India’s new trade strategy built on economic momentum

India’s recent free trade agreements (FTAs) show a clear shift in the country’s trading strategy. India is pursuing trade deals not for geopolitical signalling or for aspirational market access.

Instead, it’s focusing on partners with which it has existing economic ties; ones with economies in alignment with India’s strengths in manufacturing, pharmaceuticals, services, and energy processing.

Between fiscal year (FY) 2020-21 and FY 2024-25, India’s trade with strategic FTA partners grew by 92% – more than double the 41.5% increase in India’s overall merchandise trade with the rest of the world.

In 2021, countries with which India has since signed FTAs accounted for around 11-12% of the country’s total trade, which, by 2025, climbed to nearly 16.5%. India’s approach to trade is centred on strategic partnerships that work for its development beyond economic growth, supporting sectors that aid prosperity in the long term and offer sustainable growth. Several recent agreements illustrate how this strategy is working in practice.

India and the UK

India’s partnership with the UK represents a high-value economic relationship. In 2021, exports from the UK to India were around $6.08 billion. This reached $12.9 billion in 2023, reflecting the expansion of trade between the two countries even before the FTA was finalised in 2025.
The UK offers a high-income market where Indian exporters – competitive in pharmaceuticals, textiles, engineering goods, chemicals, auto components, and services – have a strategic advantage.

The agreement improves market access while addressing barriers to professional mobility and strengthening mutual investment into technological developments, financing, advanced manufacturing, and the energy transition.

For instance, according to the UK government, one major draw of the agreement is that India has a rapidly growing green sector and a net-zero target for 2070. The UK’s expertise in clean energy technologies and green finance is therefore a significant asset, and the FTA increases export opportunities in clean energy initiatives for both countries, while enabling tariff liberalisation in green products.

India and Australia

India and Australia have a trading partnership dating back to 2011, when they first launched negotiations for the Comprehensive Economic Cooperation Agreement (CECA). Although negotiations were suspended in 2016, the two countries signed the Economic Cooperation and Trade Agreement in 2022, adopted as the foundation for the more comprehensive ECTA.

The CECA reflects a strong complementary dynamic across resource and manufacturing. 96% of Indian exports into Australia are tariff-free, and Australia supplies India with coal, metal ores, critical minerals, and energy inputs, supporting India’s industrial base.

In return, India is exporting refined petroleum products, pharmaceuticals, machinery, textiles, and consumer goods. The partnership also strengthens their links across services – particularly in education and professional mobility – and is promoting cooperation in clean energy and critical minerals.

India and New Zealand

A smaller but still illustrative case is India’s FTA with New Zealand, expected to be signed later this month. The agreement seeks to enable tariff-free access for Indian goods into New Zealand’s market and attract up to $20 billion in investment over the next 15 years.
The exchange reflects clear sectoral niches: India exports pharmaceuticals, machinery, and manufactured goods, while importing wool, agricultural products, metals, and raw materials. The agreement balances market access with domestic sensitivities – especially in agriculture – while also adding an investment dimension, which signals confidence in India’s growth prospects.

India and the EU
India signed a trade deal with the European Free Trade Association (EFTA) countries in 2024. Imports from EFTA are concentrated in high-value items such as gold, precision instruments, and chemicals, keeping trade volumes stable. The real value beneath this agreement isn’t in the number of goods being traded, but rather is in the embedded investment commitments, technological collaboration, and high-skill job creation.

The India-EFTA pact marks a transition from viewing FTAs as mere tariff instruments, to using them as vehicles for capital formation and industrial modernisation.

In January 2026, India and the European Union (EU) announced that they reached a conclusion of negotiations for an FTA, described as the ‘mother of all deals,’ under which 93% of Indian shipments will enjoy duty-free access to the 27-nation bloc.

India and Mauritius

Smaller partners also carry strategic weight. In January 2026, India exported $51.8 million to Mauritius – a 14.8% increase from January 2025. The India and Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA), signed in 2021, drove this growth; however, the agreement’s real importance lies in services, financial cooperation, and investment facilitation.
Mauritius is effectively functioning as a gateway economy, strengthening an institutional framework that supports cross-border financial and business flows. The countries are also set to sign an MOU this month, establishing a $655 million special economic package designed to assist various projects.

India and the UAE

Another example of India’s new trading model is its economic partnership with the UAE. Since the agreement came into effect in 2022, bilateral trade has nearly doubled from $43 billion in FY 2020-21 to $83.7 billion in FY 2023-24.

India is exporting petroleum products, machinery, textiles, food products, and gems and jewellery, while importing crude oil, petrochemicals, and precious metals. The UAE’s role as a global logistics hub is amplifying these flows, reinforcing strong services and investment linkages between the two economies.

India and Oman

Similarly, India’s agreement with Oman, signed in 2025, is building on long-standing commercial ties and geographic proximity. India is among Oman’s top trading partners and the fourth-largest source of its non-oil imports.

The agreement addresses key barriers to trade, such as rules of origin, technical barriers to trade (TBT), and customs procedures, reflecting how the deal goes beyond the mere expansion of trade volumes and focuses on strengthening the connectivity between the two countries.
India is increasingly signing FTAs with economies where trade corridors are already expanding, and supply chains are already forming. These deals are functioning as accelerators of existing economic momentum.

In a fragmented global trading system, this targeted approach appears to be particularly resilient. While tariff threats become common ground elsewhere in the world, India is focusing on approaching trade with care and commitment, expanding its services provisions and translating its investment pipelines into new industrial capacity.