India Should Now Focus on FTA Implementation, Utilisation by Exporters: Experts

Why It Matters

Improving FTA utilisation can unlock billions in export revenue and reduce India’s vulnerability to geopolitical shocks, making it a high‑leverage reform for trade growth.

Key Takeaways

• India's FTA utilisation sits at ~25%, far below 70‑80% in developed economies
• Cites duty‑free access for 99% of exports to the UK under CETA
• MSMEs lack awareness and certification infrastructure to claim preferential tariffs
• Targeted PLI‑type support needed for textiles, pharma, engineering to meet standards

Pulse Analysis

India has built an extensive network of free‑trade agreements with partners ranging from Singapore and Japan to the EU and the UK, yet the real economic payoff remains elusive. While the agreements promise duty‑free access for the vast majority of Indian export baskets, utilisation rates linger around a quarter of potential, a stark contrast to the 70‑80% seen in the United States, Europe, and Japan. This utilisation gap reflects structural bottlenecks rather than a lack of market opportunities, underscoring the need for a policy shift from treaty signing to active implementation.

The primary obstacles lie in awareness, certification, and compliance. Small and medium‑sized exporters often do not know which preferential tariffs apply to their products, and the domestic certification ecosystem is fragmented, making it costly to meet foreign quality, traceability, and sustainability standards. Experts point to the success of Australia’s ECTA, where utilisation exceeds 80%, as evidence that targeted production‑linked incentives (PLI) and streamlined mutual‑recognition agreements can bridge the gap. Building robust testing labs, carbon‑accounting frameworks, and soft‑finance mechanisms for MSMEs will enable firms to claim the tariff reductions they have already negotiated.

Strategically, turning the FTA network into a growth engine requires parallel investment in India’s domestic manufacturing base. High‑value sectors such as electronics, pharmaceuticals, and machinery depend heavily on imported inputs, exposing them to supply‑chain disruptions. By keeping tariffs low on intermediate goods, upgrading standards, and channeling capital into technology up‑gradation, India can reduce input costs and meet the stringent requirements of premium markets like the EU and the US. Effective FTA utilisation, combined with a stronger domestic ecosystem, could add several percentage points to export growth annually, reinforcing India’s resilience amid global geopolitical uncertainty.