Union Minister Piyush Goyal welcomes Todd McClay, New Zealand’s Minister for Trade & Investment on April 24, 2026. Picture: X/@PiyushGoyal

Commerce and Industry Minister Piyush Goyal. File
| Photo Credit: PTI

Union Minister of Commerce and Industry Piyush Goyal. File
| Photo Credit: ANI

File picture of Union Minister Piyush Goyal and EU’s trade commissioner Maroš Šefčovič and European Commissioner for Agriculture and Food Christophe Hansen over a discussion on the Free-Trade Agreement (FTA) between India and the European Union. in New Delhi on September 12, 2025.
| Photo Credit: ANI

A view of a sand sculpture depicting Donald Trump at Puri beach in Odisha on November 6, 2024 after he won the U.S. Presidential elections.
| Photo Credit: Reuters

Five years after Prime Minister Narendra Modi told a crowd in Houston, Texas, that India had “connected well” with Republican candidate Donald Trump and followed it up with “Abki Baar Trump Sarkar (This time, a Trump government)”, Mr. Trump has gained the votes required to become the U.S.’s 47th President. Mr. Modi’s statement reflected the bonhomie that the two leaders shared throughout Mr. Trump’s first tenure. But when we go beyond personal ties to bilateral ties, ‘Trump 1.0’ was a mixed bag for India. New Delhi will no doubt welcome Trump 2.0, even as it braces for the impact of some of his methods, such as using social media to open coercion in order to drive home a point.

Where the road will be smooth

There are several reasons for the Modi government to be delighted with Mr. Trump’s victory. The President-elect has made it clear that he intends to build on his past history with India, which will include building trade ties, opening up more technology for Indian companies, and making more U.S. military hardware available for Indian defence forces. He will pick up the broken threads of negotiations for a Free Trade Agreement, which saw intense negotiations in 2019-2020 before he lost power, and which former President Joe Biden showed no interest in continuing. Rather than pushing India on carbon emission cuts, Mr. Trump is likely to encourage India to buy into U.S. oil and LNG, along the lines of the Memorandum of Understanding for the Driftwood LNG plant in Louisiana in 2019, which would have brought $2.5 billion in investment from Petronet India into the U.S. but was shelved a year later.

U.S. Elections 2024 results | LIVE updates

Under Mr. Trump, India-U.S. ties are also unlikely to face less trouble over issues such as democratic norms, minority rights, press freedoms, and human rights, which the Modi government faced from the Biden administration and the U.S. Commission on International Religious Freedom. Nor will they need to worry about queries on the treatment of climate and human rights NGOs hit by the Foreign (Contribution) Regulation Act, 2010, although there may be some questions asked by Republican Congressmen who are concerned about U.S. Christian NGOs operating in India. New Delhi will also hope that public comments by the U.S. State Department and Department of Justice on the Pannun-Nijjar cases will be more muted. While the trial involving alleged middleman, Nikhil Gupta, for the aborted assassination attempt on Khalistani activist Gurpatwant Pannun last year would continue, founder of the Republican Hindu Coalition, Shalabh ‘Shaili’ Kumar, has said that he expects Mr. Trump to “crackdown” on Khalistani groups. Moreover, Mr. Trump’s frosty ties in the past with Canadian Prime Minister Justin Trudeau indicate that New Delhi would not have to worry about a reaction from Washington over its ongoing diplomatic war with Ottawa over the Nijjar killing.

Potential trouble areas

So, where could the trouble come from? The first problem is Mr. Trump’s persistent focus on cutting trade tariffs, which saw his administration impose a series of counter-tariffs, file World Trade Organization complaints, and then withdraw India’s GSP status for exporters.

The second is his habit of disclosing the contents of private conversations with leaders and, on occasion, embellishing them or even imagining them. For instance, he mocked Mr. Modi on the issue of lowering of duties on Harley Davidson motorcycles and badgered India to lift the ban on Hydroxychloroquine exports, which did not go down well in New Delhi.

