With the signing of a landmark trade deal with the European Union and the US trade agreement in sight, growth momentum is likely to be sustained for a longer period, Reserve Bank of India Governor Sanjay Malhotra said on Friday.
"While services exports are expected to remain strong, merchandise exports will get a boost from the prospective trade deal with the US. The landmark comprehensive trade pact with the European Union, coupled with trade deals with New Zealand and Oman, should help diversify exports and strengthen the external sector," he said in his Monetary Policy Committee statement.
The recently concluded India-EU free trade agreement (FTA) and the prospective India-USA trade deal, along with several other trade agreements, will support exports over the medium-term, Guv Malhotra said.
He noted that while services exports should remain resilient, the spillovers emanating from geopolitical tensions, volatility in international financial markets, and shifting trade patterns pose risks in the outlook.
US President Donald Trump and Prime Minister Narendra Modi independently announced the conclusion of a trade deal between the two countries late on Monday, which would reduce tariffs on Indian exports to 18%, from the earlier 50% tariff (including 25% punitive tariff imposed by Trump).
In a move to bolster its overseas trade relations, New Delhi signed terms of reference of a free trade agreement (FTA) with the Gulf Cooperation Council (GCC) on Thursday, that would open doors for goods and services in six member countries - Saudi Arabia, United Arab Emirates (UAE), Qatar, Kuwait, Oman, and Bahrain; two of which already have a trade pact with India.
India has signed five trade agreements in the last twelve months, including the United Kingdom (UK), the European Union, Oman, New Zealand, and the US, alongside ongoing negotiations with other major economies.
Commerce Minister Piyush Goyal recently said that the country will soon conclude a free trade agreement with Chile, which will help secure access to critical minerals.
In FY25, India’s total exports stood at an all-time high of $825.25 billion, reflecting a robust 6.05% annual growth. During the April-September 2025 period, the exports stood at $418.91 billion, reporting a 5.86% increase yoy.
In the last four years, New Delhi has signed eight free trade agreements covering major economies across Europe and other regions, including the 27-nation European Union, the four-nation EFTA bloc comprising Switzerland, Liechtenstein, Norway and Iceland, UK, Australia, New Zealand, the United Arab Emirates and Oman.
Key export drivers include electronic goods (41.94%), engineering goods (5.35%), drugs and pharmaceuticals (6.46%), marine products (17.40%) and rice (10.02%), which collectively propel India’s strong export momentum.
India’s top export destinations during the first half of FY26 include China (21.85%), Spain (40.30%), the USA (13.34%), the United Arab Emirates (9.34%), and Hong Kong (23.53%), as per the commerce ministry data.
The current ongoing FTA negotiations include:
India-Chile Free Trade Agreement (FTA)
India – Korea CEPA (upgraded negotiation)
India-Peru Free Trade Agreement (FTA)
India-Sri Lanka Economic and Technology Cooperation Agreement (ETCA)
India-EAEU Free Trade Agreement (FTA)
India-Maldives Free Trade Agreement (FTA)
ASEAN-India Trade in Goods Agreement (AITIGA)
An expanding network of FTAs supports India's trade strategy by offering reliable market access amid global uncertainty, the latest Economic Survey noted, adding that these agreements enable export-focused firms to boost production and become more integrated into the global value chain.
Bilateral trade agreements also enhance the export competitiveness of Indian firms by encouraging them to prioritise productivity and reliability over reliance on access-based benefits.
Source Name : Economic Times