India's Economic Partnership Agreements (EPAs): A comprehensive coverage of the Journey and its prospectives for Viksit Bharat 2047

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Introduction

Economic Partnership Agreements have become a major pillar of India's trade and foreign policy. As India aims to become a Viksit Bharat by 2047, these agreements enhance market access, diversify supply chains, attract investments, improve competitiveness, and integrate India into Global Value Chains while balancing domestic industry and strategic interests.

1. What are Economic Partnership Agreements (EPAs)?

Economic Partnership Agreements are bilateral or regional agreements that go beyond tariff reduction and include:

  • Trade in goods
  • Trade in services
  • Investment
  • Intellectual Property Rights
  • Digital trade
  • Government procurement
  • Competition policy
  • Customs cooperation
  • Standards and technical barriers
  • Sustainable development

Unlike traditional FTAs, EPAs are broader and aim for deeper economic integration.

2. Types of Trade Agreements

TypeCoverageExample
Preferential Trade Agreement (PTA)Limited tariff reductionIndia–MERCOSUR PTA
Free Trade Agreement (FTA)Elimination/reduction of tariffsIndia–UAE CEPA
Comprehensive Economic Partnership Agreement (CEPA)Goods + Services + Investment + IPRIndia–Japan CEPA
Comprehensive Economic Cooperation Agreement (CECA)Broader economic cooperationIndia–Singapore CECA
Customs UnionCommon external tariffEuropean Union
Common MarketFree movement of goods, labour, capitalEuropean Single Market
Economic UnionCommon economic policiesEurozone

3. Evolution of India's Trade Policy

Before 1991

  • Import substitution
  • High tariffs (often >150%)
  • Licence Raj
  • Limited exports
  • Self-reliance model

Post-1991 Liberalization

  • Economic reforms
  • WTO membership (1995)
  • Export promotion
  • Lower tariffs
  • Greater foreign investment

Since 2014

  • Shift towards strategic trade agreements
  • "Act East Policy"
  • Production Linked Incentive (PLI)
  • Make in India
  • Supply chain diversification
  • Trusted trade partnerships

4. Major Economic Partnership Agreements of India

Bilateral Agreements

India–Sri Lanka FTA (1998)

First modern FTA

Focus:

  • Goods

India–Singapore CECA (2005)

Includes:

  • Goods
  • Services
  • Investment
  • Financial cooperation

India–South Korea CEPA (2010)

Focus:

  • Electronics
  • Automobile components
  • Technology

India–Japan CEPA (2011)

Coverage:

  • Trade
  • Investment
  • Intellectual property
  • Skilled professionals

Importance:

  • High-quality manufacturing
  • Supply chain resilience

India–Malaysia CECA (2011)

Focus:

  • Palm oil
  • Services
  • Construction

India–UAE CEPA (2022)

One of India's fastest negotiated agreements.

Targets:

  • Trade target: US$100 billion
  • Investment target: US$75 billion

Benefits:

  • Jewellery
  • Textiles
  • Pharmaceuticals
  • Food processing

India–Australia ECTA (2022)

Focus:

  • Education
  • Critical minerals
  • Agriculture
  • Services

Negotiations underway for full CECA.

India–EFTA Trade and Economic Partnership Agreement (TEPA) (Signed 2024)

Members:

  • Switzerland
  • Norway
  • Iceland
  • Liechtenstein

Major Feature:

  • US$100 billion investment commitment over 15 years
  • Around 1 million direct jobs expected.

Largest investment-linked trade agreement signed by India.

Regional Agreements

ASEAN–India FTA (2010)

Covers:

  • Goods
  • Services
  • Investment

SAFTA

South Asian Free Trade Area

Limited success because of political tensions.

BIMSTEC FTA

Negotiations continuing.

5. Agreements Under Negotiation (2025)

  • India–United Kingdom FTA
  • India–European Union FTA
  • India–Oman FTA
  • India–Israel FTA (limited progress)
  • Review of ASEAN FTA

6. Why are EPAs Important?

Economic

  • Export diversification
  • Higher GDP growth
  • Technology transfer
  • Better productivity
  • Integration into Global Value Chains

Strategic

  • Reduce dependence on China
  • Indo-Pacific cooperation
  • Trusted supply chains
  • Critical minerals security

Employment

  • Manufacturing
  • IT
  • Healthcare
  • Logistics
  • Agriculture exports

Investment

  • Stable policy environment
  • Higher FDI
  • Better ease of doing business

7. Factors Affecting Success

Internal

  • Infrastructure
  • Logistics costs
  • Manufacturing competitiveness
  • Skill availability
  • Ease of doing business
  • Compliance standards

External

  • Global recession
  • Geopolitics
  • Supply chain disruptions
  • Currency fluctuations
  • WTO disputes
  • Protectionism

8. Outcomes of India's Trade Agreements

Positive Outcomes

  • UAE became one of India's largest trading partners.
  • Services exports increased.
  • IT sector gained market access.
  • Pharmaceutical exports expanded.
  • Gems and jewellery exports improved.
  • Increased FDI inflows.

