India’s FTA push may not offset US tariffs drag, Barclays says

Core Insights - India's recent free trade agreements (FTAs) may not sufficiently counteract the negative impact of US tariffs on its exports, particularly in labor-intensive sectors like textiles and apparel [1][9] - The US remains India's largest export market, accounting for 19.3% of total exports prior to the imposition of tariffs, which are among the highest globally at 50% [9][10] - The uncertainty surrounding trade negotiations has pressured the Indian rupee and led to a $5 billion expenditure by the government to support exporters [9][10] Trade Agreements and Economic Impact - Many of the newer FTAs, such as those with Oman and New Zealand, are unlikely to significantly boost India's exports due to relatively small trade volumes [2][9] - Of India's top 20 export markets, 16 have FTAs or are in negotiations, collectively representing 51% of total trade [5][10] - The effectiveness of these agreements in translating into tangible export growth remains uncertain, particularly regarding their potential to strengthen India's industrial base [6][10] Future Prospects - The anticipated India-EU FTA is viewed as a significant opportunity for export diversification and increased trade openness with a large economic bloc [8][10] - Upcoming visits by European Commission and Council leaders to India may enhance the likelihood of finalizing the trade agreement after prolonged negotiations [8][10] - Approximately 70% of India's exports to the US are at risk if the 50% tariffs continue, with sectors like leather, apparel, and marine exports being particularly vulnerable [10]