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Picture Courtesy: THE HINDU

Context:

The Ministry of Commerce and Industry reported that India is seeing "good progress" in negotiations with the EU, but less satisfactory progress on the review of the free trade agreement with ASEAN.

INDIA'S ONGOING TRADE TALKS WITH EU, ASEAN AND USA

What is a Free Trade Agreement (FTA)? => Deal between two or more countries, to promote trade, by lowering or completely removing tariffs and other roadblocks.

What is a Bilateral Investment Treaty (BIT)? => When a company or person from one country wants to invest money in another country, a BIT sets clear rules and protections for that investment.

It includes ways to solve disagreements through international arbitration, rather than just using the host country's courts.

What is the status of the trade deal between India and Europe?

India and the European Union are discussing a Free Trade Agreement (FTA).

India wants to make its exports more competitive and gain access to the entire European market.

Current Status & Progress
Negotiation	12th round recently completed in Brussels.
Key Progress	Both sides exchanged offers on services and non-services. They "in principle" closed the digital trade chapter and made good progress on investment.
Next Steps & Timeline	The EU will host the 13th round of talks in India during the first week of September. Both sides aim to finish the comprehensive FTA by the end of 2025.
Areas of Disagreement	Discussions continue on areas where India and the EU have different views, but some common understanding has started to appear. For example, India has been negotiating new investment treaties after ending old ones, and the EU wants clarity on investment protection.

Why is India Revisiting the India-ASEAN Free Trade Agreement (AITIGA)?

India signed a trade deal with the ASEAN group of countries (Association of Southeast Asian Nations) in 2009.

Indian industries raised concerns about issues like "rules of origin" and difficulties in getting their products into ASEAN markets.

India and ASEAN started reviewing the agreement (called AITIGA) in September 2022 to make it more beneficial and fair for both sides.

Current Status & Challenges
Negotiation Rounds	9th rounds of meetings for the review was held in Kuala Lumpur, Malaysia, in June 2025.
Progress	Progress on things like customs rules and making trade easier. However, progress on market access has been mixed.
Objectives	India wants to fix issues regarding rules of origin and barriers to market access, to ensure the deal truly helps Indian exports and creates balanced trade. India is concerned about some ASEAN countries getting cheap raw materials from China, processing them, and then sending them to India, which harms Indian industries.
Next Steps & Timeline	Two more rounds are expected: one in New Delhi in August and another in Malaysia in October. The goal is to finish the review by the ASEAN-India Summit in late October.

What is the status of the trade talks between India and the U.S.?

India and the United States are negotiating a trade deal. An Indian team has visited Washington multiple times recently for these talks. The main focus of these discussions is to finalize a Bilateral Investment Treaty (BIT).

Current Status & Negotiations
Negotiation	The 5th round of negotiations concluded in Washington in July 2025.
Main Focus	The discussions mainly revolve around finalizing a Bilateral Investment Treaty (BIT). India aims to reduce tariffs on certain products like steel, aluminum, and auto parts.
Specialized Approach	India sent "sectoral specialists" (experts in specific industries) to Washington, showing their detailed approach to complex trade issues.
Tariffs & Deadlines	A "Fall deadline" is in place to finalize the Bilateral Trade Agreement (BTA). While some US tariffs (like a 10% baseline) apply broadly, India has so far avoided higher tariffs faced by some other countries.
Indian Concerns	India is careful about opening its agriculture sector, as heavily subsidized products from developed nations could harm Indian farmers.

How do the trade deals help the Indian economy?

Boosting Economic Growth and Exports => India gets easier access to important global markets.

Helps Indian businesses to export more products and services, which boosts the economy and supports local industries.
Clear trade policies encourage foreign investment, which helps to create jobs and brings in new technology.

Making Supply Chains Stronger and More Diverse => Help India to avoid depending too much on one country or region for its trade and supply chains.

Makes the Indian economy more resilient to global shocks and disruptions.
Open up new ways for India to get raw materials and sell its finished products to more places.

Gaining Geopolitical and Strategic Influence => By signing trade deals, India strengthens its relationships with other countries and groups, which boosts India's diplomatic influence on the world stage.

What steps are taken by the Indian government to boost trade?

New Foreign Trade Policy (FTP) 2023 => Focuses on four main pillars:

Incentives to Remission: Shifting from just giving incentives to refunding duties and taxes paid on exported products (like the RoDTEP scheme).
Export Promotion through Collaboration with states and districts to identify export-worthy products.
Ease of Doing Business: Making trade processes simpler and more digital.
Emerging Areas: Focusing on new sectors for growth.

Export Promotion Schemes

Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme refunds taxes and duties paid on inputs used in making exported products, making Indian goods more competitive.
Rebate of State and Central Levies and Taxes (RoSCTL) Scheme to help labor-intensive textile exports.
Trade Infrastructure for Export Scheme (TIES) & Market Access Initiatives (MAI) Scheme provide assistance for improving export infrastructure and exploring new markets.

Improving Investment Environment => Revamping model Bilateral Investment Treaty (BIT) to make it more investor-friendly.

"Make in India" Initiative => To boost domestic manufacturing, making India a global manufacturing hub, which naturally supports exports.

"Districts as Export Hubs" => Focuses on identifying and promoting unique products and services from each district for export.

National Trade Facilitation Action Plan (NTFAP) 3.0 (2024-2027) => Focuses on reducing logistics costs and improving trade efficiency to make India more competitive and achieve the "Aatmanirbhar Bharat" vision.

Development of Enterprise and Service Hubs (DESH) Bill => Aim to replace Special Economic Zone (SEZ) rules, to allow units to produce for both domestic and international markets, boosting exports.

Conclusion

India's strong focus on new trade agreements with major economies like the EU and U.S., along with rethinking its existing pact with ASEAN, clearly shows its dedication to open trade and becoming a bigger part of the global economy.

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ASEAN Delays India Trade Review

Source: THE HINDU

PRACTICE QUESTION

Q. To what extent can the Carbon Border Adjustment Mechanism (CBAM) and other evolving sustainability regulations of the EU pose challenges for Indian exports, even with the finalization of a Free Trade Agreement (FTA)? 250 words

Frequently Asked Questions (FAQs)

An FTA is a pact between two or more countries to reduce barriers to imports and exports among them, by eliminating or reducing tariffs.

Benefits for India include increased market access for its goods and services, lower input costs for industries, technology transfer, and greater foreign investment.

Challenges include addressing divergent interests on market access, intellectual property, environmental and labor standards, and managing domestic industry concerns.