New Delhi: India’s diplomatic efforts in 2025 saw the announcement of three free trade agreements (FTAs) and the signing of two others with the United Kingdom and Oman, as New Delhi seeks to expand its trade partnerships with developed markets.
Earlier this month, India announced the conclusion of negotiations with New Zealand for a trade deal expected to be signed by the first quarter of next year, while negotiations with the European Union have progressed at a real pace over the past 12 months. For New Delhi, the last 12 months have seen its diplomacy evolve around trade, with ups and downs in many aspects related to FTAs or the avoidance of tariffs imposed by US President Donald Trump.
As of early 2025, India had three operational free trade agreements, with the UAE, Mauritius and Australia, while a fourth with the European Free Trade Association (EFTA) had been signed and was awaiting ratification by all member states of the regional trade body.
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The year began with two major trade announcements: the opening of negotiations for the “first tranche” of a bilateral trade agreement with the United States following Prime Minister Narendra Modi’s visit to Washington on February 13-14.
President Trump often talks about MAGA.
In India, we are working towards a Viksit Bharat, which in the American context translates to MIGA.
And together, India and the United States have a MEGA partnership for prosperity!@POTUS @realDonaldTrump pic.twitter.com/i7WzVrxKtv
-Narendra Modi (@narendramodi) February 14, 2025
The second announcement came a week later, following the visit of the College of Commissioners of the European Union (EU) led by Commission President Ursula von der Leyen to New Delhi. One of the main outcomes of this visit was the setting of a deadline to conclude FTA negotiations within one year.
India and the EU are apparently on track to achieve this goal, with high expectations for an FTA announcement during von der Leyen’s likely visit to New Delhi next month for the India-EU summit.
However, negotiations with the United States have stalled, despite initial positive results. India has made what it considers its “final” offer in negotiations for a “first tranche” of a broader bilateral trade deal. The lack of a deal so far has seen the United States first impose a 25 percent tariff on Indian imports and then an additional 25 percent penalty for New Delhi’s continued purchases of Russian oil.
For India, any partial deal with the United States would involve the removal of additional sanctions, although New Delhi has to some extent reduced its purchases of Russian oil, particularly after Washington imposed sanctions on two of Moscow’s biggest energy companies: Rosneft and Lukoil.
The agreements concluded in 2025 are expected to allow Indian exporters to benefit from a number of advantages, particularly in the UK market, and potentially even expand their presence in Oceania through the agreement with New Zealand. The agreement with Oman comes against the backdrop of the challenges that India and Turkey currently face in their relations, allowing Indian exporters to have an alternative source of marble for example.
Read also: India, US move closer to first tranche of trade deal, focus on mutual tariffs, oil
India-UK CETA
The first trade deal announced this year is the India-UK Comprehensive Economic and Trade Agreement (CETA). First announced on May 6, a day before Operation Sindoor, the agreement is the first bilateral trade agreement between India and a European country. New Delhi’s previous agreement with EFTA covered the trade organization and its member states.
Agriculture, textiles, plastics, marine products, chemicals and engineering goods are some of the sectors where Indian exporters are expected to see significant gains. Indian products currently face average tariffs of around 15 percent, and under CETA this will fall to around 3 percent. The overall potential gain from bilateral trade is around $33 billion.
Around 99 percent of customs duties covering Indian exports are expected to be removed. British companies, particularly those in the financial services sector, are expected to be treated on an equal footing with domestic companies by the Indian government once the agreement comes into force.
India is also moving to eliminate tariffs on about 90 percent of goods, and about 85 percent of tariff lines will be duty-free over the next decade. Additionally, UK car manufacturers are expected to see their tariffs cut from 100 per cent to 10 per cent alongside the introduction of a quota.
Indian textiles are expected to see gains, particularly compared to Bangladeshi exports, thanks to the elimination of customs duties in this sector. The agreement also provides a model for ongoing negotiations with the EU, especially as India has granted a number of concessions in thorny sectors such as automobiles and alcohol.
CEPA India-Oman
Prime Minister Modi visited Oman earlier this month to witness the signing of the Comprehensive Economic Partnership Agreement (CEPA) between New Delhi and Muscat. This agreement is the second for India in the region after the agreement with the United Arab Emirates in 2022.
Bilateral trade stands at $10.61 billion for the financial year 2024-25 and is expected to expand in accordance with the terms of CEPA. Indian exporters are expected to enjoy duty-free access to 96 percent of tariff lines and another 2 percent of duties will be eliminated over time.
The main gain for India lies in the possibility of importing raw marble from Oman. In 2019, the West Asian kingdom imposed a ban on exports of raw marble exceeding three centimeters. Around 55 percent of marble imports come from Türkiye, with figures reaching $339.81 million in the last financial year.
The other major gain is in the Indian services sector. Trade in services with Oman stood at around $665 million in 2024, while Muscat imported services worth $12.52 billion during the same period. Increased services as well as mobility options provide Indian companies with increased access to the West Asian market.
There is hope that the two governments will implement this agreement within the next three months, indicating that it will likely be the first of the new trade agreements to come into force.
India-New Zealand FTA
A few days after the India-Oman CEPA, New Delhi announced the conclusion of negotiations for an FTA with New Zealand. Negotiations began earlier this year. The agreement is undergoing final legal review and is expected to be signed before the end of the first quarter of 2026.
The agreement will allow Indian products 100% access to the New Zealand market once the agreement comes into force. India will eliminate customs duties on 70.03 percent of its tariff lines on goods from New Zealand. The agreement excludes access to the Indian market for a number of agricultural products, animal products, plant products, artificial honey, copper and aluminum.
India is also expected to gain in the mobility sector, thanks to a more predictable visa regime for students and workers. Wellington has promised to invest $20 billion in India over the next 15 years, with a clawback mechanism in place in case those investments do not materialize.
The deal faces domestic problems in New Zealand, with Foreign Minister Winston Peters announcing his party, New Zealand First, would not support the deal. Mobility arrangements and the exclusion of dairy exports have attracted criticism within New Zealand domestic politics.
And then?
As the new year approaches, India’s list of FTAs is expected to grow. The first deal likely to be announced will be the India-EU FTA at the end of January. India and Canada are expected to agree terms of reference for a trade deal before the end of the first quarter of 2026, giving New Delhi a potential trade deal with another developed country.
Other deals with announced deadlines include the expansion of the Preferential Trade Agreement (PTA) currently in force between India and Mercosur, the South American trade organization whose members include Argentina, Bolivia, Brazil, Paraguay and Uruguay. During Brazilian Vice President Geraldo Alckmin’s visit to New Delhi in October, it was agreed to conclude negotiations on the expansion of the India-Mercosur FTA within a year.
Negotiations are also underway between India and Chile for the expansion of the existing PTA between the two countries. Terms of reference for a trade deal between India and Israel have also been agreed, with negotiations expected to begin in the new year, while New Delhi’s negotiations with the Russia-led Eurasian Economic Union (EAEU) are also expected to gain momentum in 2026. Not forgetting the ever-elusive trade deal with the United States.
(Edited by Tony Rai)
Read also: Negotiations on an FTA between India and New Zealand are ending and the agreement will be signed next year. Why Kiwi FM plans to vote against
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