India's FTAs set stage for $1 trillion export target: Report
A new report by Yes Securities identifies India's recent wave of Free Trade Agreements as a structural catalyst that could unlock $1 trillion in merchandise exports by 2030, marking a strategic pivot from cautious protectionism to deep global trade integration.
Electronics, Pharmaceuticals, and Engineering & Machinery Goods are identified as the three strongest sectoral beneficiaries of the expanded FTA network, with electronics exports alone projected to reach $233 billion by 2030 — surpassing the government's own sectoral target of $200 billion.
The report emphasises that FTAs operate synergistically with Production Linked Incentive (PLI) schemes and the global "China+1" supply-chain diversification trend to position India as a credible manufacturing and export hub.
Agreements with the United Kingdom and the European Union are expected to improve market access for IT services, engineering R&D, consulting, and financial services — reinforcing India's comparative advantage in skilled, technology-intensive sectors.
Manufacturing expansion, private capital expenditure revival, and deeper supply-chain integration are flagged as the three key transmission channels through which FTAs can deliver the export target.
Free Trade Agreements (FTAs) and India's Trade Policy Evolution
A Free Trade Agreement is a pact between two or more countries to reduce or eliminate tariff and non-tariff barriers on goods and services traded between them. India's trade policy until the 2010s was characterised by selective and cautious engagement with FTAs. The post-2020 shift — marked by the UAE CEPA (2022), Australia ECTA (2022), EFTA (2024), UK FTA (2025), and Oman CEPA (2026) — represents a qualitative change toward using trade agreements as instruments of industrial policy and strategic positioning.
Key Details
- India currently has 15 FTAs covering 27 nations, with several more under negotiation including with the EU and Canada.
- Under the new-generation FTAs, India negotiates provisions on services, investments, intellectual property, and digital trade — not just goods tariffs.
- The India-UK FTA is expected to provide zero-duty access for pharmaceuticals, engineering goods, and chemicals into the UK market.
The $1 trillion export target rests on these new-generation FTAs opening large, high-value markets where India's manufacturing and services sectors have demonstrated competitiveness.
Production Linked Incentive (PLI) Schemes
PLI schemes, launched across 14 sectors between 2020 and 2022, provide manufacturers with financial incentives linked directly to incremental production output over a base year. The scheme aims to attract global supply chains to India, substitute imports, and generate employment in high-value manufacturing. As of March 2025, PLI schemes had attracted investments of approximately ₹2 lakh crore, generated incremental production/sales of ₹18.7 lakh crore, and created 12.6 lakh direct and indirect jobs.
Key Details
- Mobile phone domestic production grew from ₹18,000 crore in FY2015 to ₹5.45 lakh crore in FY2025 — a 28-fold increase — primarily driven by the electronics PLI scheme.
- The Union Cabinet approved an additional PLI scheme of ₹22,919 crore for electronic components manufacturing in April 2025.
- Electronics and pharmaceuticals together accounted for approximately 70% of PLI incentive disbursements in FY2024-25.
FTAs provide the market access, while PLI schemes build the supply-side capacity; together they form the twin pillars of India's strategy to hit $1 trillion in exports.
China+1 Supply Chain Diversification
The "China+1" strategy refers to the global trend of multinational corporations reducing manufacturing concentration in China by establishing parallel or alternative production bases in other countries. Triggered by US-China trade tensions (2018 onwards), the COVID-19 pandemic's supply chain disruptions, and geopolitical realignments, this trend has created a structural window of opportunity for manufacturing economies in Asia.
Key Details
- India, Vietnam, Thailand, Bangladesh, and Indonesia are the primary beneficiaries of China+1 diversification across different sectors.
- Electronics, textiles, chemicals, and engineering goods are the sectors where China+1 relocation has been most pronounced.
- India's share of global electronics exports rose from under 0.5% in 2015 to approximately 1.5% by 2024, with significant further growth projected.
FTAs amplify India's China+1 attractiveness by providing partner-country investors with preferential access to third markets through India's production base.
India's $1 Trillion Export Target
The Government of India first announced the $1 trillion merchandise export target as a medium-term goal under the Foreign Trade Policy (FTP) 2023. Merchandise exports in FY2024-25 stood at approximately $437 billion, meaning the target requires more than a doubling over five to six years.
Key Details
- FTP 2023 (in effect from April 2023) replaced the earlier FTP 2015-20, which had been extended multiple times due to COVID-19 disruptions.
- The target is supported by the Districts as Export Hubs initiative, Niryat Bandhu scheme, and expansion of digital trade infrastructure.
- Services exports, already at approximately $341 billion in FY2024-25, are separately targeted to reach $1 trillion, implying a combined goods and services export goal of $2 trillion by 2030.
The Yes Securities report affirms that the new-generation FTA architecture is a necessary — though not sufficient — precondition for hitting the merchandise export target.
- Target: $1 trillion in merchandise exports by 2030 (vs approximately $437 billion in FY2024-25).
- Electronics export projection under FTA scenario: $233 billion by 2030 (government's own target: $200 billion).
- India's PLI schemes: Investments of ₹2 lakh crore realised across 14 sectors as of March 2025.
- India currently operates 15 FTAs covering 27 nations.
- New-generation FTAs include coverage of services, digital trade, IP, and investment — not just goods tariffs.
- UK and EU FTAs expected to benefit IT services, engineering R&D, consulting, and financial services.
- India's services exports in FY2024-25: approximately $341 billion.