How India's trade deals have evolved

Mint

27-07-2025

Trade deals that India signed initially failed to deliver. But India has since learnt from its mistakes and tweaked its strategy to see better success. Mint explains how the India-UK free trade agreement is a case in point when it comes to that process of evolution.
How did India's early trade agreements fare?
Not too well. On 7 August 2009, India signed the Comprehensive Economic Partnership Agreement (CEPA) with South Korea. A few days later it inked a Trade in Goods agreement with the Association of Southeast Asian Nations. In 2011, India concluded a CEPA with Japan. From India's perspective, all these trade agreements underperformed.
The ASEAN agreement saw a sharp increase in trade volume. But India's trade deficit widened from $6 billion in 2009 to $38 billion fuelled by a sharp increase in imports. In the case of the South Korea and Japan deals, too, imports shot up while India's exports stagnated.
What caused their underperformance?
Experts have pointed to several shortcomings.
Have recent trade agreements fared better?
Yes. India began by choosing its trade partner wisely for such agreements. It also broadened the scope of such agreements.
India's exports to the United Arab Emirates (UAE) have grown 14% annually since New Delhi signed a trade deal with the West Asian nation in 2022. India's trade deal with Australia, signed the same year, eliminated tariffs on both goods and services, seeing utilisation by Indian exporters rise by over 75%.
Has the India-UK free trade agreement taken this process forward?
Apart from a sharp tariff reduction on goods, India has removed duties on 90% of its tariff lines while the UK has on 99%.
The India-UK Comprehensive Economic and Trade Agreement (CETA) also has a strong focus on services. India has opened up its accounting, auditing, financial services, telecom, and environmental services. The UK will grant commercial presence rights to Indian companies in computer services and consultancy space.
The trade deal will also allow mobility of 1,800 professionals between the two countries, a modest start in an area India has been keen on.
Is the UK deal a benchmark for the future?
While trade negotiation with each nation is unique, the India-UK CETA does offer pointers to nations such as the US, Europe, Oman, New Zealand, Chile, and Peru, which are negotiating similar trade deals with India.
By agreeing, for the first time, to cut tariffs on imported cars (but with quotas to allow Indian firms more time to become competitive) and allowing UK firms to participate in government procurement, the Indian government has indicated its readiness to be flexible in achieving a win-win deal without compromising its position on sensitive sectors such as dairy and sugar.