This habit took a more serious turn when it involved other countries. In 2019, Mr. Trump told Pakistan’s then Prime Minister, Imran Khan, that they could “resolve the Kashmir issue”, and that Mr. Modi had asked him to mediate in the matter (India vehemently denied the assertion). In 2020, after China transgressed the Line of Actual Control and began a military stand-off with India, Mr. Trump posted that Mr. Modi was “not in a good mood” over the developments; India denied that the two leaders had spoken at all. Diplomats, however, point out that Mr. Trump did back India in the conflict, ensuring that the U.S. shared intelligence, leased drones, and supplied winter gear for the forces “in a manner different from past U.S. administrations”.

Perhaps the most testing times were during the U.S.’s tensions with Iran: in June 2018, he sent the then United Nations envoy, Nikki Haley, on a mission to New Delhi to virtually threaten India with sanctions. Subsequently, India “zeroed out” its oil imports from both Iran and Venezuela.

In some relief, New Delhi is likely to face little pressure now on cutting ties with Moscow, given Mr. Trump’s interest in engaging the Russian President. India will also seek Mr. Trump’s intervention in ending Israel’s war in Gaza and Lebanon, and reopening talks with Gulf countries, to help revive its plans for the India Middle East Europe Economic Corridor, now virtually moribund.

India’s neighbours may be more concerned about the impact of Mr. Trump’s victory. During his last tenure, he had cancelled most of the U.S. aid to Pakistan. Now, the Shahbaz Sharif government would worry about losing U.S. support on loans from the International Monetary Fund and World Bank as well. In Bangladesh, Chief Advisor Muhammad Yunus, a close friend of Democratic Party leaders, has already run afoul of Mr. Trump, who posted on social media last week about Dhaka’s failure to protect Hindu minorities. The Biden government had expanded its outreach in South Asian countries, such as Nepal, Bhutan, and the Maldives. In that sense, many in the region may worry not so much about U.S. actions, but a lack of attention from the new administration.

suhasini.h@thehindu.co.in

The Labour Party’s election manifesto for the recent polls also committed to clinching the deal. File.
| Photo Credit: AFP

With the new government taking charge in Britain, senior officials of India and the U.K. will hold the next round of talks this month for the proposed free trade agreement to resolve the pending issues and close the negotiations, an official said.

The India-U.K. talks for the proposed free trade agreement (FTA) began in January 2022. The 14th round of talks stalled as the two nations stepped into their general election cycles.

Also read | Visas not first priority for India in FTA with U.K.: High Commissioner Doraiswami

The official said the two sides are in touch, and the next round would start this month only.

Britain’s newly-elected Prime Minister Keir Starmer spoke to Prime Minister Narendra Modi on Saturday and said he stood ready to conclude an FTA that worked for both sides.

The two leaders agreed to work towards the early conclusion of a mutually beneficial India-U.K. FTA.

There are pending issues in both the goods and services sectors.

The Indian industry is demanding greater access for its skilled professionals from sectors like IT and healthcare in the UK market, besides market access for several goods at nil customs duty.

On the other hand, the UK is seeking a significant cut in import duties on goods such as scotch whiskey, electric vehicles, lamb meat, chocolates and certain confectionary items.

Britain is also looking for more opportunities for U.K. services in Indian markets in segments like telecommunications, legal and financial services (banking and insurance).

The two countries are also negotiating a bilateral investment treaty (BIT).

There are 26 chapters in the agreement, which include goods, services, investments and intellectual property rights.

The bilateral trade between India and the UK increased to $21.34 billion in 2023-24 from 20.36 billion in 2022-23.

The Labour Party’s election manifesto for the recent polls also committed to clinching the deal.

The new Starmer-led government’s new Foreign Secretary David Lammy is also on the record saying that he wants to finish the job on the FTA and plans to visit India within the first month of being elected.

According to the think tank GTRI (Global Trade Research Initiative), the agreement is nearly finalised and with a few minor adjustments like curtailing the number of visas for Indian professionals, the Labour Party is likely to give its approval.

