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India’s Next-Generation FTA Trajectory

SESSION-9 Envisioning The Next Trajectory Of India's Ftas.mp4 · 1:01:35 · 6 speakers

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Key takeaways

  1. Recent Indian FTAs were described as deeper agreements that extend well beyond tariff reductions.
  2. Non-tariff barriers, regulatory standards, rules of origin, and domestic implementation may determine whether FTA benefits are realized.
  3. FTAs can diversify India’s trade exposure, but they do not eliminate dependence on China and may face preference erosion.
  4. Indian MSMEs’ low awareness and limited utilization of FTA preferences remain significant constraints.
  5. States, regulators, industry, and the central government need stronger coordination to translate signed agreements into investment, exports, and jobs.
  6. The WTO remains valuable to India in principle, but its current paralysis has increased the strategic importance of FTAs.

Key moments

  • Session opening
    Speaker 1 frames the discussion around India’s expanding FTA agenda.
  • New-generation FTA framework
    Speaker 3 identifies five structural shifts from older FTAs.
  • Trade-deficit and NTB caution
    Speaker 3 argues against using trade deficits as the sole FTA metric and details NTB risks.
  • Depth and partner selection
    Speaker 5 contrasts older shallow FTAs with recent agreements.
  • China and domestic preparedness
    Speaker 4 links FTA strategy to geopolitical competition and India’s domestic capability.
  • WTO and multilateralism
    Speaker 3 describes continued value in multilateralism despite WTO paralysis.
  • Implementation challenge
    Speaker 2 asks how businesses can realize FTA benefits amid regulatory and state-level complexity.
  • Audience questions
    Questions begin on monitoring, state regulation, RCEP, standards, and tariff policy.
  • RCEP explanation
    Speaker 3 explains why changed RCEP tariff modalities led to opposition.
  • Alcohol and state excise clarification
    Speaker 3 states that FTAs cover customs duties, not state excise on alcohol.
  • Closing
    Speaker 2 thanks the panel and characterizes the discussion as the start of further dialogue.

Decisions made

No explicit final decision was identified.

Proposals & suggestions (not confirmed decisions)

  • Create comparable state-level bureaus to handhold investors and potentially support MSMEs and prospective FTA beneficiaries, drawing on Tamil Nadu’s “guidance bureau” example. — suggested by Speaker 4. Outcome: No final decision.
  • Deepen trade with China and the US mostly under the aegis of the WTO rather than pursuing FTAs with them at present. — suggested by Speaker 3. Outcome: No final decision.
  • Adopt good regulatory practices at India’s own pace and avoid binding commitments that exceed available resources and implementation capacity. — suggested by Speaker 3. Outcome: No final decision.

Topics discussed

Opening and framing of India’s FTA agenda

to 00:01:48 Speaker 1

Speaker 1 opened the post-lunch panel, noted that India had recently concluded or was pursuing several FTAs, and asked how the new agreements differ from earlier ones and whether they will change Indian trade.

Characteristics of next-generation FTAs

to 00:06:10 Speaker 3

Speaker 3 outlined five shifts: investment-led supply-chain integration, regulatory alignment and NTB treatment, services and skilled-person mobility, increased MSME utilization through simplified and digitalized processes, and sustainability-related requirements including CBAM.

Trade deficits, NTBs, and investment chapters

to 00:14:15 Speaker 3

Speaker 3 argued that trade deficits alone are an inadequate FTA metric, stressed the importance of imports for India’s export competitiveness, identified traditional and newer NTBs, and cautioned that recent FTAs lack investment chapters.

Partner selection and implementation architecture

to 00:19:09 Speaker 5

Speaker 5 contrasted earlier shallow agreements with newer, deeper FTAs, citing changed partner selection, regulatory pathways for pharmaceuticals, safeguards, rules of origin, follow-up institutions, trade facilitation, and investment commitments.

China, geopolitical trade systems, and domestic readiness

to 00:25:31 Speaker 4

Speaker 4 discussed the US, EU, and China as major economic systems, argued that India should manage rather than abruptly sever China dependence, and urged domestic reforms and higher standards to make India capable of absorbing investment and joining value chains.

Multilateralism and FTA limits with China and the US

to 00:31:24 Speaker 1, Speaker 3, Speaker 5

Speaker 3 defended multilateralism while describing the WTO as paralyzed. The discussion covered India’s difficulty in pursuing FTAs with China and the US, and Speaker 5 argued that FTAs can diversify trade risks despite preference erosion.

