How India’s Free Trade Agreements are boosting exports
ndia is a significant player in the global economy, with a gross domestic product (GDP) of approximately $3.7 trillion in 2024, making it one of the largest economies in the world. Exports are a critical part of India's economic growth, contributing around 22% to the GDP. According to the Press Information Bureau, India’s exports reached a record high of approximately $776 billion in 2023, with merchandise exports accounting for over $437 billion, demonstrating the country’s export potential across various sectors, from textiles and apparel to electronics and jewelry. Free Trade Agreements (FTAs) play a crucial role in India’s export success by establishing mutually beneficial trade relationships with other countries.
India has signed numerous FTAs with major economies and trading blocs, including the UAE, Japan, ASEAN, and South Korea. These agreements have emerged as a key instrument in boosting India’s export growth by offering favorable trade terms, lowering tariffs, and enhancing market access.
For businesses like Qalara, an Indian wholesale platform offering eco-friendly, artisanal products to international buyers, FTAs mean greater access to global buyers with minimal tariffs and streamlined processes. This advantage empowers Indian exporters to better meet global demand and capitalize on their unique, sustainable product offerings, ultimately driving export growth and supporting the domestic economy.
Table of contents:
The Role of FTAs in India’s export growth
Reducing tariffs for key exports
Boosting export-oriented sectors
Streamlining compliance and reducing regulatory barriers
Encouraging Foreign Direct Investment (FDI)
Job creation and economic growth
Enhancing global competitiveness
Facilitating e-commerce and digital trade
How FTAs benefit Indian exporters on Qalara
Lower tariffs and increased competitiveness
Faster delivery with streamlined customs
Expanding markets for artisanal products
Artisan empowerment and fair trade
India-UAE Comprehensive Economic Partnership Agreement (CEPA)
India-Japan Comprehensive Economic Partnership Agreement (CEPA)
India-Australia Economic Cooperation and Trade Agreement (ECTA)
What are FTAs?
Free Trade Agreements (FTAs) are pivotal instruments in the global economy, designed to foster trade between nations by reducing or eliminating tariffs, import quotas, and other trade barriers. By opening up access to each other’s markets, countries engaged in FTAs aim to create a more seamless flow of goods, services, and investments. This approach not only boosts economic cooperation but also encourages specialization and efficiency, allowing each country to focus on industries in which it has a competitive advantage.
As of 2024, India enjoys preferential access, economic cooperation, and Free Trade Agreements (FTAs) with over 50 countries. Recently, India and the Member States of the European Free Trade Association — Iceland, Liechtenstein, Norway, and Switzerland, signed a comprehensive Trade and Economic Partnership Agreement (TEPA), further strengthening India’s economic ties and promoting trade opportunities across diverse sectors.
The Role of FTAs in India's export growth
Free Trade Agreements (FTAs) are pivotal in accelerating India’s export growth. Here are some of the key ways FTAs support and enhance India’s export performance.
Expanding market access
FTAs open doors to new markets by reducing or eliminating trade barriers, making Indian goods more competitive abroad. India has established FTAs with multiple countries, including the United Arab Emirates (UAE), Japan, and the ASEAN nations, granting Indian exporters preferential access to these markets. For instance, the India-UAE Comprehensive Economic Partnership Agreement (CEPA) has eliminated duties on over 97% of the UAE’s tariff lines for imports from India, and over 80% of India’s tariff lines for exports to the UAE, which has enabled Indian exports to the UAE to grow by over 16% in its first year, allowing sectors like jewelry, tourism, healthcare, financial services and others to flourish with reduced tariffs.
Reducing tariffs for key exports
Lower tariffs make Indian products more affordable in foreign markets. Sectors like textiles, jewelry, pharmaceuticals, and petroleum products—core areas for Indian exporters—benefit significantly from tariff reductions. With FTAs, these goods can be exported at competitive prices, which enhances demand. For instance, under the India-South Korea Comprehensive Economic Partnership Agreement (CEPA), both nations agreed to a 100% reduction in customs duties for goods such as journals, computer appliances, and nuclear reactors. Meanwhile, agricultural goods were included in the category with a tariff reduction of up to 50%.
Boosting export-oriented sectors
FTAs help identify and promote specific sectors that align with the demand in partner countries. India has a rich heritage of artisanal craftsmanship and a growing market for sustainable goods—an area where FTAs give Indian exports a competitive edge. Sectors like handloom textiles, handicrafts, and eco-friendly decor items benefit from access to markets with high demand for unique, ethical products. This has been a significant advantage for wholesale platforms like Qalara, which sources artisanal and sustainable products for export to markets such as Europe, the USA, and Australia.
Streamlining compliance and reducing regulatory barriers
FTAs often include provisions to simplify customs procedures, reduce non-tariff barriers, and align quality standards between countries. These streamlined processes make it easier and faster for Indian exporters to meet regulatory requirements in partner countries. For instance, the India-Japan CEPA includes measures that simplify technical requirements, making it easier for Indian businesses to export manufactured goods to Japan.
