Bilateral trade deals have been characterised by long negotiations and reasonable concessions on either side to iron out workable agreements. In this respect, India’s two bilateral FTAs — one with the EU and the most recent one with the US — stand out as significant developments connecting the world’s largest economies.
Both FTAs have different histories, commonalities and differences. India’s position is based on, one, not budging from its stated position of protecting the vulnerable areas of agriculture, dairy and SMEs, ensuring the interests of the small farmers are not compromised, and two, the emergence of a mature, market-driven economy in India, driven by wider reforms across governance, regulation, and market infrastructure.
The differences include some key points, notably the issue of CBAM in the EU negotiations and its absence in the US FTA negotiations. Views on labour mobility also differ across the two FTAs.
Looking at the EU FTA, India has secured unprecedented market access for more than 99 per cent of Indian exports, by trade value, to the EU, which also bolsters the “Make in India” initiative. Beyond goods, it unlocks high-value commitments in services, supported by a comprehensive mobility framework enabling the seamless movement of skilled Indian professionals.
In contrast, the US interim agreement was a direct by-product of emerging geopolitical realities. The fact that the deal with the US was given the go-ahead only after putting in place historic deals with the EU and the UK stands testimony to India’s diplomatic acumen. The deal with the US should thus be viewed as part of a series of formal negotiations spanning the Middle East, the UK, and New Zealand, all of which indicate the emergence of a new trade order in South Asia.
Before we discuss the impact of the US trade deal, a couple of points are in order on the misguided rhetoric around the deal. First, even after the 18 per cent tariff has come into force, the gap between the MFN simple average tariff and the new tariff is among the lowest for India relative to most countries, including its neighbours.
Second, India’s exports post‑deal could still see an upside, as exports of goods and services — even with a 50 per cent tariff regime — have almost matched a hypothetical no‑tariff scenario in the first nine months of FY26 by registering growth of 4.3 per cent.
Third, hypothetically, the complete substitution of Russian crude with Venezuelan crude (Merey 16) has clear benefits for the domestic economy, as heavy crude discounts in the range of $10–12 per barrel can ensure commercial viability. In fact, India could save up to $3 billion on its import bill. This suggests that the trade deal will not significantly affect domestic inflation, even after sacrificing the Russian discount (end of hostilities in Ukraine may even reduce the discount from Russia).
Now, the benefits. The US trade deal opens up a massive $118 billion global market for textiles and apparels. Further, the 25 per cent penalty on Russian oil imports will cease to exist, provided necessary adjustments to the oil import basket are made. The US has also indicated that this interim framework is a stepping stone toward a full Bilateral Trade Agreement (BTA). Further tariff reductions on Indian goods will be considered during BTA negotiations.
The two deals share some similarities, notably shielding the imports of agri and dairy products to India. Under the US deal, India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soyabean oil, wine, and spirits, while protecting the broader domestic market. In fact, India is already the largest importer of soyabean oil globally (but USA accounted for only 3 per cent in India’s overall soyabean oil import of $4.3 bn in Apr-Nov, FY25). Hence this decision clearly benefits India. Similarly, almonds, walnuts, pistachios and cranberry import from USA will now attract significantly lower duties and benefit India consumers. India produces these fruits in very limited quantities and these are in high demand given their nutritional contents.
Notably, regarding non-tariff barriers and digital trade, both the US and the EU have indicated flexibility and a willingness for dialogue.
In terms of benefits, $75 billion of Indian exports to the EU are poised for take-off, with $33 billion in labour-intensive sectors set to gain significantly from preferential access under the EU FTA.
The benefits from the US deal could be even greater. Among the top five US imports, India has a revealed comparative advantage in chemicals, where China and Singapore currently hold higher shares. With higher tariffs on China, India can increase its share of chemical and pharmaceutical exports to the US. India may also capture part of Singapore’s share. Capturing a 2 per cent share from these countries could add 0.2 per cent to GDP, and an additional 1 per cent from Japan, Malaysia, and South Korea — which face tariffs equal to or lower than India’s — could add another 0.1 per cent to GDP.
India can also capture a larger share of apparel exports from Bangladesh, Cambodia, and Indonesia. Currently, India’s share of apparel exports in US imports is 6 per cent, and if it captures an additional 5 per cent from these countries, it could add another 0.1 per cent to its GDP.
India also intends to purchase $500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years. This will diversify our capital goods imports from China.
The EU FTA and the interim BTA with the US open a new chapter in India’s trade history. Today, consumers are the real kings, conscious of the choices they make across backward and forward integration. This changed reality must be recognised, and adjustments made. India has effectively established a reverse Byzantine equation, engaging in dialogue with all key stakeholders on its own terms and pace, building a springboard for a win-win proposition.
The author is member 16th FC, member, PMEAC and group chief economic advisor, State Bank of India. Views are personal
The EU FTA and the interim BTA with the US open a new chapter in India’s trade history. 
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