’s trade history”.

Challenge to pvt sector

While celebrating policy achievements, Modi issued a challenge to India’s corporate sector. “Policy can only create the enabling framework. The next phase of transformation requires a decisive response from the private sector,” he said.

Indian firms, Modi argued, must invest more aggressively in research and development, adopt frontier technologies, and compete on quality and productivity rather than protected margins.

“Incentives and tariff preferences can catalyse growth, but durable competitiveness must rest on innovation, efficiency and scale,” Modi said.

The Prime Minister also called for a fairer sharing of productivity gains. “Rising real wages, skill upgrading, and stable employment reinforce domestic demand and social cohesion, which, in turn, support long-term investment,” he said.

Manufacturing focus

Central to Modi’s vision is the transformation of India into a manufacturing powerhouse. The results, he argues, are already visible. “A country that imported almost all its mobile phones a decade ago is today the world’s second-largestmobile phone manufacturer, with exports forming a significant share of production,” Modi said.

The transformation extends across sectors. Toy exports have surged over the past decade, defence manufacturing is expanding, and India has emerged as a trusted global pharmaceutical supplier. “We went from just a few hundred startups to over 2 lakh in just a decade,” Modi said, observing that many are manufacturing-related enterprises.

The recent trade agreements are designed to accelerate this momentum. The India-UK and India-EU FTAs will eliminate tariffs on 99 per cent of Indian exports to these countries. Merchandise trade with Australia and the UAE has doubled since signing FTAs with those nations.

MSMEs’ role

A distinctive feature of India’s recent trade strategy is the prominent role given to micro, small and medium enterprises. Modi emphasised that the agreements target labour-intensive sectors where MSMEs dominate — textiles, leather, footwear, engineering goods, processed food, chemicals, handicrafts, and gemsand jewellery.

“The objective is clear: MSMEs must move beyond being peripheral suppliers,” Modi said. “They must become technologically upgraded, globally integrated andexport-oriented enterprises that form the backbone of India’s participation in global value chains.”

Budget 2026

The Union budget for 2026-27, presented on February 1 in Parliament, reflects the government’s continued emphasis on capital-intensive growth. Overall capital expenditure stands at ₹12.2 lakh crore — a five-fold increase compared to 2013.

Modi emphasised thatthis represents “a conscious strategic choice to invest in assets that create productivity, jobs, and future economic capacity rather than short-term populism.”

Key allocations include nearly ₹3 lakh crore for the Indian Railways, with seven new high-speed rail corridors proposed, including the South High-Speed Diamond corridor connecting major southern cities. National highway allocations have increased nearly 500 per cent compared to a decade ago.

Tech & data

Recognising the importance of digital infrastructure in the AI era, the budget provides tax incentives for data centres. Modi positioned this as essential for India’s technological leadership ambitions.

“India, with an aspirational population of 140 crore people, is one of the world’s largest generators and consumers of data,” he said. “Such a massive and diverse data pool has great potential only when it can be leveraged safely and productively.”

The focus on data centres, Modi argued, provides the foundation for a thriving Indian AI ecosystem. “AI needs computing power and data centre infrastructure. By expanding capacity today, we are laying the foundations for a thriving Indian AI ecosystem,” he said.

Defence & self-reliance

The budget allocates a record ₹7.85 lakh crore to defence — 15 per cent higher than the previous year and the largest allocation to any ministry. Of the ₹2.2 lakh crore capital expenditure for the armed forces, 75 per cent is reserved for procurement from domestic defence industries.

“This not only enhances security but also creates jobs and strengthens our industrial base,” Modi said. Defence exports have crossed ₹23,000 crore, representing a nearly 35-fold rise over the past decade.

Women-centric policies

The Prime Minister emphasised that women’s empowerment guides every government decision. Budget initiatives include support for community-owned retail outlets in rural areas, expansion of STEM hostels for girls in every district, training of 1.5 lakh caregivers, and establishment of AVGC Creator Labs in 15,000 schools.

Viksit Bharat 2047

Throughout the interview, Modi framed recent achievements within the context of India’s goal to become a developed nation by 2047 — the centenary of Independence.

“This budget should not be seen just as Budget 2026. This is the first budget in the second quarter of the 21st century,” Modi said. “Just as the decisions and initiatives taken in the 1920s laid the foundation for Independence in 1947, the decisions we are taking now are laying the foundation for Viksit Bharat by 2047.”

Reforms all the way

Asked about priorities for the next decade, Modi declined to limit reforms to just three areas, instead outlining a broader direction: continuing structural reforms that improve competitiveness, deepening innovation across sectors, and simplifying governance to operate with greater ease and trust

Written from the text of the interview put out by PTI