New Delhi: India is making one of its biggest economic wagers in decades. After years of approaching trade liberalisation with caution, New Delhi is stitching together a network of Free Trade Agreements (FTAs) with the hope that stronger global market access will accelerate manufacturing, revive private investment and push merchandise exports to $1 trillion by 2030. The ambition is bold, but the bigger question is whether trade policy can overcome the structural weaknesses that have long constrained India’s export engine.
The backdrop is favourable. Global companies are diversifying production bases to reduce dependence on China, geopolitical tensions are redrawing supply chains and multinational manufacturers are looking for markets that can offer scale, labour and policy stability. India wants to position itself as the natural alternative, combining FTAs with production-linked incentive (PLI) schemes, infrastructure spending and efforts to build domestic manufacturing ecosystems.
That shift is reflected in the YES Securities report, India’s FTAs Set Stage for $1 Trillion Export Target. The brokerage argues that “India’s recent wave of FTAs marks a fundamental shift in economic strategy from cautious protectionism toward deeper global trade integration”. It adds, “These FTAs are not merely trade agreements but represent the foundation of a multi-year industrial and export-led growth cycle.”
Exports Need Investment
The current generation of trade agreements differs from earlier attempts because they are part of a broader industrial strategy rather than stand-alone tariff negotiations. Deals with the UAE, Australia, the UK and EFTA, alongside negotiations with the European Union and the US, are expected to provide exporters with more predictable market access while supporting India’s manufacturing ambitions.
Electronics is likely to be the clearest beneficiary. The industry has undergone a rapid transformation over the past few years, driven by PLI incentives and the expansion of smartphone manufacturing led by Apple and its supplier network. What was once largely an import-driven sector is steadily emerging as a major export contributor. YES Securities estimates electronics exports could climb to $233 billion by the end of the decade, exceeding the government’s own target.
Pharmaceuticals and engineering goods also stand to gain from the changing trade landscape. Better regulatory cooperation could strengthen pharmaceutical exports to developed markets, while engineering products could benefit from lower tariff barriers and the ongoing reorganisation of global supply chains. Services, too, remain a critical part of the equation, particularly as trade agreements improve opportunities for India’s IT, consulting and engineering businesses.
The investment cycle could prove to be the more consequential story. “One of the strongest arguments in favour of FTAs is their potential ability to revive India’s stagnant private investment cycle,” YES Securities said. Higher export demand could improve factory utilisation, encourage companies to expand capacity and create the conditions for fresh private capital expenditure. That would represent a significant shift for an economy where investment momentum has remained uneven for years.
Structural Risks Persist
The case for optimism, however, comes with a sizeable caveat. Trade agreements can create opportunities, but they cannot automatically make Indian industry more competitive.
YES Securities acknowledges as much. “The strongest counter-argument is that India’s primary challenge lies not in market access but in domestic competitiveness,” it said. The observation goes to the heart of India’s export challenge. Merchandise exports have expanded only modestly over the past decade, despite access to a growing number of overseas markets.
Several structural constraints remain unresolved. Logistics costs remain relatively high, electricity expenses continue to weigh on manufacturers and regulatory compliance can be cumbersome. Labour productivity trails several export competitors, while infrastructure gaps still increase costs across supply chains. Unless those issues are addressed, easier market access could result in imports rising faster than exports, undermining some of the intended gains from FTAs.
The benefits are also unlikely to be evenly distributed. Electronics may have policy support and favourable global demand, but traditional export sectors such as textiles, gems and jewellery and specialty chemicals face changing consumption patterns and intense competition from lower-cost producers. Tariff reductions can improve competitiveness at the margin, but they cannot offset deeper structural disadvantages.
The experience of successful export economies suggests that trade agreements are most effective when they complement broader domestic reforms. Competitive manufacturing, efficient logistics and stable policy frameworks tend to matter as much as preferential access to foreign markets.
Execution Will Decide
India’s $1 trillion merchandise export target should therefore be viewed as achievable, but not guaranteed. The country’s advantages are substantial. It offers scale, a large workforce and a domestic market capable of supporting industrial growth while exporters build global presence. The ‘China+1’ shift has created an opportunity that could reshape international manufacturing networks over the next decade.
The latest FTA strategy strengthens India’s position by linking the economy more closely with major trading partners while reinforcing domestic manufacturing initiatives. The combination could support higher exports, stronger investment and deeper integration into global value chains.
The challenge is that trade agreements can only create the framework for growth. They cannot substitute for improvements in competitiveness. Lower logistics costs, better infrastructure, simpler regulations and higher productivity will ultimately determine whether Indian companies can capture larger shares of global markets.
The evidence suggests that FTAs improve India’s chances of reaching the $1 trillion merchandise export milestone. They provide access to larger markets, encourage manufacturing investment and align with broader shifts in the global economy. But the target will be won or lost at home. The next chapter of India’s export story will depend less on the agreements it signs and more on its ability to convert those agreements into sustained industrial capacity, higher productivity and globally competitive businesses.