In fact, the trade diplomats of New Delhi have had a marvellous five years. India has been implementing free trade agreements with the UAE, Australia, Mauritius, the four-nation European Free Trade Association bloc, Oman and, most recently, the United Kingdom since 2020. Signed in 2025 after many years of talks and negotiations, the EU deal is being dubbed “the mother of all trade deals.” New Zealand has signed and is waiting for implementation. Negotiations are ongoing with Canada, Israel, Peru, the Gulf Cooperation Council and the Eurasian Economic Union. But on paper, India now has commercial deals with 27 countries and has exported to more than three-quarters of its trade, the commerce ministry had told Parliament last week, and exports have reached a record $863.1 billion in the financial year ending March 31, with merchandise and services only slightly different. Here's the headline and it's truly amazing.

The problems lie one level below that. But on closer examination of the specifics of who is actually benefiting from such agreements, the tale becomes far less idyllic. These preferential tariff rates are meant to come into effect only on eligible exports of India, but the market takes only a quarter to a third of them. The utilisation rate of the import side is at 60 to 70 per cent. In the simplest possible terms, foreign firms bringing in goods to India are very good at keeping the New Delhi discounts, while Indian firms collecting discounts on behalf of foreign firms are much less adept at holding onto the foreign discounts. That asymmetric is more than any single clause in any single treaty, the true story of India's FTA decade.

It is in some agreements where the proper utilization is demonstrated. Indian merchandise exports to the UAE rose from $28.4 billion to $37.36 billion under the UAE Comprehensive Economic Partnership Agreement (CEPA) since it came into force in May 2022, while exporters have availed over 4.4 lakh certificates of origin (CoO) for duty benefits on textiles, gems, engineering goods and pharmaceuticals. The same can be said for the Australia pact, where the number of certificates issued increased from almost 1,482 per year prior to the deal to an average of more than 45,000 annually thereafter, and exports to Australia grew from $4 billion to $7.3 billion. The new Oman agreement, which has been in effect for just a couple of months, has already yielded a 55 per cent export increase on a month-to-month basis in each of the tariff lines. These are the success stories; and that's why officials mention them.

However, return to the numbers and the negative side of the ledger tells a different story. India's trade deficit with ASEAN increased by 381 per cent while with Japan it rose by 318 per cent and with South Korea it increased by 268 per cent during the period from late 2000s to mid-2020s, as compared to a 142 per cent increase with the rest of the world during the same period. India's deficit with only four newer partners the UAE, Australia, Mauritius and the EFTA bloc last fiscal year was more than $50 billion. Lower import prices for intermediate goods have overcome exports of finished goods and there is a recurring theme, often discussed in parliamentary debates, that China is sneakily infiltrating into the Indian value chain via assembly lines in Southeast Asia that can benefit from preferential tariffs under rules of origin not originally written with Beijing in mind, especially in the ASEAN corridor.

Why the time lag between signing and uptake in the shop-floor? The paperwork required to establish origin, lack of understanding of India's certification systems by customs officials in countries of destination, and even a basic lack of knowledge regarding the availability of a discount are all common problems faced by exporters, especially small and medium manufacturers. Add to this the inverted duty structure of India import duty for raw steel is 7.5 to 10 per cent, while for aluminium it is 10 per cent and a manufacturer can easily find the lower import cost for raw steel compared with producing it.And then add to it the inverted duty structure of India import duty on raw steel is 7.5 to 10 per cent, while that on aluminium finished goods is 10 per cent and a manufacturer often finds it easier to import a finished product than to manufacture it for export. The commerce ministry has responded by introducing the Trade Connect e-platform and outreach programmes for smaller businesses, while tracking progress via data on certificates of origin and trade statistics from the countries with which it deals, but its efforts have been progressing at a somewhat slower speed than the deals themselves are being signed.

But there's a geopolitical piece as well, one unrelated to tariff schedules and related solely to Washington. Despite a gruelling run of effective rates reaching nearly 50 per cent of the value of Indian products, a framework agreed by both sides in February and subsequent adjustments have reduced the effective America tariff for Indian goods to around 18 per cent despite a reciprocal levy of 25 per cent, which is lower than the 20-plus per cent that Vietnam and Bangladesh pay but significantly higher than the roughly 10 per cent baseline that other countries apply, not much under China's 30-plus per cent. That relative positioning is more important than the absolute number is because Indian exporters in textiles, gems and engineering goods are facing the same American shelf space as their Vietnamese and Bangladeshi competitors on a daily basis.

The lesson from Vietnam (and China before that) is that trade agreements only add to growth when domestic manufacturing capability, logistics and finance are geared to take up the export slots a treaty has opened. India is placed at 38th position on the Logistics Performance Index of the World Bank, and regular shortages of power and port congestion wipe out any tariff benefits a certificate of origin may provide. It's a diplomatic accomplishment to be proud of to get 15 agreements and counting. Now, it is only for a few more deals to be booked and much more for the exporter in Tiruppur or Ludhiana to consider it worthwhile to do so.