India's exports under free trade pacts grew faster than imports in April-July: Piyush Goyal

India's recent trade performance under Free Trade Agreements (FTAs) marks a significant milestone in the country's evolving export strategy. During April-July 2024, exports to FTA partner countries surged by 23.9% year-on-year to reach USD 57.2 billion, while the trade deficit with these partners narrowed from USD 34.2 billion to USD 32.6 billion. This development, highlighted by Union Commerce and Industry Minister Piyush Goyal, signals a maturing of India's trade pact utilization — a critical shift from the historical pattern where imports often outpaced exports under such agreements. The backdrop to this achievement lies in India's strategic recalibration of its trade diplomacy since 2014. After opting out of the Regional Comprehensive Economic Partnership (RCEP) in 2019 over concerns about market access and trade imbalances — particularly with China — India pivoted toward negotiating bilateral FTAs with greater scrutiny on rules of origin, services liberalization, and non-tariff barriers. Key agreements operationalized or advanced during this period include the India-UAE Comprehensive Economic Partnership Agreement (CEPA), effective May 2022; the India-Australia Economic Cooperation and Trade Agreement (ECTA), effective December 2022; and ongoing negotiations with the UK, EU, Canada, and EFTA bloc (Iceland, Liechtenstein, Norway, Switzerland). The UAE and Australia FTAs alone cover major markets for Indian gems & jewellery, textiles, engineering goods, and agricultural products — sectors that have shown strong export growth. Constitutionally, the power to negotiate and ratify international treaties, including trade agreements, vests in the Union Executive under Article 73 (executive power of the Union) read with Article 253 (legislation for giving effect to international agreements). However, since FTAs often require tariff modifications, they necessitate Parliamentary approval via Finance Acts under Article 110 (Money Bills) and Article 117 (special provisions for financial bills). The Department of Commerce, under the Ministry of Commerce & Industry, leads negotiations, while the Directorate General of Foreign Trade (DGFT) administers preferential tariff certificates (like Certificate of Origin) essential for claiming FTA benefits. The narrowing trade deficit with FTA partners — from USD 34.2 billion to USD 32.6 billion — is particularly noteworthy. Historically, critics argued that India's FTAs led to "import surges" without commensurate export gains, especially in manufacturing. The current data suggests improved compliance with rules of origin, better awareness among exporters, and effective use of tariff preference schemes. Sectors like pharmaceuticals, organic chemicals, and electronic goods have leveraged FTAs to penetrate regulated markets. Moreover, the overall merchandise exports of USD 173.8 billion for April-July 2024 reflect resilience amid global headwinds — Red Sea disruptions, sluggish EU demand, and volatile commodity prices. Strategically, this trend strengthens India's position in global value chains (GVCs) and supports the "Make in India" and "Atmanirbhar Bharat" initiatives by linking domestic production to assured export markets. It also enhances India's leverage in ongoing negotiations — such as the India-UK FTA (26 rounds completed as of mid-2024) and India-EFTA talks — where market access commitments are calibrated based on demonstrated export capacity. Looking ahead, the focus must shift to deepening services trade (Mode 1 and Mode 4), addressing non-tariff measures (NTMs), and integrating MSMEs into FTA-driven export ecosystems. The recently launched "Trade Connect" portal and district-level export hubs aim to democratize FTA benefits. If sustained, this export-outpacing-import trajectory under FTAs could redefine India's trade narrative — from a cautious participant to a confident architect of mutually beneficial trade partnerships, aligning with its aspiration to become a USD 5 trillion economy and a key node in resilient global supply chains.