Rising FTA Trade Deficit:
A NITI Aayog Trade Watch Quarterly report notes that India’s trade deficit with free trade agreement (FTA) partner countries has widened sharply, even as the country recorded strong export growth in electronics and other sunrise sectors.
Findings from the NITI Aayog Report:
- India’s trade deficit with FTA partners widened by 59.2% in Q1 FY26 (April and June). Exports fell 9% to USD 38.7 billion, while imports rose 10% to USD 65.3 billion.
- Electronics emerged as a top performer, growing 47% year-on-year (YoY), now constituting over 11% of total exports. This contrasts with a sharp decline in petroleum exports.
- The overall deficit was driven by a 16.9% contraction in exports to ASEAN, India’s largest FTA export market. Major declines were seen in Malaysia (-39.7%) and Singapore (-13.2%).
- Imports from the UAE surged 28.7%, propelled by new imports of gold compounds and increased petroleum. Imports from China grew 16.3%, led by electronic components.
- The data is critical as India actively negotiates FTAs (e.g., EU, US) and has recently concluded pacts with Oman, New Zealand, and the UK (2025).
- It also follows a missed 2025 deadline to re-negotiate the ASEAN FTA.
