The Italian Institute for International Political Studies (ISPI) published a commentary titled India’s current FTAs and their prospects by Dr Amitendu Palit, Senior Associate Research Fellow (ISPI), on July 1, 2025. The piece offers a detailed overview of India’s expanding free trade agreement (FTA) landscape in a year marked by geopolitical uncertainty and economic recalibration, especially in light of Donald Trump’s return to the US presidency.
Dr Palit notes that 2025 is an especially active period for India’s FTA diplomacy. India has concluded a trade agreement with the United Kingdom, is advancing towards an interim deal with the European Union, and has re-engaged in bilateral negotiations with the United States. Simultaneously, talks have opened with New Zealand, Chile, Oman, and the Gulf Cooperation Council, while existing FTAs with ASEAN and Sri Lanka are being upgraded. The agreement signed with the EFTA countries in 2024 is also set to become operational this year. Diplomatic thaw with Canada may finally unlock a long-stalled bilateral deal.
According to Dr Palit, what distinguishes the FTAs with the UK, US, and EU is their strategic and symbolic importance. These are India’s first major trade negotiations with G7 economies outside Asia. While Japan remains India’s sole existing G7 FTA partner, agreements with the US, UK, and EU would signal New Delhi’s deepening engagement with the transatlantic economic order.
However, not all negotiations are proceeding smoothly. The US-India FTA, reintroduced after Trump’s return to office, is weighed down by political complications, including President Trump’s claim of mediating an India-Pakistan ceasefire—an assertion New Delhi strongly refutes. Dr Palit warns that this could complicate trade talks, especially if Washington uses security guarantees as leverage.
In contrast, India’s FTA with the UK was fast-tracked and finalised in May 2025 with mutual enthusiasm. The agreement includes wide tariff reductions and expanded market access in services. A key win for India is a three-year exemption from UK social security contributions for temporary Indian workers, benefiting major Indian companies across IT, auto, and pharma sectors. Both sides saw the deal as a way to secure bilateral trade terms without being caught up in the uncertainties of US trade policy.
Negotiations with the EU, long stalled, have gained momentum. Dr Palit attributes this shift to the urgency created by Trump’s foreign policy unpredictability. A first-phase ‘early harvest’ deal is expected by July 2025. The agreement could include deep tariff cuts, market access in sensitive service sectors, and mutual recognition of professional qualifications. Remaining hurdles include contentious issues such as cross-border data flows, investment norms, and the EU’s Carbon Border Adjustment Mechanism.
Dr Palit concludes that India is at a strategic juncture. By broadening its trade ties with the West, it is moving past its protectionist past and positioning itself as a global economic player. Yet, as geopolitical tensions increasingly shape trade rules, India’s challenge will be to secure economic gains while avoiding strategic overdependence.
