India arming itself with FTAs to blunt Trump’s tariff shocks

India's proactive acceleration of Free Trade Agreements (FTAs) marks a significant pivot in its foreign trade policy, driven primarily by the need to fortify its economic resilience against global protectionist sentiments, particularly those emanating from the United States under the 'America First' doctrine. This strategic move is not merely a reaction but a calculated effort to diversify market access, secure stable export destinations, and enhance India's position in the evolving global trade architecture.

Historically, India adopted a largely protectionist stance post-independence, prioritizing import substitution. The economic reforms of 1991 ushered in an era of liberalization, gradually opening India's economy to global trade and investment. While India engaged in multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT) and later the World Trade Organization (WTO), its enthusiasm for bilateral FTAs was initially cautious. However, the early 21st century saw a renewed interest, leading to agreements like the India-ASEAN FTA and the Comprehensive Economic Partnership Agreement (CEPA) with Japan and South Korea.

The immediate catalyst for the current acceleration stems from the previous U.S. administration's imposition of tariffs on various goods, including steel and aluminum, under Section 232 of the Trade Expansion Act of 1962, citing national security concerns. While these were broad, the underlying sentiment of 'America First' policy, which also saw the withdrawal of Generalized System of Preferences (GSP) benefits for India in 2019, highlighted the vulnerability of relying heavily on a single market. With the potential return of similar protectionist policies, India is wisely future-proofing its trade strategy.

Several key stakeholders are involved in this intricate dance of trade diplomacy. At the forefront is the **Government of India**, primarily through the Ministry of Commerce & Industry and the Ministry of External Affairs, which are responsible for negotiating and finalizing these complex agreements. **Indian exporters and manufacturers** are direct beneficiaries, as FTAs promise reduced tariffs and non-tariff barriers, making their products more competitive in partner markets. **Farmers** also stand to gain through increased access for agricultural products, though domestic sensitivities often necessitate careful negotiation. On the partner side, the **European Union (EU)** represents a massive, affluent market, and an FTA with it would be a game-changer for Indian industries, especially textiles, pharmaceuticals, and IT services. **New Zealand** and **Chile** offer access to Oceania and Latin American markets, respectively, with potential benefits in agriculture, minerals, and specialized manufacturing. The recently signed FTA with **Oman** is significant for securing energy supplies and expanding market access in the Gulf region, leveraging historical ties and geographical proximity.

This strategic push holds immense significance for India. Economically, it aims to boost exports, which are crucial for economic growth and job creation, aligning with the 'Make in India' and 'Atmanirbhar Bharat' initiatives. Diversifying export destinations reduces economic risk, ensuring stability even if one major market faces downturns or imposes trade barriers. Politically, engaging in FTAs enhances India's diplomatic leverage and strengthens its relationships with key global partners, solidifying its role as a responsible global trading power. It also signals India's commitment to a rules-based international trading system amidst rising protectionism. From a broader perspective, these FTAs are integral to India's foreign policy objectives, such as strengthening ties with the EU as a strategic partner and expanding its footprint in dynamic regions like Southeast Asia and Latin America.

From a constitutional standpoint, **Article 253** of the Indian Constitution empowers Parliament to make any law for implementing any international treaty, agreement, or convention. This provides the legal framework for India to enact domestic legislation necessary to give effect to the provisions of an FTA. Furthermore, the **Foreign Trade (Development and Regulation) Act, 1992**, and the overarching Foreign Trade Policy (FTP) provide the statutory and policy guidelines for India's engagement in international trade, including the negotiation and implementation of FTAs.

The future implications are profound. Successfully concluded FTAs could significantly reshape India's trade landscape, making its exports more competitive and attracting foreign direct investment (FDI) seeking preferential access to partner markets. This could lead to the integration of India into global supply chains, fostering technological upgrades and manufacturing excellence. However, challenges remain, including ensuring that domestic industries are not unduly harmed by increased imports and navigating complex geopolitical shifts. The acceleration of FTAs underscores India's proactive approach to carving out its economic destiny in a multipolar world, demonstrating its commitment to open trade while safeguarding its national interests. This strategy is vital for India to achieve its aspiration of becoming a developed economy by 2047.