India’s trade deal blitz: Why it's a strategic necessity despite uncertain gains

Amid surging protectionism, India’s trade deals are a strategic imperative to secure market access and supply chains, even though free trade deals of the past have delivered underwhelming results. Plain Facts India’s trade deal blitz: Why it's a strategic necessity despite uncertain gains Puneet Kumar Arora , Jaydeep Mukherjee 5 min read 18 Feb 2026, 07:00 am IST The shift toward bilateral and regional trade agreements has intensified during the Trump years, Photo: AFP Summary Amid surging protectionism, India’s trade deals are a strategic imperative to secure market access and supply chains, even though free trade deals of the past have delivered underwhelming results. Gift this article This is a Mint Premium article gifted to you. Subscribe to enjoy similar stories. Subscribe now Economics 101 tells us that free trade makes the world better off. Countries specialise in what they produce most efficiently and trade for the rest. In theory, everyone gains. In practice, however, trade creates winners and losers within each economy, turning trade policy into politics. As a result, rather than embracing across-the-board liberalization, nations increasingly rely on bilateral and regional trade agreements, often shielding sensitive domestic sectors. The shift has intensified during the Trump years, with tariffs used as tools of geopolitical leverage and countries scrambling to secure preferential access. India too has signed a flurry of agreements, including those with the EU and the US. While FTAs today are increasingly driven by geopolitical and supply-chain considerations, past experience shows they deliver results only when backed by competitiveness, infrastructure and domestic reforms. Also Read | Three points in India-US trade deal divorced from reality Protectionist pressuresThe ratio of global goods trade to GDP, which peaked at 51% before the global financial crisis, has remained broadly stable over the past decade, fluctuating between 41% and 48%. Even after shocks such as the covid pandemic and Russia’s invasion of Ukraine, trade flows did not collapse. Firms rerouted supply chains, diversified sourcing and found new markets, keeping global commerce resilient despite geopolitical tensions. While the world economy is not shutting its doors just yet, fault lines have been deepening since Donald Trump took office for a second term in January 2025. A WTO analysis shows that the trade coverage of import-related measures implemented between October 2024 and October 2025 surged to $2.64 trillion, accounting for 11.1% of world imports, more than four times the $611 billion recorded a year earlier. Trump has increasingly deployed tariffs as geopolitical tools, justified on grounds ranging from correcting historical trade deficits to addressing national and international security concerns. India, for instance, faced 25% penalty tariffs over its Russian oil purchases. Striking trade agreements in this landscape is less about textbook efficiency gains and more about securing supply chains, reducing policy uncertainty and insulating exports from weaponised tariffs. Power blocsCross-border trade is heavily concentrated in a handful of large economic blocs. Just six trading groupings account for roughly 60% of global merchandise exports and imports. The European Union (EU), United States-Mexico-Canada Agreement (USMCA) and Association of Southeast Asian Nations (Asean) together command more than half of world trade. These blocs increasingly set standards, shape supply chains and influence the direction of capital flows, making access to them critical for export-oriented economies. Further, while overall global trade growth slows during crises, intra-bloc trade tends to remain relatively resilient. A study by the International Monetary Fund (IMF) shows that in the period following Russia’s invasion of Ukraine, average quarterly trade growth between geopolitically distant blocs was nearly 5 percentage points lower than in the pre-war years. By contrast, trade within blocs recorded a much smaller decline of around 2 percentage points. Investment patterns show a similar tilt towards partners within established groupings. For countries, remaining outside large trade arrangements, therefore, carries tangible risks. Exporters may face higher barriers and investment may shift to competitors enjoying preferential access. Being part of major arrangements, by contrast, offers insulation, predictability and assured market access. Rare successesWhile trade deals may be the need of the hour, India’s past experience with FTAs has been underwhelming. Among the major agreements signed earlier, only the South Asian Free Trade Agreement (Safta) with South Asian Association for Regional Cooperation (Saarc) nations has delivered a trade surplus. In most other cases, India has ended up buying far more from its FTA partners than it sells to them. According to NITI Aayog, India’s exports to FTA partner countries stood at $38 billion in July-September 2025, while imports surged to $69.8 billion, leaving a trade deficit of $31.8 billion. Every recent quarter has seen imports outpace exports, steadily widening the gap. Import growth has