India’s Trade Agreements in Action

 

 

1. India is shifting from merely signing Free Trade Agreements (FTAs) to ensuring their effective use by exporters. The focus is on increasing exports, investment, employment, product diversification and market access while protecting sensitive domestic sectors.

2. In Financial Year (FY) 2025–26, India’s combined merchandise and services exports reached a record US$ 863.1 billion. Merchandise exports were US$ 441.8 billion, while services exports were US$ 421.3 billion.

3. During April–June 2026, India’s combined exports were estimated at US$ 232.73 billion, showing 11.37 percent growth over the corresponding period of the previous year.

4. Major FTA markets for India’s merchandise exports in FY 2025–26 included the Association of Southeast Asian Nations (ASEAN) at US$ 38.42 billion, the United Arab Emirates (UAE) at US$ 37.36 billion, the South Asian Free Trade Area (SAFTA) at US$ 25.77 billion and the United Kingdom at US$ 13.44 billion.

5. Other important FTA export destinations were Singapore, Nepal, Australia, Malaysia, Japan, the Republic of Korea, Sri Lanka, Thailand, Oman, Bhutan, New Zealand and Mauritius. New Zealand’s agreement had been signed but was yet to become effective.

6. The India–UAE Comprehensive Economic Partnership Agreement (CEPA) came into force on 1 May 2022. Negotiations were completed in 88 days, making it India’s first full FTA in a decade.

7. The UAE became India’s largest individual FTA export market, with merchandise exports of US$ 37.36 billion in FY 2025–26. India–UAE bilateral trade crossed US$ 100.06 billion in FY 2024–25, and both countries aim to raise it to US$ 200 billion by 2032.

8. The India–Australia Economic Cooperation and Trade Agreement (ECTA) came into force on 29 December 2022. India’s exports to Australia increased from US$ 4 billion in FY 2020–21 to US$ 7.28 billion in FY 2025–26, while total bilateral trade reached US$ 24.1 billion in FY 2024–25.

9. Australia initially gave immediate zero-duty access on 98.3 percent of its tariff lines under ECTA. From 2026, all Indian exports became eligible for zero-duty access, while negotiations continue for a Comprehensive Economic Cooperation Agreement (CECA).

10. To obtain FTA tariff concessions, exporters must establish that their products meet rules of origin. A preferential Certificate of Origin (CoO) certifies this eligibility and enables reduced or zero customs duties.

11. The European Free Trade Association Trade and Economic Partnership Agreement (EFTA TEPA) generated 7,885 CoOs after becoming operational in October 2025, while 783 CoOs were issued under the India–Oman CEPA after its implementation in June 2026.

12. The e-CoO 2.0 system enables end-to-end digital issuance of preferential and non-preferential CoOs. It uses Aadhaar-based electronic signatures and Quick Response (QR) code verification. Trade Connect and its Tariff Explorer help exporters, especially Micro, Small and Medium Enterprises (MSMEs), access tariff information and resolve CoO-related issues.

13. Newer FTAs simplify origin documentation. India–EFTA TEPA and India–UK Comprehensive Economic and Trade Agreement (CETA) allow self-declaration of origin; the UK agreement permits importer’s knowledge and waives origin documents for consignments below £1,000. India–Australia ECTA allows multiple qualifying products in a single CoO.

14. Exported tariff lines increased under recent FTAs: UAE from 7,546 to 8,053, Australia from 5,396 to 5,668, Mauritius from 3,593 to 4,345, and Oman from 2,879 in May 2026 to 3,371 in June 2026. FTAs support labour-intensive exports such as textiles, agriculture and processed food, leather, marine products, gems and jewellery, carpets and handicrafts.

15. Services account for nearly 30 percent of India’s employment. Recent FTAs expand opportunities in services, professional mobility and social-security support: the India–New Zealand FTA provides a pathway for up to 5,000 skilled Indians for up to three years; the India–EU FTA covers 144 services sub-sectors; and the India–UK CETA’s Double Contribution Convention is estimated to save over Rs. 4,000 crore by preventing dual social-security payments. India is also negotiating or discussing agreements with the Eurasian Economic Union, Peru, Chile, Israel, Canada and Maldives, while upgrading the India–Korea CEPA and India–Sri Lanka Economic and Technology Cooperation Agreement.

 

Must Know Terms :

 

1.Free Trade Agreement (FTA)

 

An FTA is an agreement between countries to reduce or eliminate customs duties and other trade barriers on selected goods and services.

 

2. Preferential Certificate of Origin (CoO)

 

A CoO confirms that goods meet the rules of origin under a trade agreement. It allows eligible exports to receive reduced or zero customs duties in the partner country.

 

3. Rules of Origin

 

Rules of origin are criteria used to determine the country where a product is considered to have been produced. They prevent non-member countries from wrongly claiming FTA tariff benefits.

