Last Thursday, the commerce minister, addressing a meeting on “Leveraging Free Trade Agreements (FTAs)”, called for a nationwide effort to maximise their utilisation and ensure that the benefits of enhanced market access reach businesses across the country. The discussion also highlights the continuing importance of understanding how FTAs are being utilised and whether preferential access translates into an advantage for Indian exporters.
Awareness Has Long Been Part of FTA Policy
The Foreign Trade Policy Statement released on April 1, 2015, aimed to raise India’s merchandise and services exports from $465.9 billion in 2013-14 to $900 billion by 2019-20.
Its analysis identified a lack of awareness among industry about FTA benefits. The government subsequently introduced an outreach programme covering tier-I and tier-II cities, followed by a series of seminars.
The policy statement also acknowledged that export documentation did not separately capture preferential trade data. It noted that India’s exports under various FTAs could not be quantified and that certificates of origin could provide an approximation, although the scope for error was substantial.
The statement therefore proposed a system to capture export data under FTAs at the earliest.
Export FTA Utilisation Data Remains Limited
Eleven years later, agreement-wise and product-wise FTA utilisation data for exports is still not available in the public domain.
The Trade Connect portal does not disclose the number or value of preferential agreement-wise certificates of origin. It also does not cover origin statements made under self-certification mechanisms.
This limits the availability of detailed information on how preferential trade agreements are being used across individual products and agreements.
Import Data Indicates Greater Use of Preferences
The situation on the import side presents a different picture.
Indian Customs data shows that concessional rates under FTAs and other preferential arrangements had a revenue impact of ₹98,569 crore in 2024-25.
Foreign suppliers typically advertise these concessions to Indian customers, while importers and customs brokers examine them as part of efforts to reduce landed costs. Foreign buyers also ask Indian exporters for preferential origin documents because duties can influence purchasing decisions.
Businesses and executives are therefore alert to benefits that affect prices and margins.
Tariff Preferences Do Not Always Translate Into Export Gains
Low export utilisation may therefore reflect commercial factors rather than a lack of awareness.
The preference may be too small, the origin rules may be too onerous, or compliance may be too costly. India is also seldom a partner country’s only FTA partner.
Although duties on Indian goods may decline under an agreement, duties on competing goods from several other countries may also be nil or similarly reduced.
The relevant issue is therefore not simply whether Indian goods receive a concession against the MFN rate, but whether they gain an advantage over competitors. An FTA may remove a tariff disadvantage but does not necessarily create a competitive edge.
Tariff Structures Can Create Uneven Benefits
The structure of tariffs can also result in unequal benefits between trading partners.
India’s MFN duties are high on many products, while duties in several partner countries are already low. Eliminating a 10 or 15 per cent Indian duty can provide a significant benefit to a foreign supplier.
By contrast, reducing a partner country’s duty from 3 per cent to nil may provide Indian exporters with limited additional advantage when competitors have access to the same market.
Competitiveness Remains a Central Issue
The larger concern is that excessive emphasis on FTA awareness could divert attention from the central issue of competitiveness.
An FTA cannot reduce India’s costs of power, credit, logistics, testing and regulatory compliance, or ensure adequate scale, consistent quality and timely delivery. If these disadvantages exceed the tariff preference, awareness alone will not secure orders.
The government should gather FTA utilisation data through shipping bills and publish it, while also providing product-specific guidance where information gaps exist.
However, seminars cannot substitute for policies that reduce costs and improve productivity.
FTAs may open doors; Indian exporters will enter them only when they can compete on cost, quality and delivery.