With the Indian government negotiating new Free Trade Agreements (FTAs) and revising existing treaties, the country’s trade policy looks in good shape in 2025. India is engaging with key partners like the US, UK, EU, and ASEAN while also expanding its reach to the Gulf Nations, Latin America, and Africa. All these agreements are set to reshape the business environment in India. This promises greater access to the market, along with sustained economic growth.
With the trade environment looking lucrative, businesses are seeking professional assistance for company formation in India from experts.
The Expanding FTA Environment in India
Currently, India has 13 active FTAs and several ongoing negotiations. The country is also re-evaluating its investment treaties and preferential trade agreements, prioritizing contemporary economic priorities. India is strategically balancing the interests of global investors with national economic goals.
Here are some of the active FTAs of India.
- SAFTA (South Asian Free Trade Area)
- India-Sri Lanka FTA
- India-ASEAN FTA (Expanded to include services in 2014)
- India-Japan CEPA
- India-South Korea CEPA
- India-UAE CEPA (Implemented in 2022)
- India-Australia ECTA (Signed in 2022)
Different Types of Trade Agreements in India
In this section, let’s take a look at the different types of trade agreements in India.
- Free trade agreements (FTAs): FTAs are comprehensive packs that eliminate trade barriers or reduce them between countries.
- Preferential trade agreements (PTAs): PTAs involve limited reduction of tariffs on selected goods. For instance, businesses might consider the India-MERCOSUR and India-Chile PTAs.
- Comprehensive economic partnerships/cooperation agreements (CEPAs/CECAs): CEPAs and CECAs cover cooperation on trade, investment, and regulatory aspects. Examples include the India-South Korea CEPA and the India-Singapore CECA.
- Bilateral investment treaties (BITs): BITs are formulated to protect investments, ensuring fair treatment for businesses and easy resolution of disputes.
- Regional trade agreements (RTAs): RTAs involve multilateral trade integration agreements like SAFTA and APTA.
Key FTA Developments in 2025
India is making significant strides in trade negotiations. Have an overview of the most notable updates.
- United Kingdom: Negotiations between India and the UK resumed in early 2025, following 14 rounds of discussions since January 2022.
- United States: India is looking to achieve bilateral trade agreements of $500 billion with the US by 2030. Discussions for a comprehensive FTA are likely to take place within the next 6-8 months.
- European Union: The next round of FTA talks between India and the EU is set to take place in March 2025 in Brussels.
- Oman: India and Oman are working on a Comprehensive Economic Partnership Agreement (CEPA). The negotiations began in 2023, with significant progress taking place since then.
- European Free Trade Association (EFTA): India and the EFTA signed a Trade and Economic Partnership Agreement (TEPA) in March 2024. It is likely to come into effect by the end of 2025.
- ASEAN: A review of the ASEAN-India Trade in Goods Agreement (AITIGA) is underway, with the fifth Joint Committee meeting scheduled for February 2025 in Jakarta.
- Qatar: India and Qatar are in discussions for a potential FTA. These countries are aiming to double trade to $28 billion over the next five years.
Other Trade Negotiations to Watch
- India-Canada CEPA: Discussions between India and Canada have been on hold since September 2023.
- India-GCC FTA: Negotiations restarted in 2022, with formal discussions expected to commence in 2025.
Revamping Investment Treaties of India
In February 2025, Finance Minister Nirmala Sitharaman announced plans to revamp India’s Model Bilateral Investment Treaty (BIT). This is likely to attract more foreign investment to the country. Currently, India is negotiating BITs with countries like UK, Saudi Arabia, Qatar, and the EU. The goal is to provide investors with better protections while maintaining flexible policies.
India has shifted from the 2016 Model BIT considering the concerns of its Western trade partners. The 2016 model largely emphasized state control, while the current approach is much friendlier to investors.
Some of the notable BITs in force include:
- India-UAE BIT: Signed in 2024, providing strong protections to investors.
- India-Uzbekistan BIT: Strengthening investment flows.
- India-Switzerland BIT (Pending): Following the EFTA-India TEPA, Switzerland is pushing for a new BIT after India canceled older treaties.