 

4. Comprehensive Economic Partnership Agreement (CEPA)

 

A CEPA is a broad trade agreement that covers goods, services, investment, economic cooperation and other areas beyond tariff reduction.

 

5. Most-Favoured-Nation (MFN) Treatment

 

MFN treatment is the principle of treating all trading partners equally in trade. A country generally cannot give a less favourable trade advantage to one partner than it gives to another.

 

6. Tariff Lines

 

Tariff lines are detailed product categories used in customs schedules. Each product category has a specified customs duty rate, which may be reduced or removed under an FTA.

 

 

MCQ :

1. With reference to India’s Free Trade Agreement (FTA) strategy, consider the following statements:

1. India is focusing on effective utilisation of FTAs by exporters.
2. The objective includes export diversification, investment and employment generation.
3. The strategy excludes protection for sensitive domestic sectors.

Which of the statements given above are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

2. In Financial Year 2025–26, India’s combined merchandise and services exports were:

(a) US$ 441.8 billion
(b) US$ 421.3 billion
(c) US$ 863.1 billion
(d) US$ 232.73 billion

3. During April–June 2026, India’s combined exports showed a growth of:

(a) 5.0 percent
(b) 6.7 percent
(c) 11.37 percent
(d) 20.9 percent

4. Which one of the following was India’s largest individual FTA export market in Financial Year 2025–26?

(a) Australia
(b) United Arab Emirates
(c) United Kingdom
(d) Singapore

5. With reference to the India–United Arab Emirates Comprehensive Economic Partnership Agreement, consider the following statements:

1. It came into force on 1 May 2022.
2. Its negotiations were completed in 88 days.
3. India–UAE bilateral trade crossed US$ 100 billion in Financial Year 2024–25.

Which of the statements given above are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

6. India and the United Arab Emirates have set a target to raise bilateral trade to:

(a) US$ 100 billion by 2030
(b) US$ 200 billion by 2032
(c) US$ 250 billion by 2035
(d) US$ 500 billion by 2047

7. The India–Australia Economic Cooperation and Trade Agreement came into force on:

(a) 29 December 2022
(b) 1 May 2022
(c) 1 January 2023
(d) 1 October 2025

8. With reference to the India–Australia Economic Cooperation and Trade Agreement, consider the following statements:

1. Australia initially provided immediate zero-duty access on 98.3 percent of its tariff lines.
2. From 2026, all Indian exports became eligible for zero-duty access to Australia.
3. A Comprehensive Economic Cooperation Agreement is under negotiation between India and Australia.

Which of the statements given above are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

9. A preferential Certificate of Origin is primarily used to:

(a) Certify the quality of imported products
(b) Establish eligibility for preferential tariff treatment under an FTA
(c) Determine the exchange rate applicable to exports
(d) Provide export insurance to traders

10. The European Free Trade Association Trade and Economic Partnership Agreement generated how many Certificates of Origin after becoming operational in October 2025?

(a) 783
(b) 5,668
(c) 7,885
(d) 8,053

11. The e-CoO 2.0 system provides:

1. Digital issuance of preferential and non-preferential Certificates of Origin.
2. Aadhaar-based electronic signatures.
3. Quick Response code verification.

Select the correct answer using the code given below:

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

12. Which one of the following agreements allows multiple qualifying products to be included in a single Certificate of Origin?

(a) India–Australia Economic Cooperation and Trade Agreement
(b) India–United Arab Emirates Comprehensive Economic Partnership Agreement
(c) India–Mauritius Comprehensive Economic Cooperation and Partnership Agreement
(d) India–Oman Comprehensive Economic Partnership Agreement

13. Under the India–United Kingdom Comprehensive Economic and Trade Agreement, origin documentation is waived for consignments below:

(a) £100
(b) £500
(c) £1,000
(d) £5,000

14. Which one of the following pairs is correctly matched?

(a) UAE — Tariff lines increased from 7,546 to 8,053
(b) Australia — Tariff lines increased from 3,593 to 4,345
(c) Mauritius — Tariff lines increased from 2,879 to 3,371
(d) Oman — Tariff lines increased from 5,396 to 5,668

15. With reference to services provisions under India’s FTAs, consider the following statements:

1. Services account for nearly 30 percent of India’s employment.
2. The India–New Zealand FTA provides a pathway for up to 5,000 skilled Indians to stay for up to three years.
3. The India–EU FTA covers 144 services sub-sectors.
4. The India–UK Double Contribution Convention aims to prevent dual social-security payments.

Which of the statements given above are correct?

(a) 1 and 2 only
(b) 2, 3 and 4 only
(c) 1, 3 and 4 only
(d) 1, 2, 3 and 4