India’s quest for higher growth hinges not only on domestic reforms but also on enhancing its global trade capabilities. While recent efforts to simplify tariffs are positive, analysts argue that further liberalisation and strategic trade agreements, including potential accession to the CPTPP, are vital to fully capitalise on international markets.
India’s push for faster growth will require more than domestic reform; it will also depend on whether the country can make better use of global trade. That is the central argument of a recent Business Standard editorial, which says India has spent years underusing exports as a growth engine even as economies such as South Korea and China used trade to transform themselves. The paper argues that the government is now moving in the right direction by trimming tariffs and simplifying duty slabs, but says the bigger task is to build a low-tariff regime that makes Indian firms more competitive abroad.
The case for change is strengthened by the scale of India’s trade relationships. The United States government’s trade guide says India already has bilateral and regional agreements with more than 50 countries, including pacts with the United Kingdom, the United Arab Emirates and Australia. Other analyses say India now has preferential access to almost two-thirds of global trade through its network of free trade agreements, reflecting a marked shift from its earlier protectionist stance. Economists and policy analysts have argued that this turn towards trade liberalisation is meant to pull domestic industry into global supply chains, attract investment and expand exports.
Finance Minister Nirmala Sitharaman has signalled that the tariff reform process is not finished. In remarks last week, she suggested that by the 2027-28 Budget, customs duty could be reduced to single digits apart from a few items. That would matter because tariffs act as a cost on imports and, indirectly, on exports too. Higher duties make intermediate goods more expensive, which raises production costs and weakens the ability of Indian companies to compete in international markets.
The numbers underline the challenge. World Bank data show India’s total exports at $431.4 billion and imports at $672.1 billion, leaving a trade deficit of $240.7 billion. The same data put India’s effectively applied tariff weighted average at 5.22% and its most-favoured-nation weighted average at 6.51%, figures that suggest there is still room to simplify and lower the system further. The editorial also makes a strategic point: as India concludes deeper trade deals with advanced economies, it may need to consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership if it wants to maximise the gains from an increasingly interconnected trade order.
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