India's Free Trade Agreements and Trade Performance
India is actively engaged in negotiating and concluding Free Trade Agreements (FTAs) to diversify its export markets and mitigate the effects of US tariffs. A recent report by the Niti Aayog highlights key trends in India's trade dynamics with its FTA partners.
Rising Trade Deficit with FTA Partners
- India's trade deficit with FTA partner countries increased by 59.2% between April and June last year compared to the previous year.
- Imports increased by 10% to $65.3 billion, while exports decreased by 9% to $38.7 billion.
FTAs and Preferential Trade Agreements
- India has concluded FTAs with Oman, New Zealand, and the UK in 2025.
- Negotiations are ongoing with the EU, US, Australia, Bahrain, GCC, EAEU, Canada, and SACU.
- Consideration for Preferential Trade Agreements (PTA) with Brazil and Israel.
Export Performance
- Electronics Exports: Strong growth of 47% year-on-year, accounting for over 11% of total exports, indicating deeper integration into global supply chains.
- Decline in Petroleum Exports.
Trade with ASEAN and Other FTA Partners
- Contracting exports to ASEAN, with a 16.9% decrease.
- Significant declines in exports to Malaysia (-39.7%), Singapore (-13.2%), and Australia (-10.9%).
- Slight gains to South Korea (15.6%), Japan (2.8%), Thailand (2.9%), and Bhutan (10.2%).
Import Trends
- Increased imports from top markets like China, UAE, Russia, and USA, contributing to 43% of total imports in Q1 FY26.
- UAE imports rose by 28.7%, China by 16.3%, USA by 16.9%, and Singapore by 14%.
- Declines in imports from Iraq (-13.3%), Russia (-8.7%), and Saudi Arabia (-8.50%).
Key Import Drivers
- UAE: Gold compounds and petroleum oils, with UAE surpassing Japan as a top import source.
- China: Surge in specific electronic components such as circuit boards and integrated circuits.
- Iraq: Shift from petroleum oils to mineral fuels in gaseous form and petroleum bitumen.
- Russia: Decline due to lower petroleum oil imports.
