India's recent wave of Free Trade Agreements represents a fundamental strategic shift that could propel the country toward its US$1 trillion merchandise export target by 2030, according to a report by Yes Securities. The brokerage said the new-generation pacts, combined with production-linked incentive (PLI) schemes and the 'China+1' diversification trend, give India its clearest shot yet at achieving the ambitious goal.
FTA Strategy Shift
"India's recent wave of FTAs marks a fundamental shift in economic strategy from cautious protectionism toward deeper global trade integration," Yes Securities said in its report. The brokerage noted that the agreements are no longer just about tariffs. "These FTAs are not merely trade agreements but represent the foundation of a multi-year industrial and export-led growth cycle," it added. Agreements with the UAE, Australia, UK, EFTA, Oman, New Zealand and the EU are being implemented alongside industrial corridors, port upgrades and supply-chain localization.
Sectoral Beneficiaries
Electronics, Pharmaceuticals and Engineering & Machinery Goods are positioned as the strongest beneficiaries of the new trade pacts, the report said. The combination of market access under FTAs and domestic manufacturing incentives is expected to boost these sectors' export performance. The brokerage highlighted that India's scale, labour force and domestic market size make it one of the few economies capable of absorbing large-scale manufacturing relocation from China.
| Metric | Value |
|---|---|
| Total export target by 2030 | US$2 trillion |
| Merchandise export target | US$1 trillion |
| Services export target | US$1 trillion |
| Merchandise export CAGR (2015–2025) | 3.5% |
Investment Catalyst
"One of the strongest arguments in favor of FTAs is their potential ability to revive India's stagnant private investment cycle," Yes Securities said. With capacity utilization at around 75%, companies lack confidence for large capital expenditure. The report argued that exports facilitated by FTAs can provide sustained demand, improve capacity utilization and economies of scale, eventually triggering stronger private-sector investment—mirroring the East Asian export-led manufacturing expansion model.
Services as Parallel Engine
India is targeting US$2 trillion in total exports by 2030, split evenly between merchandise and services, according to the report. Yes Securities said UK and EU agreements improve market access for IT services, consulting, engineering R&D and financial services, reinforcing India's edge in skilled labour and technology. Services are expected to remain a parallel growth engine alongside merchandise exports.
Domestic Competitiveness Challenges
Despite the optimism, the brokerage cautioned that market access alone is not sufficient. "The strongest counterargument is that India's primary challenge lies not in market access but in domestic competitiveness," it said. Merchandise exports grew at just 3.5% CAGR over 2015–2025. Structural bottlenecks—high logistics costs, expensive power, compliance complexity and lower labour productivity—remain. Without fixing these, FTAs could widen trade deficits if imports rise faster than exports, the report warned.
For importers, exporters and trade policy professionals, the report underscores the need to monitor tariff phase-down schedules under each FTA and to assess domestic cost competitiveness. The new agreements offer enhanced market access, but realizing export gains requires parallel improvements in infrastructure and regulatory efficiency.
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