Why in News?
According to NITI Aayog’s Trade Watch Quarterly, India’s trade deficit with its Free Trade Agreement (FTA) partners widened sharply in 2025, even as exports from sunrise sectors like electronics showed strong growth.
Description:
Key Terms:
- Trade Deficit: Excess imports over exports.
- Free Trade Agreement (FTA): Bilateral or multilateral agreement reducing or eliminating trade barriers.
- Structural Divergence: Mismatch between export composition and import dependence.
- Sunrise Sectors: Emerging high-growth industries such as electronics.
Key Findings:
- India’s trade deficit with FTA partners rose by 59.2% between April–June 2025 compared to the previous year.
- Imports increased by ~10%, while exports declined by ~9% during the same period.
- Total deficit with FTA partners reached ~$38.7 billion.
Export Trends:
- Electronics exports grew ~47% year-on-year, increasing their share in total exports to over 11%.
- Reflects India’s deeper integration into global electronics value chains.
- However, strong electronics exports were insufficient to offset declines in other sectors.
Import Trends:
- Surge in imports from UAE, driven by Gold compounds & Petroleum oils and bitumen
- UAE emerged as a major import source, overtaking earlier suppliers.
- India’s imports from its top 7 markets accounted for ~43% of total imports in Q1 FY26.
Sectoral Imbalance:
- Decline in petroleum exports.
- Rising imports of electronics components, mineral fuels, and precious metals.
- Indicates continued dependence on import-intensive supply chains, even with FTAs.
Regional Trends:
- India’s exports to ASEAN, its largest FTA bloc, contracted sharply.
- Exports to some partners (Malaysia, Singapore, Australia) declined significantly.
- Highlights uneven benefits across FTA partners.
India’s FTA Landscape:
- Concluded FTAs with UAE, Australia, UK, Oman, New Zealand.
- Active negotiations with EU, USA, GCC, EAEU, SACU, and others.
- Exploring Preferential Trade Agreements (PTAs) with new partners.
La Excellence IAS Academy, the best IAS coaching in Hyderabad, known for delivering quality content and conceptual clarity for UPSC 2026 preparation.
FOLLOW US ON:
◉ YouTube : https://www.youtube.com/@CivilsPrepTeam
◉ Facebook: https://www.facebook.com/LaExcellenceIAS
◉ Instagram: https://www.instagram.com/laexcellenceiasacademy/
GET IN TOUCH:
Contact us at info@laex.in, https://laex.in/contact-us/
or Call us @ +91 9052 29 2929, +91 9052 99 2929, +91 9154 24 2140
OUR BRANCHES:
Head Office: H No: 1-10-225A, Beside AEVA Fertility Center, Ashok Nagar Extension, VV Giri Nagar, Ashok Nagar, Hyderabad, 500020
Madhapur: Flat no: 301, survey no 58-60, Guttala begumpet Madhapur metro pillar: 1524, Rangareddy Hyderabad, Telangana 500081
Bangalore: Plot No: 99, 2nd floor, 80 Feet Road, Beside Poorvika Mobiles, Chandra Layout, Attiguppe, Near Vijaya Nagara, Bengaluru, 560040