It has suggested that India should focus on two issues – Carbon Border Adjustment Measure (CBAM) and non-traditional subjects like labour, environment, gender, and intellectual property rights – in the pact.

Historically, India has resisted incorporating these topics into FTAs as they often require domestic policy changes.

The GTRI report has stated that even if the UK agrees to eliminate tariffs on sectors like textiles, Indian exports might still need to meet stringent UK sustainability requirements, and this could adversely affect Indian exports, especially in labour-intensive sectors.

Shadow Foreign Secretary David Lammy. File
| Photo Credit: Reuters

Days before the U.K.’s general election, the opposition Labour Party’s shadow Foreign Secretary, David Lammy, reiterated that his party would reset its relationship with India. Mr Lammy is all but certain to be the country’s next Foreign Secretary, given that Labour is most likely — as per polls — to form the next U.K. government after the country’s July 4 elections.

Speaking on June 24 afternoon at the India Global Forum, a weeklong gathering of government officials, politicians, entrepreneurs and industrialists, Mr Lammy outlined some of the areas of cooperation — notably trade, climate and security.

“We need a reset,” he said, saying a reset with of the U.K.’s relationship with the Global South was needed, starting with India.

Referring to former Conservative U.K. Prime Minister Boris Johnson’s recital of a colonial-era Rudyard Kipling poem during a visit to a temple in Myanmar, Mr Lammy said, to applause,

“If I recite a poem, it will be by Tagore.” Mr Lammy’s great great grandmother was from Calcutta and was taken (by the British) to the Caribbean as an indentured labourer, he said.

The Labour Party has also been seeking to reset its own relationship with India after some evidence that British Indians, who have traditionally supported the Labour Party were moving to the Conservative Party. The shift, as per some data available from 2021, was led more by Hindus and Christians, rather than Muslims or Sikhs.

U.K.-India FTA ‘A floor not ceiling’

The ‘free trade’ deal (FTA), being negotiated by India and the U.K., was a floor not a ceiling to the relationship Mr Lammy said.

He also stressed the emphasis a Labour government, under Keir Starmer, would place on climate action, including by appointment a climate envoy and reversing the watering down of the U.K.’s climate targets by the Rishi Sunak government.

Speaking of a power alliance abroad, Mr Lammy said, “There can be no energy transition without an Indian energy transition.”

He urged China not to join forces with Russia, Iran and North Korea and urged deeper cooperation between India and the U.K.

“Because we are committed to a free and open Indo Pacific, just like India is,” he said, adding that a Labour government would seek to ramp up its partnership with India across several dimensions: military and maritime cooperation, emerging technology, cyber and supply chain security.

“We are India’s friends, and we are with her and right behind her. This is our message which the UK Carrier Strike Group will carry to the Indian Ocean in 2025,” he said. The Rishi Sunak government had announced in January that the Carrier Strike Group would undertake joint training with Indian forces.

“While India’s total imports from the UAE fell 9.8% from $53.2 billion in FY23 to $48 billion in FY24, imports of gold and silver skyrocketed 210%, from $3.5 billion to $10.7 billion,” GTRI report said.
| Photo Credit: Reuters

“India’s gold and silver imports from its free trade agreement (FTA) partner UAE have skyrocketed 210% to $10.7 billion in 2023-24 and there is a need to potentially revise the concessional customs duty rates under the pact to mitigate the arbitrage driving this surge,” a report said on June 17.

Economic think tank Global Trade Research Initiative (GTRI) said this sharp rise in gold and silver imports is primarily driven by import duty concessions granted by India to the UAE under the India-UAE Comprehensive Economic Partnership Agreement (CEPA).

India allows 7% tariffs or customs duty concessions on import of unlimited quantities of silver and a 1% concession on 160 metric tonnes of gold. CEPA was signed in February 2022 and implemented in May 2022.

Additionally, India facilitates gold and silver imports by allowing private firms to import from the UAE through the India International Bullion Exchange (IIBX) in Gift City. “Previously, only authorised agencies could handle such imports,” the report said.

