Bigger than Manmohan's 1991 reforms: Arvind Panagariya on why India's US, EU trade deals matter
'From India's point of view, two deals together do actually make the mother and father of all deals – because these are the two largest entities with which we trade globally,' says Arvind Panagaria
- Feb 5, 2026,
- Updated Feb 5, 2026 5:50 PM IST
16th Finance Commission chairman Arvind Panagariya on Wednesday said India's trade deals with the United States and the European Union together mark a moment bigger than the 1991 economic reforms. The twin deals, he argued, would improve India's global competitiveness and investment appeal.
The US and India have agreed to a trade deal, but details are yet to be announced. When asked whether celebrations over the India-US trade deal should be tempered until full details are released, the noted economist said he saw no reason to hold back. "As far as celebration is concerned, I don't mind having celebrations," he said while speaking to India Today TV.
From India's perspective, Panagariya argued, the agreement with the US must be seen alongside the recently concluded pact with the European Union. "From India's point of view, two deals together do actually make the mother and father of all deals – because these are the two largest entities with which we trade globally," he said.
The economist explained that the EU agreement gives India access to the European market, while the US deal provides Indian exporters access at tariff rates lower than most competitors. "So, from any potential investor's viewpoint, India now becomes extremely attractive location both because of these two deals," Panagariya said, adding that the opportunity is amplified by India’s large domestic market and workforce of around 600 million with a wide range of skills.
"If we also do a few more things internally to make business environment more friendly for the businesses, we are well within reach for the 2047 Viksit Bharat ambition to be realised," he said.
Addressing concerns that lowering tariffs and non-tariff barriers for American goods could lead to US products flooding Indian markets, Panagariya said such fears overlook consumer benefits and the role of competition. "As a trade economist, I totally see it the opposite way," he said.
Panagaria acknowledged sensitivities in sectors such as agriculture, but said liberalisation ultimately strengthens domestic industry. "It makes our industry more competitive. You have to compete against the best in the world and that is what brings out the best out of you," he said.
Asked whether Indian firms can truly compete with American companies on a level playing field, the economist pointed to India's post-1991 experience. "Look at our own experience in 1991 when we first opened up, there were so many kind of these fearful voices," he said.
He noted that India's merchandise exports rose from about $50 billion in 2002 to $300 billion by 2011. "The six-fold increase within a decade. It's very rare for anything to go up sixfold within a decade," he said, arguing that competition drives efficiency and growth, even if some inefficient firms must adjust.
Panagariya said the current moment, taken together with recent domestic reforms, surpasses the scale of 1991. "What we have done now with the two deals actually amounts to something bigger than 1991," he said.
Pressed on whether that was a fair comparison, he added: "Having studied both 91 and what is happening currently I feel pretty confident of what I'm saying. I'm including some of the big reforms we have done in 2025, the labor law reform in particular. If I put those 25 reforms and these two deals together, that certainly is a lot bigger than 1991."
On Monday, US President Donald Trump announced a cut in US tariffs on Indian goods to 18 per cent and said New Delhi and Washington had agreed on a trade deal. They also follow the January 27 signing of a free trade agreement between India and the European Union, billed as the "mother of all deals".
16th Finance Commission chairman Arvind Panagariya on Wednesday said India's trade deals with the United States and the European Union together mark a moment bigger than the 1991 economic reforms. The twin deals, he argued, would improve India's global competitiveness and investment appeal.
The US and India have agreed to a trade deal, but details are yet to be announced. When asked whether celebrations over the India-US trade deal should be tempered until full details are released, the noted economist said he saw no reason to hold back. "As far as celebration is concerned, I don't mind having celebrations," he said while speaking to India Today TV.
From India's perspective, Panagariya argued, the agreement with the US must be seen alongside the recently concluded pact with the European Union. "From India's point of view, two deals together do actually make the mother and father of all deals – because these are the two largest entities with which we trade globally," he said.
The economist explained that the EU agreement gives India access to the European market, while the US deal provides Indian exporters access at tariff rates lower than most competitors. "So, from any potential investor's viewpoint, India now becomes extremely attractive location both because of these two deals," Panagariya said, adding that the opportunity is amplified by India’s large domestic market and workforce of around 600 million with a wide range of skills.
"If we also do a few more things internally to make business environment more friendly for the businesses, we are well within reach for the 2047 Viksit Bharat ambition to be realised," he said.
Addressing concerns that lowering tariffs and non-tariff barriers for American goods could lead to US products flooding Indian markets, Panagariya said such fears overlook consumer benefits and the role of competition. "As a trade economist, I totally see it the opposite way," he said.
Panagaria acknowledged sensitivities in sectors such as agriculture, but said liberalisation ultimately strengthens domestic industry. "It makes our industry more competitive. You have to compete against the best in the world and that is what brings out the best out of you," he said.
Asked whether Indian firms can truly compete with American companies on a level playing field, the economist pointed to India's post-1991 experience. "Look at our own experience in 1991 when we first opened up, there were so many kind of these fearful voices," he said.
He noted that India's merchandise exports rose from about $50 billion in 2002 to $300 billion by 2011. "The six-fold increase within a decade. It's very rare for anything to go up sixfold within a decade," he said, arguing that competition drives efficiency and growth, even if some inefficient firms must adjust.
Panagariya said the current moment, taken together with recent domestic reforms, surpasses the scale of 1991. "What we have done now with the two deals actually amounts to something bigger than 1991," he said.
Pressed on whether that was a fair comparison, he added: "Having studied both 91 and what is happening currently I feel pretty confident of what I'm saying. I'm including some of the big reforms we have done in 2025, the labor law reform in particular. If I put those 25 reforms and these two deals together, that certainly is a lot bigger than 1991."
On Monday, US President Donald Trump announced a cut in US tariffs on Indian goods to 18 per cent and said New Delhi and Washington had agreed on a trade deal. They also follow the January 27 signing of a free trade agreement between India and the European Union, billed as the "mother of all deals".