States, competitiveness, and global value chains

to 00:36:37 Speaker 1, Speaker 3, Speaker 4

Speaker 3 discussed state interest in FTAs, using Tamil Nadu as an example of export-driven growth and MSME-based industrialization. Speaker 4 said an FTA with the US was not presently on offer and highlighted the EU agreement’s importance.

Implementation, industry participation, and MSME awareness

to 00:47:12 Speaker 2, Speaker 3, Speaker 5, Speaker 4

Speaker 2 raised implementation challenges after the UK FTA. Speakers discussed state regulations, political-economy constraints, industry involvement, successful use of older Japan and Korea agreements, awareness gaps, manufacturing capacity, jobs, skills, and bottom-up preparation.

Audience questions: monitoring, RCEP, standards, and protectionism

to 00:59:45 Speaker 6, Speaker 3, Speaker 1, Speaker 4, Speaker 5

Audience members asked about FTA monitoring, state regulation of alcohol, RCEP, regulatory capacity, and higher tariffs after 2017. Responses addressed RCEP modalities, cautious adoption of good regulatory practices, domestic quality systems, geopolitical drivers of protectionism, and the limits of FTAs regarding state excise.

Closing remarks

to 01:01:24 Speaker 2, Speaker 1, Speaker 3

Speaker 2 thanked the panel and audience, described the discussion as a starting point for further FTA dialogue, and invited a group photograph. Speaker 1 made a closing reference to a book title and the discussion.

Important questions

  • How are the new FTAs different from India’s earlier FTAs, and will they change the way India trades? — asked by Speaker 1
    Answered Speakers said recent FTAs are broader than tariff-focused agreements, with provisions or focus areas involving investment, supply chains, services, professional mobility, digital trade, regulations, safeguards, rules of origin, sustainability, and implementation follow-up.
  • Can the new FTAs help India manage its trade relationship with China and unilateralism? — asked by Speaker 1
    Answered Speaker 4 said India cannot abruptly end China-related industrial dependence without harming its economy, but should diversify engagement and build domestic capacity. Speaker 5 said FTAs can reduce risk concentration and provide preferences in major markets, though they do not remove all risks.
  • Is multilateralism dead, and how important is it for India amid expanding FTAs? — asked by Speaker 1
    Answered Speaker 3 said India still prefers multilateral rules for dispute settlement and coalition-based negotiating protection, but described the WTO as paralyzed in dispute settlement and negotiations, making FTAs more important.
  • Can FTAs help India de-risk, and why has India not pursued an FTA with Africa? — asked by Speaker 1
    Partially answered Speaker 5 said FTAs can de-risk by reducing export-market concentration and increasing preferential access, while warning of preference erosion. The Africa portion of the question was not directly answered.
  • Are states interested in FTAs, and what can increase their involvement? — asked by Speaker 1
    Answered Speaker 3 said states benefit when local businesses create jobs and identified Tamil Nadu as an example of a state pursuing export-driven growth and global-value-chain integration. Capacity building and technical expertise were identified as constraints.
  • Should India sign an FTA with the US now or wait two years? — asked by Speaker 1
    Answered Speaker 4 said the US was not negotiating or offering an FTA and that India’s realistic objective was a trade or tariff deal that limits tariff exposure. Speaker 3 had earlier cited US demands for “gold standard rules” as difficult for India to accept.
  • How can businesses secure FTA benefits when implementation is affected by regulators and state-level requirements? — asked by Speaker 2
    Answered Speakers said implementation remains complex after signing and requires coordination with states, capacity building, industry involvement, awareness, and enabling domestic conditions. Speaker 5 added that Indian MSMEs need clearer, easier-to-use FTA information and greater manufacturing capability.
  • What government monitoring mechanisms assess FTA success, including sectoral performance and trade deficits? — asked by Speaker 6
    Not answered
  • How are FTAs implemented in alcohol-related trade where state regulation and taxation are more significant than federal measures? — asked by Speaker 6
    Answered Speaker 3 stated that FTAs bind customs-duty reductions under the Government of India, while state excise and alcohol trade remain state subjects and are not covered by FTAs. The speaker suggested this could be addressed during a review after five years.
  • What triggered the shift from supporting RCEP initially to opposing India’s participation? — asked by Speaker 3
    Answered Speaker 3 said the initial arrangement would have allowed India a lower concession level of 42.5% for China, New Zealand, and Australia, but this changed to 80% plus for all parties, creating concern about manufacturing imports from China and dairy imports from New Zealand.
  • What is the capacity of India’s regulators, and how should central and state capacity be strengthened for good regulatory practices and trade sustainability? — asked by Speaker 3
    Partially answered Speaker 3 said good regulatory practices should be adopted at India’s own pace and not bound beyond available capacity. Speakers also said India needs stronger standards, quality compliance, and trusted domestic regulatory systems, but did not specify a concrete capacity-building plan.
  • Do higher tariff barriers since 2017 indicate a return to protectionism in India’s political economy? — asked by Speaker 1
    Answered Speaker 4 linked the shift to concerns over China’s supply-chain weaponization, border tensions, security, Atmanirwar interpretations, and a weaker WTO environment. The speaker said protectionist tendencies persist but need to be handled cautiously.

