India Free Trade Agreements Benefits : In the year 2025, the Indian economy is expected to benefit a lot based on the free trade agreement. This year, the central government has mainly succeeded in concluding three free trade agreements. First, in July 2025, Prime Minister Narendra Modi, during his visit to London, signed a free trade agreement with British Prime Minister Starmer after four years of negotiations. Then in December, India made rapid progress in this direction and in the third week these agreements were signed with two countries, Oman and New Zealand.
The trade agreement with New Zealand proceeded at a rapid pace and was mutually agreed within a period of just nine months. On December 22, the Prime Ministers of both the countries agreed to it in a telephone conversation. An agreement with Oman was signed by the foreign ministers of both countries on December 18 during Prime Minister Modi’s visit to Oman. Already India has signed FTAs (Free Trade Agreements) with Mauritius, Dubai, Australia and European Free Trade Association.
Objective of Free Trade Agreement
A free trade agreement or FTA is an agreement between two or more countries in which countries agree on various matters related to trade in goods and services, protection of investors and certain obligations affecting intellectual property rights. The main purpose of such an agreement is to reduce or completely eliminate the various tax rates levied on mutual business transactions, so as to increase financial profits.
Another objective is to increase employment opportunities for citizens between the two countries and create various opportunities for financial investment. India seems to be moving fast in this direction and its attitude is surprising and worrying various countries. Arguably, during this second term of US President Donald Trump, his tariff policies have confused the entire world and India is in economic crisis from the very beginning, because of the deliberate bias against India on the part of Trump. Amidst all this, the Indian rupee continues to weaken against the dollar.
In fact, the rupee’s historic high of 91 rupees against the dollar is also a symbol of economic crisis. Amidst all this, the Indian government increasing its trade partnership with many developed countries of the world through FTA is a good diplomatic move and also a sound economic policy.
A question of interest
On these three major agreements, if we talk about the Indian side, India is benefiting from the mutual trade between India and England. In the current financial year, as of November 2025, the UK exported £19 billion to India, while imports from India were around £28 billion.
India is also very important to the UK as it is its tenth largest global trading partner. However, India accounts for only around three percent of the UK’s total exports. So Britain is also very important for India, as it reduces India’s dependence on America and China.
India mainly imports gold, iron, aluminium, liquor and various cars from England. Therefore, it is possible that the reduction in tax rate will directly benefit the consumer and also reduce the price of raw materials. Besides, India is the world’s fourth largest supplier of clothing to the UK and India’s participation is expected to increase after this agreement, which will also bring huge profits to India’s textile industry.
A test of balance
India has a deficit in bilateral transactions with Oman and currently it is around two billion US dollars. Based on October, 2025 figures, Oman exported goods worth USD 628 million from India, while purchases from India were only around USD 340 million. The free trade agreement with Oman is going to play a major role in supplying crude oil and gas to India and controlling their prices in the domestic market. Also, India’s rice industry will benefit greatly from mutual agreement on abolition of tax rates of both the countries. About eight lakh Indians live in Oman and the agreement will also boost their personal income, which is expected to bring in remittances equivalent to about two billion US dollars annually to India.
India has an advantage in the interaction between New Zealand and India. As of June 2025, India exported around $3.68 billion to the US, while imports were only around $1.79 billion. India mainly buys dairy products, wool etc. from New Zealand and mainly sells medicines and refinery petroleum products to New Zealand. The FTA between New Zealand and India will provide an opportunity for IT companies, tourism, banking sector, health etc. to expand mainly under India’s service sector and open employment opportunities for various Indian professionals in New Zealand. Currently, there are about three lakh Indians living in New Zealand, which is five percent of the population there.
A burden of dollars
One thing that remains to be understood is whether India can do the mutual transactions with all these countries keeping away from dollars. If this is possible then the weakness of the Indian rupee against the dollar can certainly be curbed. India’s exports to the US fell by about 21 percent from May to November due to American tariff rates, and to offset this, India has cut GST domestically. However, India should be seen as a positive on the FTA side.