- The rise in India’s FTAs reflects a strategic shift, rather than sudden liberalisation. The recent FTA momentum reflects selective openness, not just ideological free trade.
- FTAs are one form of India’s response to growing fragmentation in the global economy. Bilateral and regional agreements are becoming ‘safe corridors’. India’s FTAs are meant to anchor market access in a fractured world.
- Due to the implementation of FTAs, strategic autonomy is redefined in economic terms. This autonomy is achieved not through isolation, but through diversification.
- FTAs act as instruments of geoeconomic statecraft. FTAs act as enabling tools, and not just as guarantees of economic outcomes. The long-term impact of these FTAs will be determined by India’s ability to translate strategy into results.
In recent decades, global trade has increasingly been shaped by geopolitics, particularly through tools like sanctions, blocs, and export controls. Beyond these, FTAs are no longer merely neutral economic instruments. States, through these trade agreements, signal alignment, reduce vulnerability, and secure influence. The rise in India’s FTAs reflects a strategic shift, rather than sudden liberalisation. Historically, India has been cautious about trade commitments and has resisted them wherever possible, as seen in the WTO gridlock and its exit from the Regional Comprehensive Economic Partnership (RCEP). The recent FTA momentum reflects selective openness, not just ideological free trade. Here, India is not just choosing markets, but also partners.
FTAs are one form of India’s response to growing fragmentation in the global economy. It signals a weakening of multilateral trade deals. As a result, bilateral and regional agreements are becoming “safe corridors”. India’s FTAs are meant to anchor market access in a fractured world. India is utilising the channels of FTAs to embed itself in trusted supply chains.
This article contends that India’s current approach to FTAs ought to be read as a shift in the use of trade instruments, not towards trade liberalisation but towards geoeconomic statecraft, which seeks to carve out strategic autonomy, resilient supply chains, and global standing in an increasingly fragmented world economic system.
India’s Trade Policy: A Shift from Caution to Calibration
Historically, India has been cautious about deep FTAs, which is clearly showcased by India’s withdrawal from important free trade agreements like the Regional Comprehensive Economic Partnership (or RCEP). This signals trade scepticism, not isolationism. Concerns over de-industrialisation and import surges remain amongst Indian policymakers. Globally, there has been a shift from multilateral to selective bilateral engagement with consistent emphasis on calibrated openness.
Today, the growing fragmentation of the global trade architecture makes it essential for India to engage more actively in regional trade blocs. This shift prioritises resilience over efficiency. As can be observed worldwide, there has been a paralysis of the WTO dispute settlement mechanism. Nation-states are preferring friendly markets over cheaper markets today.
FTAs are treated as tools to shape supply chains. They provide investment protection that attracts long-term capital. Trade agreements help reinforce political alignment. Digital trade rules shape future commerce, while trade agreements act as signalling devices. They also help countries to diversify their supply chain away from China, thereby attracting manufacturing investment. Additionally, they integrate services trade with goods trade and reduce vulnerability to external shocks.
Due to the implementation of FTAs, strategic autonomy is redefined in economic terms. This autonomy is achieved not through isolation, but through diversification. FTAs also act as tools to manage dependence, avoiding over-reliance on any single bloc. This helps preserve domestic policy space and signals selective commitments over blanket liberalisation.
For India, FTAs enhance its credibility as a trade partner by providing regulatory stability for investors. They also strengthen India’s image as a reliable economy. At the same time, trade diplomacy complements foreign policy.
Why FTAs Matter in a Fragmenting Global Economy
Lately, the multilateral trading order has been weakening. The World Trade Organisation’s dispute settlement mechanism is in a crisis. Due to this, there is a declining faith in universal trade rules. At the same time, rising power asymmetries shape trade outcomes, resulting in a shift from rule-based trade to interest-based trade.
In recent years, there has been the emergence of competing trading blocs across multiple regions. This has led to the regionalisation of global commerce and fragmentation along geopolitical lines. Trust and political alignment shape trade relations, while divergence in standards and regulations continues to grow.
Sanctions have increasingly been used as tools of foreign policy. Similarly, export controls and technology restrictions are being deployed more frequently, while financial networks are leveraged for coercion. As a result, trade flows are exposed to heightened political risks, reinforcing perceptions of economic vulnerability.
A few years ago, the COVID-19 pandemic exposed global supply chains to concentration risks. This forced countries to shift from efficiency to resilience. This further led to the diversification of production locations. There have been state-led supply-chain interventions, framing critical sectors such as technology and manufacturing, energy and resources, health and life sciences, and logistics and infrastructure through a national security lens.
In this unprecedented era, FTAs act as tools that provide predictability amid uncertainty. They create corridors for trade and investment, fostering institutionalisation of trust between partners. FTAs serve as adjusting mechanisms by guaranteeing market access and shielding trade relations from sudden unilateral disturbances and political volatility.
In a fragmented world, FTAs are increasingly used as tools for hedging against geopolitical risk and managing exposure to external shocks. By authorising long-term commitments, they embed economic relations in an otherwise uncertain international environment and provide stability to trade and investment flows. Moreover, FTAs provide a means to exert influence over rules, standards, and norms governing new and emerging areas of trade, allowing states to shape the architecture of economic engagement, rather than merely respond to it.
India’s FTA Strategy as Geoeconomic Statecraft
India’s recent expansion of free trade agreements has been a deliberate effort to reposition itself within a dynamic global economic order. This shift is less a return to unbridled trade liberalisation and more a recalibration of engagement, where trade agreements are used as tools for strategic signalling and risk mitigation. India’s FTAs are aimed at reducing vulnerabilities to external shocks and integrating the country into trusted, resilient global value chains. Partner selection is influenced not by market size alone but by strategic fit, allowing India to diversify its trade and investment ties and strengthen its bargaining position.
These pacts emphasise investment facilitation, services and digital trade and seek to tailor external economic commitments to domestic industrial policy goals. In this respect, India’s FTA focuses on fortifying its trade policy credibility and aligning trade with broader foreign policy objectives, positioning economic agreements as the vehicle for long-term geoeconomic positioning.
Conclusion
Trade and geopolitics have become inseparable. FTAs act as instruments of geoeconomic statecraft. India’s FTA strategy reflects strategic intent rather than ideological liberalisation. India chooses selective engagement, which allows it to balance openness with policy autonomy. FTAs are used to manage risk, diversify dependence, and enhance resilience.
Economic agreements have emerged as major foreign policy tools, reinforcing India’s global positioning. Strategic autonomy is being redefined through managed integration. Success depends not only on domestic competitiveness, but also on effective implementation capacity. FTAs act as enabling tools, and not just as guarantees of economic outcomes. The long-term impact of these FTAs will be determined by India’s ability to translate strategy into results.
Archita Gaur is a postgraduate student at the School of International Studies, JNU. She specialises in the World Economy and has a strong interest in public policy, economic research, and governance. The views expressed are the author’s own.
Rishit Anand 
Anusreeta Dutta 
Parag Gilada