New Delhi’s bold commerce push marks 2026 as a defining year for India’s economy, with transformative free trade agreements reshaping its world trade role months before March.
Officials celebrate the “mother of all trade deals” with the European Union and the “father of all trade deals” with the United States—yet provisional U.S. terms draw fire for favouring America disproportionately. These mark India’s tenth such pact since 2014, ditching decades of protectionism that stalled global talks.
The EU deal cuts tariffs on cars from 110 to 10 per cent over five years, wines from 150 to 20-75 per cent, plus machinery and chemicals, boosting Indian textiles and engineering exports. The U.S. accord eases duties on American goods like soybean oil, alongside $500 billion in planned energy and tech buys.
India has also kicked off talks with the Gulf Cooperation Council, handling 15 per cent of its trade. Experts caution these offer no instant export boost without deeper reforms.
“The success of any FTA lies in how it is utilised, and India has historically exhibited a low utilisation rate of only about 25%, in contrast to a level of 70%-80% among developed economies,” Sumedha Dasgupta of the Economist Intelligence Unit told the BBC.
Small firms battle paperwork, risks, and complex rules that negate tariff gains. Exports to FTA partners rose 31 per cent from 2017-2022, against 82 per cent import surges, which is an “alarming failure,” says consultancy EY.
Newer pacts with Australia and UAE show gains from better infrastructure. “FTAs create opportunities on paper, but execution breaks down on the ground,” said Kiran Kotla, CEO of Dista.
Rules of Origin, documentation costs, and customs inconsistencies persist. “Many exporters technically qualify for lower tariffs but still pay full duties because proving eligibility is slow, risky, or expensive,” he added.
India trails Vietnam’s operational edge in logistics and supply chains. “Competitiveness is won in operations, not treaties,” Kotla said. “India’s manufacturing push, in comparison, has been fragmented, less urgent and hesitant to expose domestic firms to foreign competition. This needs to change faster,” Priyanka Kishore of Asia Decoded told the BBC.
Vietnam’s exports now rival India’s despite a tenth of the GDP. Delhi must streamline barriers to hit $1 trillion annual exports, spur jobs, and attract investment.