Negative Outcomes

  • Rising trade deficits with:
    • ASEAN
    • South Korea
    • Japan
  • Cheap imports affected:
    • Electronics
    • Steel
    • Chemicals
    • MSMEs

9. India's Trade Performance

  • Merchandise exports (FY 2024–25): around US$437 billion.
  • Services exports: over US$380 billion, making total exports exceed US$820 billion.
  • India aims for US$2 trillion exports by 2030.
  • Major export sectors:
    • Petroleum products
    • Engineering goods
    • Pharmaceuticals
    • Chemicals
    • IT services
    • Textiles
    • Rice

10. Challenges

Structural

  • High logistics cost (~13–14% of GDP)
  • Low manufacturing share (~16–17% of GDP)
  • Small MSME competitiveness
  • Non-tariff barriers abroad

Agreement Related

  • Rules of Origin misuse
  • Trade diversion
  • Safeguard measures
  • Poor utilization of FTAs
  • Complex compliance

Institutional

  • Slow dispute resolution
  • Limited export awareness
  • Poor testing infrastructure

11. India and RCEP

India withdrew in 2019 because of concerns regarding:

  • Chinese imports
  • Dairy sector
  • MSMEs
  • Trade deficit
  • Rules of origin

Many experts believe withdrawal protected vulnerable industries while allowing India to negotiate better bilateral agreements.

12. Recent Developments (2024–2026)

India–EFTA TEPA

  • Signed in 2024.
  • Investment commitment of US$100 billion.

India–UK FTA

  • Negotiations substantially concluded; expected to boost trade in automobiles, whisky, textiles, pharmaceuticals, and services.

India–EU FTA

  • Negotiations accelerated with focus on sustainable trade, digital economy, and investment protection.

ASEAN FTA Review

  • India seeking correction of trade imbalance and stronger Rules of Origin.

Supply Chain Resilience

  • Greater cooperation with Japan, Australia, and the US under Indo-Pacific initiatives to diversify critical supply chains.

13. Contribution to Viksit Bharat 2047

Economic Partnership Agreements can support India's long-term development by:

  • Increasing exports to US$2 trillion+.
  • Raising manufacturing to 25% of GDP.
  • Expanding participation in Global Value Chains.
  • Attracting high-quality FDI.
  • Supporting semiconductor, electronics, defence, renewable energy, and green hydrogen sectors.
  • Creating millions of formal jobs.
  • Strengthening India's position as a trusted global manufacturing and services hub.

14. Committee Reports and Policy Documents

Economic Survey

  • Emphasizes export diversification and logistics reforms.

Foreign Trade Policy 2023

  • Focus on ease of exporting, district exports, e-commerce exports, and export promotion.

NITI Aayog

  • Recommends integration with Global Value Chains, logistics modernization, and manufacturing competitiveness.

National Logistics Policy (2022)

  • Target: Reduce logistics costs from 13–14% to 8–9% of GDP.

PM Gati Shakti National Master Plan

  • Integrated infrastructure planning for trade competitiveness.

15. Global Best Practices

CountryBest Practice
SingaporeExtensive FTA network with high utilization
South KoreaExport-led industrial strategy with technology partnerships
VietnamLeveraging multiple FTAs to become a manufacturing hub
European UnionDeep economic integration through a common market
AustraliaStrategic agreements linked to critical minerals and supply chains

16. Way Forward

Short Term

  • Conclude pending FTAs with the EU, UK, and Oman.
  • Simplify Rules of Origin compliance.
  • Improve FTA awareness among MSMEs.

Medium Term

  • Reduce logistics costs through PM Gati Shakti and multimodal transport.
  • Strengthen quality standards, testing, and export certification.
  • Expand export credit and trade facilitation.

Long Term

  • Integrate Indian firms into Global Value Chains.
  • Promote high-value manufacturing through PLI schemes.
  • Negotiate balanced agreements protecting sensitive sectors while expanding market access.
  • Strengthen digital trade, green trade, and resilient supply chains.
  • Periodically review existing FTAs to correct persistent trade imbalances.

Conclusion

India's Economic Partnership Agreements have evolved from limited trade arrangements to strategic instruments of economic diplomacy. Well-designed agreements, backed by domestic competitiveness, infrastructure reforms, and manufacturing growth, can transform India into a globally integrated economy and become a cornerstone for achieving the vision of Viksit Bharat 2047 through sustainable, inclusive, and resilient economic growth.

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