Overview: India’s expanding network of free trade agreements (FTAs) could open new markets for exporters, manufacturers and micro, small and medium enterprises (MSMEs). Bloomberg Economics estimates that the agreements could add up to $170 billion to India’s gross domestic product (GDP) by 2035 if further trade deals are concluded. Even as these gains are not guaranteed, businesses must identify suitable markets, check product-specific tariff concessions, meet rules of origin and maintain the required export documentation to make use of preferential market access.
India’s expanding trade agreements could give Indian businesses more opportunities to sell their products overseas. Bloomberg Economics estimates that the potential economic gain could reach $170 billion by 2035, depending on the implementation of existing agreements and the conclusion of additional trade deals.
For exporters and MSMEs, the immediate priority is to identify markets where their products can compete. Understanding tariff concessions, origin requirements and export compliance can help businesses assess these opportunities before committing resources to international expansion.
What Does India’s $170 Billion FTA Opportunity Mean?
An FTA is an agreement between countries that reduces or removes certain trade barriers. Depending on its terms, it may lower customs duties, improve market access and make cross-border trade more predictable.
According to government statements, India has concluded nine recent trade agreements covering 38 countries, with a combined GDP of around $60 trillion. India is also negotiating with more country groups and individual trading partners.
Bloomberg Economics has estimated the potential economic gains under different scenarios:
| Trade scenario | Estimated GDP gain by 2035 |
|---|---|
| Existing FTAs | 1.2% above the baseline |
| Including the EU and New Zealand agreements | 1.7%, or about $140 billion |
| Adding a potential US agreement | 1.9% |
| Adding further agreements with the EAEU, GCC and Israel | 2.1%, or about $170 billion |
The dollar estimates, according to the report, are expressed in constant 2025 US dollars. The $170 billion figure is a modelled projection, not a guaranteed gain. It depends on the additional agreements being concluded and other assumptions in the economic model.
The India-New Zealand FTA is scheduled to enter into force on 20th October 2026. The India-EU agreement has concluded its negotiation stage but is not yet in force. Businesses should check the implementation status and applicable provisions of each agreement before relying on its concessions.
Exporters face a straightforward commercial question: Which markets offer a genuine opportunity for their products, and what must they do to qualify for preferential treatment?
How Exporters and MSMEs Can Identify the Right Markets
An FTA does not automatically make every overseas market profitable. Businesses need to assess demand, competition, pricing and compliance costs before selecting a destination.
1. Identify products with export potential
Start with products that the business can supply consistently at a competitive price. Review production capacity, quality, delivery timelines and the ability to fulfil larger orders.
MSMEs with limited export experience may begin with a small product range and expand after testing demand. Manufacturers should also assess whether export orders can be met without disrupting existing domestic customers.
2. Compare overseas markets
Businesses should compare potential destinations on more than customs duties. Important factors include:
- Demand for the product and size of the target market.
- Competition from local suppliers and other exporting countries.
- Freight, insurance, warehousing and distribution costs.
- Product standards, labelling and testing requirements.
- Payment terms, currency risks and expected profit margins.
A lower import duty may improve competitiveness, but it does not guarantee orders. Businesses should calculate the total cost of supplying each market before making a decision.
3. Check product-specific tariff concessions
FTAs contain tariff schedules that specify which products qualify for reduced or zero customs duty and when the concessions apply.
Exporters should identify the correct product classification and check the destination country’s tariff schedule under the relevant agreement. They should compare the preferential rate with the ordinary customs duty to understand the potential savings.
The concession may also depend on quotas, product-specific conditions or other provisions. Businesses should verify these details before quoting prices to overseas buyers.
4. Verify the rules of origin
Rules of origin determine whether goods qualify as originating in a country under an FTA. Depending on the product and agreement, the rules may consider where the goods were produced, the origin of their materials, local value addition or specific manufacturing processes.
Goods do not qualify simply because they are shipped from India. Exporters must meet the applicable origin criteria and maintain evidence to support their claims.
Where required, they must also obtain a valid certificate of origin or follow the prescribed origin declaration process.
The SetIndiaBiz guide to the India–New Zealand FTA Rules of Origin explains the origin and documentation requirements under the new framework for that agreement.
Export Compliance Checklist for Businesses
Once a business identifies a potential market, it should review the registrations and documents required for the proposed export activity.
| Requirement | What to check |
|---|---|
| Import Export Code (IEC) | Obtain and maintain a valid IEC where required for the export activity. |
| Product classification | Confirm the correct customs classification and applicable tariff schedule. |
| Rules of origin | Check the agreement’s product-specific criteria and retain supporting records. |
| Certificate of origin | Obtain the prescribed proof of origin where required. |
| Export documents | Maintain commercial invoices, packing lists, shipping documents and customs records as applicable. |
| GST compliance | Review the applicable export treatment, returns and Letter of Undertaking (LUT) or refund requirements. |
| Foreign exchange compliance | Review applicable Foreign Exchange Management Act (FEMA) requirements for export proceeds and reporting. |
| Destination-market rules | Check product standards, labelling, licences, testing and other import requirements. |
The exact requirements depend on the product, destination and agreement. Businesses should not assume that documentation accepted under one FTA will automatically satisfy another agreement’s requirements.