Important numbers & facts

  • 38 countries — Speaker 3 said India had entered into newer-generation FTAs with a large number of countries over roughly the last ten years.
  • $100,000,000,000 over fifteen years — Speaker 3 described this as EFTA TEPA’s landmark investment commitment.
  • 8,000 suggestions — Speaker 3 said the 2019 e-commerce policy received approximately this number of suggestions, creating a regulatory-coherence burden.
  • 20% to 30% — Speaker 5 said this was the approximate preference-utilization rate for Indian exporters under previous FTAs.
  • 60% to 70% — Speaker 5 said this was the approximate preference-utilization rate for partner-country exporters under previous FTAs.
  • more than $350,000,000 — Speaker 5 stated that India’s trade deficit with ASEAN had exceeded this figure.
  • more than $300,000,000 — Speaker 5 stated that India’s trade deficit with Korea had exceeded this figure.
  • ninety days — Speaker 5 said that, under the India–UAE CEPA, a pharmaceutical approved by a listed set of eight regulators is deemed approved within this period.
  • 40% — Speaker 5 said domestic value-addition norms in the UAE agreement were about this level.
  • $20,000,000,000 — Speaker 5 referred to investment associated with New Zealand.
  • 20% — Speaker 5 said that, until very recently, this share of India’s merchandise exports was directed to the US.
  • $43,000,000,000 — Speaker 5 gave this as India–UAE trade in 2021.
  • more than $100,000,000,000 — Speaker 5 said India–UAE trade had crossed this figure over the last two years.
  • 25 FTAs — Speaker 5 said the UAE had signed this number of FTAs with large economies, creating preference-erosion risk.
  • 47 countries — Speaker 5 said India would have FTAs with approximately this number of countries once the EU FTA entered into force.
  • 75% of export market — Speaker 5 said the prospective FTA network would cover approximately this share of India’s export market.
  • 65% of import market — Speaker 5 said the prospective FTA network would cover approximately this share of India’s import market.
  • 2005 — Speaker 3 said the National Manufacturing Competitiveness Council was established by the Government of India in this year.
  • 100% tariff on Russia — Speaker 4 referred to a law that, according to the speaker, empowers the imposition of this tariff.
  • 32% of global trade — Speaker 4 said that an EU conversation involving the Pacific “Trans Pacific thing” would together account for this share of global trade.
  • 4,000,000 cars — Speaker 3 said India exports this number of small cars to Europe, in a discussion of Japan and Korea FTAs and automotive investment.
  • 42.5% — Speaker 3 said this was the initial proposed special RCEP concession modality for India with China, New Zealand, and Australia.
  • 80% plus — Speaker 3 said RCEP modalities changed to this level of tariff concessions for all parties.
  • five years — Speaker 3 said state-excise issues in alcohol trade could potentially be considered when FTAs are reviewed after this period.

Speaker highlights

Speaker 1

Main points

  • Framed the discussion around India’s growing FTA agenda and the differences between old and new agreements.
  • Asked questions on China, multilateralism, de-risking, Africa, state engagement, a possible US FTA, implementation, and tariff policy.
  • Moderated audience questions and closed the session.

Positions

  • Presented the panel as a discussion of India’s future trade trajectory rather than advocating a specific outcome.