“While India’s total imports from the UAE fell 9.8% from $53.2 billion in FY23 to $48 billion in FY24, imports of gold and silver skyrocketed 210%, from $3.5 billion to $10.7 billion,” it said.

“Import of all remaining products fell 25%, from $49.7 billion in FY23 to %37.3 billion in FY24,” it said. GTRI Founder Ajay Srivastava said the current import of gold and silver from the UAE is unsustainable as the UAE does not mine gold or silver or add sufficient value to imports.

“High import duties in India on gold, silver, and jewellery at 15% are at the root of the problem. Consider lowering tariffs to 5 per cent. This will cut large-scale smuggling and other misuse,” Mr. Srivastava said.

Trade in gold, silver, and diamonds has been prone to misuse due to their low volume but high value and high import duties in India. “Low tariff imports of gold, silver only benefit few importers who keep all profits arising through tariff arbitrage and never pass it to consumers,” he said.

Mr. Srivastava suggested the government implement certain measures to help India balance its trade policies, protect domestic revenue, and ensure fair competition in the import of precious metals and jewellery. It suggested reassessing and potentially revising the concessional duty rates under CEPA to mitigate the arbitrage driving the surge in imports of gold and silver.

“At least, implement yearly import quotas (tariff rate quotas) for silver, similar to those for gold, to control the volume of imports and prevent revenue loss,” it said, adding that India should rigorously verify the claimed value addition by Dubai-based refiners in gold and silver imports to ensure compliance with CEPA rules of origin.

It also asked to tighten regulations around the India International Bullion Exchange (IIBX) at Gift City to control the volume and nature of precious metal imports and the exchange should not allow country-based exemptions.

As increased imports contribute to a higher current account deficit and since gold and silver act more like financial instruments than regular trade items, India should avoid including them in any FTA.

“India has granted tariff concessions for these items in many FTAs and under the DFTP (duty-free tariff preference) scheme, so a comprehensive review is needed.

India announced the scheme for LDCs (least developed countries) in 2008. Under this, India provides duty free/preferential market access on about 98.2% of India’s tariff lines (or product categories).

Further, the report stated that silver imports from the UAE increased multifold to $1.74 billion in 2023-24 from a meagre $29.2 million in 2022-23 due to India charging an 8% duty under the CEPA versus a 15% duty from other countries.

“The large 7% tariff arbitrage resulted in a loss of revenue for India of ₹1,010 crore in FY24. Revenue loss will increase as India has committed to make tariffs zero on unlimited quantities of silver from the UAE within next 8 years,” it added.

It said this trade is unusual because the UAE just imports large silver and gold bars, melt and convert these into silver grains and unwrought gold for exports. “A check with global refiners will show that value addition in such process is much less than 1% as opposed to 3% required under the FTA,” it said.

On gold bars, the report said India agreed to import 200 metric tonmes of gold annually from the UAE with a 1% tariff concession and due to this gold imports rose 147.6% from $3 billion in FY23 to $7.6 billion in FY24, causing India to lose ₹635 crore in revenue in FY24.

Similarly, India’s jewellery imports have increased 187.6% from $1.1 billion in FY23 to $3.3 billion in FY24, whereas these imports from the UAE have increased 290% from $347 million in FY23 to $1.35 billion in the last fiscal.

As India signs a Free Trade Agreement with 4 European Nations, is there hope for other negotiations- from the UK and EU to Oman, Gulf and Eurasian countries? Do FTAs help increase trade substantially? And are they a challenge to the global economic order under the WTO- Up ahead, an interview with Irish Trade minister on whats delaying the India EU FTA

Hello and Welcome to WorldView at The Hindu with me Suhasini Haidar.

This week we look at an important part of Foreign Policy- Trade policy and trade diplomacy.

While at present the Ministry of External Affairs oversees diplomacy, and the Ministry of Commerce negotiates Trade policies, we are seeing both come together more and more for trade talks. In fact in countries like the UK, Australia, Canada and others Departments of Foreign Affairs and Trade are actually merged together.