Businesses new to international trade can refer to the SetIndiaBiz Import Export Code (IEC) registration service to understand the registration process.
India-NZ FTA: Upcoming Opportunity for Exporters
The India-New Zealand FTA is a practical example of how a trade agreement can create new opportunities for Indian businesses. It is scheduled to enter into force on 20th October 2026.
Under the agreement, New Zealand will provide duty-free access to 100% of Indian exports from the date of implementation, subject to the agreement’s applicable requirements. Sectors with potential opportunities include textiles and apparel, leather and footwear, engineering goods, pharmaceuticals and processed foods.
However, businesses should not treat the duty-free commitment as an exemption from all trade requirements. Exporters must still check the applicable rules of origin, proof-of-origin procedures and destination-market regulations.
Businesses planning to export to New Zealand should review the relevant product provisions and prepare their documentation before shipping goods under the agreement.
Read the SetIndiaBiz overview of the India–New Zealand FTA for Indian exporters for more details.
Can FTAs Help Businesses Reduce Dependence on the US Market?
US tariff changes have increased the importance of assessing alternative export destinations. Bloomberg Economics estimates that the average US tariff on Indian goods rose to 11.6% in August 2026, compared with 2.4% in 2024. Its model projects that Indian goods exports to the US could be around one-fifth lower by 2035 under the tariff scenario examined.
The report expects the wider economic impact to remain limited partly because less than 2% of India’s economic output depends on US markets. Stronger exports to other destinations could offset some of the shortfall.
For businesses that depend heavily on US buyers, this is a reason to assess additional markets. However, diversification requires commercial planning. Exporters should compare customer demand, pricing, logistics and regulatory requirements before shifting their focus.
An FTA can improve market access, but it cannot guarantee sales or profitability. The outcome will depend on how effectively a business uses the concessions and competes in its chosen market.
What the Government’s FTA Utilisation Initiative Means for Businesses
The Department of Commerce has established an FTA Utilisation Cell to help businesses understand and use India’s trade agreements more effectively. The initiative involves working with industry associations, Export Promotion Councils and state governments to explain market opportunities and address barriers to trade.
This is relevant to MSMEs that may not have dedicated teams to study multiple trade agreements. Information about tariff concessions, product eligibility and destination-market requirements can help businesses decide where to focus their export efforts.
Businesses should use such resources alongside product-specific tariff schedules and the relevant agreement’s legal provisions. General market information is a starting point; eligibility must be checked for the actual product and shipment.
Common Mistakes to Avoid When Using FTAs
Businesses may miss the benefits of an FTA if they focus only on lower customs duties. Common mistakes include:
- Assuming that every product qualifies for preferential duty.
- Selecting a market without assessing demand and total export costs.
- Treating goods shipped from India as automatically eligible under rules of origin.
- Failing to obtain the required certificate of origin or retain supporting records.
- Overlooking destination-market standards, licences and labelling requirements.
- Neglecting GST, customs and foreign exchange compliance.
A product-by-product review before accepting an export order can help businesses identify requirements early and reduce avoidable delays or costs.
Setindiabiz Support
Setindiabiz supports businesses with Import Export Code (IEC) registration, export documentation, GST Letter of Undertaking (LUT) filings and FEMA compliance guidance.
Businesses preparing to enter new markets can establish the registrations and documentation required for their export activities. The Setindiabiz team supports the applicable compliance requirements as businesses develop and expand their international trade operations.
A well-planned compliance framework helps businesses prepare for cross-border expansion while reducing avoidable documentation errors.
FAQs
No. The figure is a modelled estimate of potential additional economic output for India by 2035 under a scenario involving further trade agreements. It is not a fund or a direct financial benefit available to individual businesses.
No. Eligibility depends on the product, the destination country’s tariff schedule and the applicable rules of origin. Exporters must meet the relevant conditions and maintain the required documentation.
MSMEs should compare overseas demand, competition, logistics costs, tariff concessions and destination-market requirements. They can also use government resources and relevant Export Promotion Councils to research opportunities.
Depending on the product and agreement, these may include a valid IEC where required, commercial invoices, shipping documents, customs records, supporting origin records and a certificate of origin or prescribed origin declaration.
No. An IEC is an important export-import registration where required, but it does not establish eligibility for preferential customs duty. The exporter must meet the relevant agreement’s origin criteria and documentation requirements.
Setindiabiz supports businesses with IEC registration, export documentation, GST LUT filings and FEMA compliance guidance. The requirements depend on the nature of the business and its proposed export activity.
