Inside India’s new playbook on free trade deals

India has travelled a long distance since the early days of its free trade agreement (FTA) journey, which effectively began with a limited “early harvest scheme” with Thailand covering fewer than 100 products.

The duty concessions extended under that pact led companies such as Honda and Sony to import gearboxes and television sets rather than manufacture them locally, putting the government on the defensive over the impact on domestic industry.

What followed was a phase of careful calibration. The government resisted cutting tariffs on what it considered “sensitive sectors” such as wine and spirits and automobiles, wary that domestic manufacturing could be hurt and grape farmers adversely affected. Any policy move with potential implications for farmers remained a red line.


A shift in approach became visible with the interim trade agreement with Australia in 2022, which followed India’s decision to exit the China-led Regional Comprehensive Economic Partnership (RCEP). For the first time, the government showed greater willingness to lower tariffs on wine above a certain price threshold, while seeking to reassure domestic producers through assurances of technical support from foreign competitors.

It also experimented with quota-based concessions for select agricultural products, allowing limited quantities rather than unrestricted access.

With each subsequent trade agreement, the scope of concessions expanded. Products such as chocolates and watches were included in the pact with the European Free Trade Association (EFTA), comprising Switzerland, Norway, Iceland and Liechtenstein. Importantly, negotiations began to move beyond goods and services—an area where India had fallen short in its ASEAN FTA—to encompass investment commitments. Under the EFTA deal, the grouping pledged fresh foreign direct investment of $100 billion.

By the time India concluded its agreement with the European Union—its eighth trade pact in four years—the list of protected items had shrunk significantly. With the exception of cereals, pulses, dairy and genetically modified foods, negotiators were more willing to make trade-offs, reflecting growing confidence and experience.

Tariff cuts on products such as French and Spanish wines were exchanged for access to European markets for limited quantities of Indian grapes. Similarly, imports of pears and apples were permitted under strict conditions, including volume caps and a minimum import price to ensure that the landed cost of apples does not fall below Rs 96 per kg.

The government has also tailored concessions to the scale of opportunity offered by each market. While it declined to offer any duty concessions for British electric vehicles when finalising the UK FTA last May, it agreed to allow a limited number of electric vehicles under the EU deal eight months later.

“Every FTA stands on its own footing,” Commerce and Industry Minister Piyush Goyal said.

The evolving approach is also evident in India’s willingness to engage on so-called “new issues”—earlier described by negotiators as non-trade concerns. Modern FTAs now include provisions on intellectual property rights, small and medium enterprises, digital trade, labour and the environment.

However, officials emphasise that these commitments do not go beyond India’s existing international obligations, addressing concerns about any dilution of domestic patent laws.

“It is about how you negotiate these issues. We are firm on certain aspects and we will stick to them in our other engagements as well,” a senior government official said.

(With inputs from TOI)