Let’s start with this week’s developments, and a flurry of activities around India’s Free Trade Agreement negotiations just ahead of elections being announced:

1. India signed a Trade and Economic Partnership Agreement (TEPA) with a 4-nation non-EU European Bloc of Iceland, Norway, Liechtenstein and Switzerland. The agreement that was completed after 21 rounds of talks, and began in 2008, had been suspended between 2013-2023.

-The agreement included a chapter on investment promotion, with EFTA countries promising $100bn investment in 15 years, as long as high GDPs and other economic factors remain. 

– On Intellectual Property Rights, India rejected a push for data exclusivity, which could have raised prices of Generic Pharma in India

– It also included a chapter on Human Rights and Sustainable development

There’s more of our coverage on the EFTA India FTA ,including an interview with the key Swiss Minister in charge of the negotiations Helene Budliger

2. The India-UK FTA has made some progress, but it is unclear if it can be signed now, before elections, or later this year as the UK heads to elections. Prime Minister Narendra Modi and British Prime Minister Rishi Sunak spoke this week to discuss the FTA

3. Belarus Foreign Minister Sergei Aleinik said after talks in Delhi that India and the Eurasian Economic Union are serious about starting FTA talks now

4. And during a visit to India, Ireland’s Trade Minister Simon Coveney said that hopes are high on the India-EU Bilateral Trade and Investment Agreement (BTIA). Listen in, as I asked him just what was holding up the agreement:

Now at present India has FTAs with about a dozen countries and regions, most of which were signed pre-2014:

1. India-ASEAN FTA, also CECAs with Singapore and Malaysia

2. India-Japan CEPA

3. India-S. Korea CEPA

4. SAFTA of all SAARC countries- along with separate FTAs with Sri Lanka, Nepal, Bhutan

More recently the government has signed 3 FTAs

5. India-Mauritius CECPA-implemented in 202

6. India-UAE CEPA, implemented in 2022

7. India-EFTA FTA, expected to be implemented in 2025

There’s also the India-Australia Early Harvest Agreement or ECTA, which is not a full-fledged FTA yet, that is being negotiated.

In the works at present are negotiations with dozens of countries- but the ones that seem most on the anvil are:

1. Australia- CECA was due to have been completed by December 2023

2. Canada- Negotiations for CEPA suspended by Canada over the Nijjar killing last year

3. UK- FTA was nearly done many times in the past few years, but first the rapid changes in UK PMs, and then India’s own election process has tripped it up

4. Oman- FTA is understood to have been finalised, so you can expect an announcement soon, or after elections

5. Gulf Cooperation Council 6 nations-FTA has been delayed, some consideration of joining with the India UAE FTA

6. European Union- BTIA- talks were suspended between 2013-2022, but now in advanced stages

7. Eurasian Economic Union EAEU 5 Post Soviet States including Russia and Belarus- where talks may begin soon.

One with the US that was started during the Trump presidency was dropped by the Biden Administration, and could be picked up if the government changes.

Broadly, where are the stumbling blocks for India’s negotiations:

1. Modi government had a traditional mistrust of FTAs, suspended most talks after 2014, and scrapped all Bilateral Investment Treaties

2. In 2019, India also walked out of the RCEP- 15 nation Asian and Australian FTA . While India has refused to reconsider, neighbours like Bangladesh and Sri Lanka have applied to join RCEP.

3. India’s announcement of the Make In India or Atmanirbhar Bharat policy runs counter to free trade without subsidies negotiations

4. India has always been protective of agricultural sector, and most FTAs leave the subject out entirely

5. Concerns about Chinese goods flooding the markets via FTAs with third countries – mean India pushes for strong Rules of Origin clauses

6. Intellectual Property Rights is increasingly a problem as countries move towards R&D as an economic mainstay, India is being forced to accept more international patents

7. Issues like Democratic freedoms, Human Rights issues, transnational operations are also bleeding into negotiations like the EU, EFTA and now Canada

8. FTAs defeat the purpose of the WTO, and bypass global mechanisms for free trade

Quick question on the benefits of FTAs- theres no doubt that trade increases with FTAs as they

-Reduce or zero out tariffs in most sectors

-Increase market access for both parties

-Make for reliable supply chains

-Build a positive momentum for trade

If you want to quantify benefits, it is more difficult in the short term, but Commerce Ministry figures given in Parliament said this in terms of how India’s exports grew:  

India’s exports – RTA Partner Countries/Region wise

Values in US$ billion

Source: Directorate General of Commercial Intelligence and Statistics (DGCI&S)

Clearly, there are benefits to FTAs, and that probably explains the complete turnaround in the government’s policy towards negotiations over a decade.

