India is in the midst of its most intense free trade agreement (FTA) push yet, with 2025 marking the highest number of trade pact signings in a single year. During the year, India signed three major FTAs, while the agreement with the four-nation European Free Trade Association (EFTA) coming into force. Collectively, these deals are expected to unlock trade and investment opportunities worth nearly $260 billion in the coming years.
However, despite the aggressive FTA drive, India continues to run a combined trade deficit of nearly $17 billion with these partner regions in 2024-25. India’s trade deficit stands at $20.47 billion with EFTA and $2.48 billion with Oman, even as it enjoys a surplus with the UK and New Zealand. The agreements offer tariff-free access across sectors ranging from engineering goods and textiles to pharmaceuticals, seafood and processed foods—giving exporters an opportunity to move up the value chain, even as negotiations test India’s stance on labour standards, sustainability and market access.
Diversifying export markets has emerged as a key priority for India as it seeks to cushion the impact of higher tariffs, particularly from the US. As highlighted by the Ministry of Commerce, India has fast-tracked trade negotiations with several regions to minimise the fallout from US tariff hikes.
The first FTA concluded in 2025 was the Comprehensive Economic and Trade Agreement (CETA) with the UK in July. The pact aims to double bilateral trade to over $100 billion by 2030 from about $56 billion at present. India currently enjoys a merchandise trade surplus of $5.96 billion with the UK in FY25. Under the agreement, the UK will provide duty-free access for nearly 99% of Indian exports across key sectors such as textiles, automotive components, footwear and pharmaceuticals.
Following the imposition of steep US tariffs in August, the Indian government stepped up trade negotiations with several countries and regions, including the US. While the India-EFTA FTA was implemented in October, the year concluded with the signing of FTAs with New Zealand and Oman in December. The India-EFTA pact alone is expected to unlock $100 billion in investments over 15 years.
“Exports from India to Oman that currently face a 5% duty and are valued at $3.64 billion will get zero-duty access under the proposed FTA, sharply boosting India’s price competitiveness,” said Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI). “While Oman is a relatively smaller market, the agreement deepens Indian firms’ role in Omani logistics and supply chains and supports India’s broader strategy on energy, services and regional connectivity.”
Under the recently concluded FTA, New Zealand has committed to investing $20 billion in India over 15 years, strengthening long-term economic and strategic cooperation. Sectors hit hardest by US tariffs—such as textiles, apparel and marine products—are expected to gain easier market access in New Zealand. For instance, according to GTRI data, India’s global exports of women’s woven apparel stand at $3 billion. New Zealand imports $179 million worth of such apparel, but India currently supplies just $9.8 million, indicating significant untapped potential.
The year also saw the Trade and Economic Partnership Agreement (TEPA) between India and the EFTA states come into effect on October 1, marking a major step in deepening economic ties. Under the agreement, EFTA has eliminated tariffs—earlier as high as 54%—on 95% of Indian chemical exports, significantly improving access for Indian products across Europe.
As part of the pact, EFTA countries—Iceland, Liechtenstein, Norway and Switzerland—have committed to mobilising $100 billion in investments in India over 15 years, with the potential to create one million direct jobs. An investment facilitation mechanism will be established to monitor implementation.
Even as India raced ahead on FTAs, its exports saw a volatile year amid tariffs and geopolitical headwinds. India’s exports to the US fell by about 21% between May and November 2025 under the 50% tariff regime. In contrast, exports to the rest of the world rose by around 5.5% during the same period, pointing to gradual diversification.