India Has Signed the FTAs. Now Comes the Hard Part: Making Them Work

After signing more than 18 free trade agreements, India is entering 2026 with a sobering reality check: FTAs alone will not deliver export growth unless they are made to work on the ground. A new report by the Global Trade Research Initiative (GTRI) argues that India’s trade strategy must pivot urgently from negotiating agreements to extracting real, measurable gains from them.

After signing more than 18 free trade agreements, India is entering 2026 with a sobering reality check: FTAs alone will not deliver export growth unless they are made to work on the ground. A new report by the Global Trade Research Initiative (GTRI) argues that India’s trade strategy must pivot urgently from negotiating agreements to extracting real, measurable gains from them.

India’s total exports stood at $825 billion in FY25 and are expected to inch up only marginally to about $850 billion in FY26. That modest growth masks a deeper challenge. Merchandise exports are likely to remain flat amid weak global demand and rising protectionism, leaving services—expected to cross $400 billion—as the only meaningful buffer.

According to GTRI, 2026 could be one of the toughest years for global trade in recent memory. Advanced economies are turning inward, protectionist barriers are rising, and climate-linked trade restrictions are tightening. For India, the question is no longer about expanding export ambitions, but about holding ground.

The United States has emerged as the most immediate pressure point. Under President Donald Trump, Washington has increasingly bypassed WTO disciplines in favour of steep unilateral tariffs. India’s exports to the US fell nearly 21 per cent between May and November 2025 under a 50 per cent tariff regime. GTRI warns that unless the additional 25 per cent penalty—linked to India’s Russian oil purchases—is rolled back or a trade deal is reached, exports to India’s largest market could weaken further.

Europe presents a different, but equally costly challenge. The European Union’s Carbon Border Adjustment Mechanism (CBAM), set to take effect from January 1, 2026, will impose a carbon cost on imports. Even before payments begin, compliance requirements have already pushed India’s steel exports to the EU down by about 24 per cent. From 2026, Indian goods will be priced with CBAM costs baked in, with actual payments due in 2027.

There are, however, early signs of resilience. While exports to the US declined, shipments to the rest of the world rose by around 5.5 per cent, suggesting gradual diversification beyond traditional markets.

With limited control over global geopolitics, GTRI argues that India’s best lever lies at home. The focus must shift to improving product quality, moving up the value chain, cutting costs, and ensuring that FTAs already signed translate into competitiveness on the factory floor.

“In 2026, India’s trade performance will be decided less by external opportunities and more by domestic execution,” the report concludes.