Encouraging Foreign Direct Investment (FDI)
FTAs not only promote exports but also create a more attractive environment for foreign direct investment (FDI) in export-oriented sectors. With more FDI, India’s capacity for production and innovation expands, allowing it to produce higher-value goods for export. Countries like Japan and South Korea have increased their FDI in India in sectors such as electronics, automobiles, and infrastructure, contributing to an ecosystem that supports exports.
Job creation and economic growth
The export sector, buoyed by FTAs, plays a significant role in employment generation, particularly in labor-intensive sectors like textiles, agriculture, and artisanal goods. FTAs that favor these industries lead to increased production and job creation. With exports accounting for approximately 22% of India’s GDP, the growth spurred by FTAs contributes to the overall economic development of the country.
Enhancing global competitiveness
FTAs enable Indian exporters to compete on a global scale by offering goods at competitive prices and aligning with global standards. By providing an edge over non-FTA countries in these partner markets, FTAs position Indian goods favorably in comparison with those from countries that don’t enjoy similar agreements.
Facilitating e-commerce and digital trade
With the rise of e-commerce, FTAs that promote digital trade make it easier for Indian exporters to reach global buyers through online platforms. The Regional Comprehensive Economic Partnership (RCEP), which India opted out of but remains relevant, includes provisions for digital trade facilitation, setting a precedent for India’s future FTAs. With India’s ongoing e-commerce boom, platforms like Qalara can leverage digital trade facilitation provisions in FTAs to streamline cross-border sales.
How FTAs benefit Indian exporters on Qalara
Qalara acts as a bridge between Indian artisans and international buyers, making it easier for small-scale producers to reach markets worldwide. By leveraging India’s FTAs, Qalara can offer competitive pricing, seamless logistics, and access to authentic, certified products that meet global standards. For example:
Lower tariffs, increased competitiveness
FTAs reduce import duties for buyers in partner countries, making Indian products more attractive in terms of price. For example, a buyer in Europe might be more inclined to purchase home decor or furniture from Qalara, knowing that reduced tariffs make Indian products a cost-effective choice compared to other markets.
Faster delivery times with streamlined customs
FTAs often simplify customs procedures, leading to quicker shipping times. For Qalara’s buyers in the USA or Australia, this can mean faster delivery and smoother transactions, ensuring that products such as handmade furniture, jewelry, and kitchenware reach them on time and in excellent condition. Do check out what our clients have to say about our services in our “testimonials” section.
Expanding markets for artisanal products
Indian FTAs have helped drive demand for traditional crafts, eco-friendly goods, and sustainably sourced materials. Qalara, which focuses on ethically produced, fair-trade items, benefits as these products resonate well in countries prioritizing sustainability and unique craftsmanship, such as European nations.
Artisan empowerment and fair trade
Many products on Qalara are fair-trade certified, aligning well with global interest in ethical sourcing, especially in regions like Europe. FTAs make these products accessible at competitive rates, increasing marketability for artisans’ work.
Major FTAs and key markets
India-UAE Comprehensive Economic Partnership Agreement (CEPA)
As one of India’s major trade partners, the UAE agreement opens up avenues for Indian home decor, jewelry, and storage solutions, especially for Qalara’s Middle Eastern buyers.
India-Japan Comprehensive Economic Partnership Agreement (CEPA)
Japan values traditional craftsmanship and sustainable practices, making it a promising market for Qalara’s range of products. Lower tariffs and favorable trade conditions make Japanese buyers more likely to consider Indian products over other options.
India-Australia Economic Cooperation and Trade Agreement (ECTA)
With Australia’s increasing demand for eco-friendly and unique home products, Qalara stands to benefit from this agreement. Australian buyers looking for sustainable, fair-trade home furnishings or dining accessories will find Qalara an attractive choice with reduced import costs.
Proposed India-EU Free Trade Agreement
Although still under negotiation, the India-EU FTA could potentially be a game-changer for Qalara. The European market is one of the largest consumers of sustainable and ethically produced goods, and an FTA could significantly lower barriers for Indian exports.
Conclusion
Free Trade Agreements (FTAs) serve as a vital engine driving India’s export growth, enabling the country to strengthen its global economic presence. By reducing trade barriers, enhancing market access, and promoting sustainable practices, FTAs provide Indian exporters with a competitive edge. Businesses like Qalara exemplify the benefits of these agreements, leveraging them to bring eco-friendly, artisanal products to international buyers.
As India continues to expand its network of FTAs, including ongoing negotiations with the European Union, the opportunities for Indian exporters are poised to grow even further. By capitalizing on these agreements, India can not only boost its export figures but also empower its artisans, create jobs, and foster sustainable economic development. With the global demand for ethically sourced and unique products on the rise, FTAs will remain a cornerstone of India’s strategy to strengthen its position as a leading exporter in the international market. Take the first step in partnering with India’s thriving export market—visit Qalara today and redefine your sourcing strategy!
~ Written by Kartik Khati
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