Deep deals, deeper strategy: India’s bilateral dynamism and trade diplomacy

The proliferation of trade deals in 2025, amid rising geopolitical tensions, is an attempt to recalibrate India’s strategic diplomacy with its trade partners. The path-dependency component adds deeper significance to the strategic agreement of the India-UK Comprehensive Economic and Trade Agreement (CETA). While the India-New Zealand Free Trade Agreement (FTA) strengthens India’s position in the Asia-Pacific, the India-Oman Comprehensive Economic Partnership Agreement (CEPA) deepens economic ties with the Middle East.

These agreements go well beyond tariff liberalisation. Economic integration is accentuated through negotiations on service trade and cross-border mobility of professionals, non-tariff measures (SPS and TBT), investment treaties, and other WTO-plus policy areas. Such ‘deep’ trade agreements are expected to enhance India’s participation in global value chains (GVC), advancing its path towards Viksit Bharat 2047. 

Strategic diplomacy through international trade policies is evident in India’s efforts to fortify bilateral agreements with the UK, New Zealand, and Oman amid heightened global uncertainty—from geopolitical tensions in Eastern Europe and West Asia to emerging risks in the Asia-Pacific. Parallel negotiations with the Eurasian Economic Union (EAEU), expansion of preferential trade agreements with Chile, expansion of partnerships with MERCOSUR, and a deepening partnership with Qatar further underline this outward push.

The rationale behind these agreements has widened. Deep trade agreements are defined not merely by tariff reductions but by expanded access to services, harmonisation of standards through mutual recognition arrangements, investment flows, and labour mobility. Together, these elements can meaningfully upgrade GVC participation, spur job creation, and support more inclusive growth. 

CETA: Boost to agri exports

Historically, the partnership between India and the UK has passed through multiple phases—from mere spice and cotton traders to colonial legacies and finally sealed as free trade partners. No doubt, the legacies played a critical role in shaping the bilateral dynamism between these two countries. The intermediate and capital goods constitute the bulk of India’s import basket from the UK—indicating backward GVC integration. It includes refined oil, clothing, mechanical power generators, pharmaceuticals, and organic chemicals.  Zero tariffs under the present agreement on parts and components will facilitate domestic manufacturers to ensure global price competitiveness of the value-added products. The negotiation of SPS (Section 4.20) and TBT (Section 4.24) under the agreement will create a win-win situation for the agri-exporters of India in terms of both reduction of production cost and export-market entry compliance cost. Two countries will cooperate to control pest outbreaks while maintaining their respective food safety and biosecurity standards. Participation of SMEs and ensuring gender parity through enhanced women’s participation in international trade are two other critical pieces of this agreement.

India-NZ FTA: Human capital and cross-border labour mobility

India’s imports from New Zealand include aluminium products, raw materials, and agricultural products. A 100% tariff duty exemption will boost Indian manufacturers, especially those engaged in labour-intensive agro-based and allied activities (including dairy products). The wool pulp/fibres/yarn imported at zero duty from New Zealand will boost the textile and garment manufacturing industries in India.  

Simplification of cross-border mobility of students, working professionals, and education visas clearly indicates the intent of the Government of India to tap the benefits of the spillover effect in human capital formation.  Potential cooperation in the field of traditional medicinal services (AYUSH) and health care facilities, education, IT and construction sectors under this agreement is prudent for job creation. 

India-Oman: Energy security and regional integration

India’s import basket from Oman includes energy-related products like crude oil, petroleum products (naphtha, diesel, etc.), raw materials, chemicals, fertilisers, metal products, etc. The duty-free access to energy-related products will ensure India’s strategic resilience against global headwinds. Duty-free access to intermediate chemical ingredients will boost the fertiliser manufacturing industries in India by enhancing their global pricing competitiveness. Further, it has larger implications in terms of food security and competitiveness in food processing sectors.  Enhancing the cross-border mobility of professionals and traditional medical services (AYUSH) in the Gulf region is another facet of this agreement. Mutual Recognition agreements, especially concerning the automatic acceptance of organic product certification issued by India in Oman, will reduce market access hurdles for Indian exporters. 

India’s market diversification strategy through FTAs will boost agricultural exports, service trade, and supply-chain resilience and foster ‘Atmanirbhar Bharat’ vis-à-vis the expansion of the domestic manufacturing base.

(Piyali is faculty, Economics and Public Policy, IIM Rohtak; Raktimava is a consultant with the National Council of Applied Economic Research; and Sanjib is a professor at the National Council of Applied Economic Research)