New FTAs open big export gains across key sectors

India has bolstered its export potential through the signing of eight new free trade agreements (FTAs) over the past five years, unlocking a staggering $982 billion in electronics, $631 billion in agriculture, and $442 billion in gems and jewellery exports, according to a ministry analysis. Engineering goods, chemicals, and pharmaceuticals also present significant market opportunities.

Two FTAs - with New Zealand and the EU - remain pending implementation. The EU alone imported $6.62 trillion worth of goods in 2024, yet India accounted for a mere 1.23% share. Similarly, the UK's merchandise imports from global markets amounted to $815.6 billion, but India's contribution was only 1.88%. Engineering goods emerge as a standout sector with a potential market worth $3 trillion, while labor-intensive sectors like marine and leather boast opportunities exceeding $70 billion each.

Officials attribute the export gains to robust growth across various manufacturing industries, engineering goods, electronics, chemicals, pharmaceuticals, food products, and consumer goods. The diversification of markets beyond conventional destinations bolsters export resilience by diminishing dependence on a limited number of markets and elevating India's involvement in multiple regional value chains.

The 100% duty-free market access under these new trade pacts has fueled trade expansion, especially in labor-intensive sectors. For instance, India's exports to the UAE surged to $37.3 billion in FY26 from $28 billion in FY22, propelled by elevated silk, machinery, and carpet shipments. The India-UAE Comprehensive Economic Partnership Agreement entered into force on May 1, 2022, while trade with the EFTA (comprising Iceland, Liechtenstein, Norway, and Switzerland) remained relatively stable at around $1.7 billion.

Notably, exports to Australia contracted to $7.3 billion in 2025-26 from $8.3 billion in FY22, although food products and pharmaceutical exports have seen growth. The India-Australia Economic Cooperation and Trade Agreement came into effect on December 29, 2022. India's trade deficit with Australia dwindled to $6.5 billion in the previous fiscal year from $8.5 billion in FY22, as per official figures.

The quality of this trade imbalance matters, according to an official, emphasizing that substantial raw material imports often serve manufacturing purposes and subsequently become exports.