Engineering goods, chemicals and pharmaceuticals are the other manufacturing sectors where the market opportunity is high. Two of the trade deals, with New Zealand and the EU, are yet to be operational.
The analysis covered trade pacts with the UK, UAE, Oman, Australia, European Free Trade Association (EFTA) and Mauritius. EFTA comprises Iceland, Liechtenstein, Norway and Switzerland. The analysis showed the EU’s imported $6.62 trillion worth of goods in 2024, but India’s share was only a meagre 1.23%. The India-EU FTA is expected to come into force next year.
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Similarly, the UK’s merchandise imports from the world were $815.6 billion but India’s share was only 1.88%. The engineering goods sector offers a whopping $3 trillion opportunity while labour-intensive sectors such as marine and leather each have a $70 billion-plus market opportunity in these new markets.
Officials said strong growth across manufacturing, engineering goods, electronics, chemicals, pharmaceuticals, food products and consumer goods has enabled exporters to capitalise on opportunities created by trade deals and expanding domestic competitiveness. “A key feature of the current export performance is the diversification of markets beyond traditional destinations,” said an official. “It helps export resilience by reducing dependence on a limited set of destinations and increasing India’s participation across multiple regional value chains.” The new trade pacts provide 100% duty-free market access to most Indian products of labour intensive sectors, leading to trade expansion. Consider this: India’s goods exports to the UAE rose to $37.3 billion in FY26, from $28 billion in FY22, buoyed by higher silk, machinery and carpet shipments.
The India-UAE Comprehensive Economic Partnership Agreement came into effect May 1, 2022, while to EFTA, the outbound shipments were stable at around $1.7 billion.Also read | Banks just got ₹2.1 lakh cr fresh lending headroom
However, exports to Australia fell to $7.3 billion in 2025-26 from $8.3 billion in FY22 though food products and pharmaceutical exports have grown. The India-Australia Economic Cooperation and Trade Agreement entered into force on December 29, 2022.
India’s trade deficit with Australia reduced to $6.5 billion last fiscal from $8.5 billion in FY22, per official data. With Mauritius, India’s goods trade surplus shrank to $374.66 million from $643 million in the same period.
“One needs to see the quality of trade imbalance,” the official said, adding that lot a lot of time, raw material imports are used for manufacturing and exports.