Trade Pacts Drive Investment
India's recent free trade agreements aim to boost investor confidence and secure supply chains.
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India’s recent free trade agreements are intended to give businesses greater certainty on tariffs, procedures and the movement of goods, encouraging long-term investment in Indian operations connected to global supply chains. Commerce Secretary Rajesh Agrawal said the pacts also widen exporters’ access to markets worth more than $60 trillion and let them sell across multiple destinations, helping reduce reliance on any one market and limit supply-chain risks. The agreements are tailored to the strengths of individual partners, and lower duties can cut input costs and improve the competitiveness of Indian exports. India’s pact with the European Free Trade Association includes a $100 billion investment commitment over 15 years, while New Zealand’s agreement includes a $20 billion commitment over the same period. Agrawal said such resilience and diversification have become more important amid geopolitical disruptions and other supply-chain shocks.
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Agrawal said India has no current plan to introduce a rules-of-origin mechanism specifically for export supply chains, noting that products often gain value at multiple stages and across different Indian states before export.
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He said India needs to retain relatively high most-favoured-nation tariffs, citing regional factors.
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The Commerce Ministry is working to share more trade data with businesses and state governments to support evidence-based policy and identify export clusters and sectors where more value can be added.
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Agrawal illustrated the potential effect of tariff cuts with textiles: duty-free access under the India-UK FTA for a product otherwise facing a 12% UK duty could improve its returns and competitiveness.
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