Questions raised

  • How are new FTAs different from earlier agreements?
  • Can recent FTAs help India manage its trade relationship with China?
  • Is multilateralism dead, and how important is it for India?
  • Can FTAs help India de-risk, and why is Africa not being considered for an FTA?
  • Are states interested in FTAs?
  • Should India sign an FTA with the US now or wait two years?

Speaker 2

Main points

  • Asked about post-signature implementation barriers, including regulator and state-level requirements.
  • Spoke from a business perspective and referred to having recently experienced benefits from the UK FTA.
  • Closed by thanking the panel and audience.

Positions

  • Emphasized that implementation can require effectively negotiating a further stage after an FTA is signed.

Questions raised

  • How can businesses obtain the real benefits of an FTA when regulators and states impose further requirements during implementation?

Speaker 3

Main points

  • Explained that newer FTAs focus on investment, supply chains, NTBs, services mobility, MSME utilization, digitalization, and sustainability.
  • Argued that trade deficits should not be the sole metric for assessing FTAs because imports can support export competitiveness.
  • Raised concerns around IP rights, CBAM, labor provisions, digital trade, regulatory coherence, and absent investment chapters.
  • Supported multilateral trade rules in principle, while describing the WTO as paralyzed.
  • Explained that RCEP became unacceptable after proposed tariff-concession modalities changed, exposing India to potential imports from China and New Zealand.
  • Stated that state-level excise on alcohol is not covered by FTAs and may only be addressed in a future review.

Positions

  • India should pursue international competitiveness and quality, but should not accept externally imposed regulatory commitments beyond its implementation capacity.
  • India should be cautious in negotiating with China and the US, while deepening trade under the WTO framework where possible.
  • FTAs require continuing implementation work, industry participation, state coordination, and capacity building.

Speaker 4

Main points

  • Described the US, EU, and China as the broad global economic systems shaping trade.
  • Argued that India must manage its China dependence without treating China as the foundation of India’s economic future.
  • Called for domestic readiness, higher standards, investment absorption capacity, state-level preparation, skills, and regulatory reform.
  • Said a US FTA was not currently being negotiated or offered, and that a trade or tariff deal was the more realistic objective.
  • Linked higher tariffs and protectionist tendencies to China’s supply-chain weaponization, border tensions, security concerns, and a changed geopolitical environment.

Positions

  • India should embrace higher climate, labor, and quality standards rather than automatically treating them as barriers.
  • India needs bottom-up implementation capacity, not only FTA negotiations, to translate agreements into jobs and investment.
  • The EU agreement is especially important because it can partly offset uncertainty around US trade relations.

Speaker 5

Main points

  • Characterized recent FTAs as more numerous, deeper, and more complementary than earlier agreements.
  • Reported lower FTA preference utilization by Indian exporters than by partner-country exporters in earlier agreements.
  • Cited India–UAE CEPA mechanisms, EFTA investment commitments, and a pharmaceutical approval pathway as examples of newer FTA features.
  • Argued that broader FTA coverage supports de-risking but warned of preference erosion.
  • Highlighted MSME awareness, easier information access, manufacturing capability, and enabling conditions as implementation priorities.
  • Supported stronger domestic quality and regulatory credibility to establish brand India.

Positions

  • FTAs are increasingly necessary because the WTO has not been effective in moving trade issues forward.
  • The more markets India can cover through FTAs, the better the de-risking outcome, subject to implementation and preference-erosion risks.

Speaker 6

Main points

  • Asked about government monitoring mechanisms for judging FTA success, including sectoral outcomes and trade-deficit objectives.
  • Asked how FTA implementation is coordinated in alcohol-related trade, where state regulations and taxation are significant.

Questions raised

  • What monitoring mechanisms will assess whether FTAs have succeeded?
  • How are FTA commitments implemented in sectors where state regulation and taxation, such as AlcoBev, are significant?

Follow-ups

  • Clarify the government’s specific monitoring mechanisms and success metrics for FTAs, including sectoral performance and trade-deficit assessment.
  • Improve awareness tools and practical guidance so MSMEs can identify and use FTA preferences.
  • Strengthen coordination among the central government, state governments, regulators, and industry during FTA implementation.
  • Assess domestic regulatory and standards capacity needed to support quality competitiveness and sustainability-related trade obligations.
  • Consider whether state-excise constraints affecting alcohol trade should be examined in a future FTA review.