GTRI: India Must Prioritize Gains from Current FTAs

New Delhi, December 25, 2025 — As India enters a challenging 2026 trade landscape, the Global Trade Research Initiative (GTRI) has released a critical report urging the government to shift its strategy. The think tank argues that with 18 Free Trade Agreements (FTAs) already signed, India’s priority must move from “negotiating new deals” to “extracting tangible gains” from existing ones.

The report comes at a time when global demand is softening and protectionist measures are on the rise in major economies. According to GTRI, India’s total exports for FY25 stood at $825 billion and are projected to grow only marginally to $850 billion in FY26, falling short of the $1 trillion target.

Key Challenges: The “Trump Effect” and Carbon Taxes

The GTRI report highlights a deepening “challenge of holding ground” rather than just expanding. Two major external factors are creating significant pressure:

• U.S. Tariff Volatility: Under the current U.S. administration, exports to India’s largest market have been hit hard. Shipments to the U.S. declined by approximately 21% between May and November 2025, largely due to a 50% tariff regime on various Indian goods.
• The EU’s Green Barrier: Starting January 1, 2026, the European Union will activate its Carbon Border Adjustment Mechanism (CBAM). This “carbon tax” has already begun impacting Indian steel exports, which saw a 24% drop even before the payment phase began.

Areas for High-Value Focus

GTRI emphasizes that the next phase of India’s trade growth will be decided by domestic execution rather than external opportunities. To counter global headwinds, India must leverage its existing FTAs—such as those with ASEAN, Japan, and South Korea—more effectively in high-potential sectors:

1. Electronics & Engineering: Moving up the value chain to move beyond simple assembly.
2. Textiles & Apparel: Competing on quality and sustainability to regain market share.
3. Agriculture & Pharma: Diversifying into markets like New Zealand, where India currently holds a small share compared to China.

“In 2026, India’s trade performance will be decided less by external opportunities and more by domestic execution,” the report stated, emphasizing the need for upgrading product quality and lowering costs.

Strategy for 2026: An Inward Focus

Despite the decline in U.S. exports, the report noted a silver lining: India’s exports to the rest of the world rose by 5.5%, suggesting a gradual and necessary diversification of trade partners.

GTRI suggests that the government must operationalize the Export Promotion Mission more aggressively. Improving utilization rates of existing FTAs—which often remain low due to complex “Rules of Origin” and lack of awareness among MSMEs—is seen as the most immediate path to growth.

Conclusion: The Road to $1 Trillion

While services exports remain a “cushion,” projected to cross $400 billion in FY26, merchandise trade faces a flat outlook. To bridge the gap, the GTRI recommends that India pauses its pursuit of “quantity” in trade deals and focuses on the “quality” of implementation.