WV Take: Free Trade Agreements are not just about tariff reductions and transactional approaches of give and take on market acess or IPR- they are an avowment of mutual trust between two countries or regions, and in effect a commitment to give each other’s businesses and investments near national treatment. Protectionism and political differences will always be the biggest blocks to the free flow of trade, and it is necessary that India align its trade policy with its domestic and international outlook on other issues, before rashly entering or leaving free trade agreement notifications.

WV Reading Recommendations:

1. India’s Moment: Changing Power Equations around the World by Mohan Kumar

2. FREE TRADE AGREEMENTS: India and the World by Dr V. S. Seshadri

3. India’s Foreign Policy in the Post-Covid World Edited by Surendra Kumar- Chapter on India’s economic diplomacy by Rahul Chhabra

4. India’s Trade Policy in the 21st Century by Amita Batra

5. JOURNEY OF A NATION : 75 YEARS OF INDIAN ECONOMY by Sanjaya Baruc

Script and Presentation: Suhasini Haidar

Production: Gayatri Menon and Shibu Narayan

Union Finance Minister Nirmala Sitharaman presents the Interim Budget 2024 in the Lok Sabha, at Parliament House in New Delhi on Feb. 1, 2024.
| Photo Credit: PTI

India is negotiating bilateral investment treaties with different countries with a view to promote foreign inflows, Finance Minister Nirmala Sitharaman said on February 1. She said that foreign direct investment (FDI) has doubled during 2014-23 to $596 billion compared to the inflow received during 2005-14.

“For encouraging sustained foreign investment, we are negotiating bilateral investment treaties with our foreign partners, in the spirit of ‘first develop India’,” she said while presenting the interim Budget 2024-25.

India is negotiating bilateral treaties with countries, such as the UK. These investment treaties help in promoting and protecting investments in each other’s countries. These pacts are important as India has earlier lost two international arbitration cases against British telecom giant Vodafone and Cairn Energy plc of the UK over the retrospective levy of taxes.

Align treaties with global practices

Commenting on bilateral investment treaties, economic think tank GTRI (Global Trade Research Initiative) said that India needs to align its treaties with global investment practices, address the negative perception caused by the mass treaty cancellations and reflect on its negotiation skills. New agreements should ideally resolve these concerns, it said in a statement.

GTRI said that India has cancelled 77 of its over 80 bilateral investment treaties (BIT) by 2016, as they didn’t align with its interests. “Now, it is renegotiating with 37 countries using the restrictive 2016 Model BIT, which may lead to protracted negotiations due to its narrow ‘investment’ definition, vague terms, omission of principles like ‘fair and equitable treatment’, and Most-Favoured Nation status,” GTRI co-founder Ajay Srivastava said. He added that the model BIT also demands investors seek local solutions for at least five years before arbitration, making new BITs challenging for other countries.

Foreign direct investment (FDI) equity inflows in India declined 24 per cent to USD 20.48 billion in April-September 2023, according to government data. The total FDI — which includes equity inflows, reinvested earnings and other capital — contracted 15.5 per cent to USD 32.9 billion during the period under review against USD 38.94 billion in April-June 2022.

The top investor countries include Singapore, Mauritius, the US, the UK, and the UAE. Computer software and hardware, trading, services, telecommunication, automobile, pharma and chemicals are some of the key sectors that attract FDI into India.

An official had earlier said that hardening interest rates globally and worsening geopolitical situation impacted FDI inflows into India in 2022-23.