The data released by the Ministry of Commerce and Industry showed that merchandise exports increased to US$ 215.91 billion during April-August 2026-27, driven mainly by outward shipments of electronics, petroleum products, and engineering goods.

However, to maintain the momentum of growth in an uncertain global environment, the Indian industry would need to build on the host of free trade agreements (FTAs) signed by the government in the recent past. India’s push to expand exports through a growing network of FTAs holds special significance for leading exporting states like Gujarat and Maharashtra.

In FY2025-26, Gujarat exported goods worth US$ 110.63 billion, accounting for 25.6% of India’s total exports — more than a quarter of the country’s outbound merchandise trade, followed by Maharashtra (US$ 70.11 billion), Tamil Nadu (US$ 59.30 billion), Karnataka (US$ 34.39 billion), and Uttar Pradesh (US$ 22.56 billion).

FTA Opportunity

India has expanded its free trade network to nine FTAs covering 38 countries, with the United Arab Emirates (UAE), Australia, European Free Trade Association (EFTA), the UK, and Oman being among the most recent partners.

The India-UAE Comprehensive Economic Partnership Agreement (CEPA) was signed in February 2022, followed by the India-Australia Economic Cooperation and Trade Agreement (ECTA) in April 2022. The India-EFTA Trade and Economic Partnership Agreement, covering Switzerland, Norway, Iceland, and Liechtenstein, came into force on 1 October 2025.

More recently, India signed the UK Comprehensive Economic and Trade Agreement (CETA) on 24 July 2025, which came into effect on 15 July 2026, and the Oman CEPA on 18 December 2025, implemented from 1 June 2026. India has also signed an FTA with New Zealand on 27 April 2026, which is under ratification, while an EU FTA has been concluded. These agreements aim to secure tariff concessions, improve market access, and support India’s export-led growth strategy.

Among others, talks have been going on with the US for inking an FTA.

India is also reviewing the legacy FTAs — particularly with Asian partners like ASEAN (Association of Southeast Asian Nations), Japan, and South Korea — as they have failed to yield the desired results. These pacts have fallen short of delivering promised export gains. 

India’s average most-favoured-nation (MFN) tariff is estimated at around 12.6%, compared with less than 4% in several partner economies, including Japan and ASEAN members. As a result, tariff concessions create a much larger opening for foreign exporters compared to domestic exporters.

India's total exports of goods and services reached a record US$ 860.09 billion in FY2025-26, up 4.22% from US$ 825.26 billion. But a closer look at the composition shows that merchandise rose 0.93% to US$441.78 billion, while for services the figure rose 7.94% to US$418.31 billion.

Imports increased 6.47% to US$ 979.40 billion, widening the overall deficit from US$ 94.66 billion to US$ 119.30 billion.

Tarriff Cuts, Other Gains

Speaking at a function in New Delhi, Commerce and Industry Minister Piyush Goyal said over the next few months and couple of years, India will endeavour to conclude FTAs with Canada, Mexico, Chile, Mercosur, SACU (South African Customs Union), GCC (Gulf Cooperation Council) and Israel, and make efforts to review existing trade agreements with ASEAN, Korea, and Japan.

The immediate gains from FTAs come from tariff cuts. Under the India-UK CETA, effective 15 July 2026, the UK has eliminated tariffs on nearly 99% of Indian tariff lines. The India-Oman CEPA, operational from 1 June, provides duty-free access to 99.38% of Indian exports.

Lower duties could help exporters compete more effectively with Vietnam, Bangladesh, and Turkey in textiles and garments, while improving access for specialty chemicals, generic medicines, and engineering products. MSMEs, which often face high compliance and market-entry costs, stand to gain from simplified rules and wider buyer networks.

The key test for exporters will be meeting rules-of-origin and quality and regulatory requirements while moving into higher value products.

Challenges Ahead

The need of the hour is to broaden its export base beyond traditional items like petroleum, gems, and engineering goods. 

Greater value addition in pharmaceuticals, specialty chemicals, engineering goods, electronics, and renewable energy equipment would make growth less sensitive to commodity-price cycles.

But as global trade becomes more competitive and rules-based market access grows in importance, the next export surge will depend on moving further up the value chain —from bulk commodities and intermediates to higher technology and higher margin products.

The central challenge is clear: trade agreements must become instruments of export growth and industrial development, rather than merely channels through which cheaper imports enter the Indian market.

According to Goyal, the “government, industry, and MSMEs (micro, small, and medium enterprises) working together will be key to translating market access into real export growth and job creation in the coming years.”