India has 15 FTAs covering 27 nations, but most exporters aren't using them effectively: GTRI report

India currently has 15 Free Trade Agreements (FTAs) in force and is negotiating or implementing another nine agreements that could eventually cover 69 countries accounting for more than 75% of the country's exports. However, despite the expanding trade network, only 20-30% of India's eligible exports make use of FTA benefits, while exporters from partner countries utilize preferential access to India at much higher rates of 60-70%, according to a new report by the Global Trade Research Initiative (GTRI).

The report, titled FTA Report Card 2026: Six Challenges India Can No Longer Ignore, argues that tariff preferences alone are not enough to boost exports and warns that several structural issues are limiting India's gains from free trade agreements.

Expanding FTA footprint

India's existing 15 FTAs cover 27 countries and account for 28.5% of the country's exports and 32.2% of imports. Another nine agreements involving 42 countries are either awaiting implementation or under negotiation. Together, these countries represent 75.3% of India's exports and 65.5% of imports, underscoring the central role FTAs now play in India's trade strategy.

The countries currently under negotiation include the United States, Canada, Israel, Peru, members of the Gulf Cooperation Council and the Eurasian Economic Union, while agreements with the UK and New Zealand are awaiting implementation. Negotiations with the European Union have also been completed and are expected to culminate in one of India's largest trade deals.

Indian exporters

According to the report, one of the biggest challenges is the low utilization of FTA benefits by Indian exporters.

Many partner countries already maintain low Most Favoured Nation (MFN) tariffs, reducing the advantage offered by preferential access. In several cases, the costs associated with rules of origin, certification requirements and documentation outweigh the savings generated by lower tariffs.

As a result, Indian exporters often prefer to ship under normal tariff regimes rather than claim FTA preferences. Meanwhile, foreign exporters have a stronger incentive to use FTAs because India's tariff structure remains relatively high, making preferential access more valuable.

Trade deficits

The report highlights a sharp increase in India's trade deficits with major FTA partners.

Between 2007-09 and 2023-25, India's trade deficit with ASEAN countries rose by 381%, while deficits with Japan and South Korea increased by 318% and 268%, respectively. Over the past three years, India's average annual trade deficit with these three partners has reached around $62 billion.

India's newer FTAs with the UAE, Australia, Mauritius and EFTA countries also resulted in a trade deficit exceeding $50 billion in FY2025, with imports reaching nearly $100 billion compared to exports of $48.6 billion.

Manufacturing concerns

GTRI noted that FTAs have aggravated India's inverted duty structure, where duties on raw materials and inputs are higher than those on finished goods. This makes imported products cheaper and creates incentives for companies to shift manufacturing to countries such as Vietnam, Thailand and Indonesia.

The report warned that such trends could encourage firms to "Make in ASEAN, Sell in India" instead of expanding domestic production.

New risks

Apart from trade deficits, the report cautioned that new-generation FTAs increasingly affect domestic policies relating to labour, environment, digital trade, intellectual property rights and government procurement. The European Union's Carbon Border Adjustment Mechanism (CBAM) and other regulatory measures could also erode many of the tariff benefits secured through future trade agreements.

According to GTRI, the ultimate success of India's trade agreements will depend less on tariff concessions and more on the competitiveness of its manufacturing sector, supply chains and domestic industries.