10 and counting: India's 2026 FTA playbook to tackle tariffs, secure minerals

Efforts to quickly close trade deals with developed markets come at a time when most Indian goods have been subject to 50 percent tariffs by its largest trading partner, the United States, since August 27.

India is also trying to clinch the first tranche of a Bilateral Trade Agreement (BTA) with the US in an attempt to lower reciprocal tariffs to a competitive level compared with key competitors like Bangladesh and Indonesia, which face lower American duties of 19–20 percent.

At the same time, the country is looking to diversify its exports to other markets to reduce dependence on a single economy.

All eyes on US & EU deals

While India and the European Union relaunched negotiations for an FTA on June 17, 2022, after a gap of more than eight years, US talks started in March, 2025.

Two-way merchandise trade between India and the US reached $132.14 billion in FY25. It is the South Asian nation's largest export market, accounting for 19.8 percent of the country’s total outbound shipments.

In FY25, India’s bilateral merchandise trade with the EU stood at $136.53 billion, including $75.85 billion in exports and $60.68 billion in imports. This made it the largest trading partner for goods.

The road to negotiations has been easier between India and the EU with an announcement expected in the presence of the bloc's leadership as chief guests at the Republic Day celebrations in January next year.

Commerce and Industry Minister Piyush Goyal said on December 11 that the next round of talks between Indian officials and EU Trade Commissioner Maroš Šefčovič is scheduled for the first or second week of January, with ministerial-level engagement planned around January 8–9 to advance discussions.

So far, 14 formal rounds of negotiations have been held, followed by ministerial interactions and technical consultations as recently as early December, as both sides work to resolve outstanding issues.

While there are outstanding issues, including India being cautious about the EU’s demands for steep tariff cuts on automobiles, medical devices, wine, spirits, and other sensitive products, as well as concerns in agriculture and rules of origin, there is strong political resolve on both sides to bring the agreement to the finish line.

On the other hand, the path to a Bilateral Trade Agreement (BTA) between India and the US has been complicated by recent tariff actions. President Donald Trump imposed a 25 percent tariff on Indian goods effective August 7, 2025, followed by an additional 25 percent duty later in the month as a penalty related to New Delhi’s purchase of Russian crude.

Talks for a BTA between India and the US first emerged in February, when during a meeting between Prime Minister Narendra Modi and his American counterpart, President Donald Trump, the two leaders set a bold new target for bilateral trade, “Mission 500”, aiming to more than double total trade to $500 billion by 2030.

As part of this new goal, the two sides announced plans to negotiate the first tranche of a mutually beneficial, multi-sector BTA by the fall of 2025. While that deadline has been missed, India’s Chief Economic Adviser recently signalled that there should be an interim pact by at least March 2026.

So far, India and the United States have conducted five formal rounds of negotiations for the trade agreement, while engagements have continued in the interim as well, most recently during a visit by a high-level delegation from the Office of the Trade Representative, led by Deputy Ambassador Rick Switzer, to India from December 9–11.

Agriculture remains one of the most contentious issues between India and the US in the talks for a trade agreement, as New Delhi traditionally keeps farm and dairy products out of international deals, while the American administration is pushing for greater market access.

A trade deal between India and the US is crucial given that Indian exports worth roughly $48.2 billion are facing elevated tariffs.

Indian exports to the US fell nearly 9 percent in October to $6.31 billion from $6.91 billion a year ago, while it increased from $5.47 billion in September.

Deepening gulf ties and critical minerals

Negotiations between India and Oman began in November 2023. Following three rounds of talks held between November 2023 and March 2024, both sides reached a consensus on all components of the Comprehensive Economic Partnership, including its text and market access offers.

However, the signing of the free trade agreement between India and Oman was delayed due to procedural formalities on the Omani side even as negotiations for the pact concluded around August. Both sides have conducted five rounds of in-person talks, with the last one held in New Delhi in January.

Attempts to broker a trade deal with a second Gulf nation follows India’s Comprehensive Economic Partnership Agreement with the UAE, signed on February 18, 2022 and entered into force from May 1, 2022.

Apart from that, India is open to trade pacts with other Gulf Cooperation Council (GCC) countries as it looks to deepen engagement with nations in this region like in the case of Qatar.

Bilateral trade between India and Oman stood at $10.6 billion in 2024‑25, up nearly 19 percent year-on-year, making it India’s third-largest export destination within the GCC.

On the other hand, recent disruptions in the supply of critical minerals spurred India’s interest in pursuing trade deals with Peru and Chile.

This given that China has intensified export curbs and trade restrictions, especially on critical minerals, capital equipment, and electronics supply‑chain inputs, prompting concerns across India’s manufacturing and export sectors.

India imports almost all of its rare earth permanent magnets. Government estimates place domestic demand at around 4,010 tonnes a year, which is expected to almost double to 8,220 tonnes by 2030.

With Peru, negotiations on a proposed FTA have advanced through nine rounds of talks, with the latest held in Lima in November 2025. Progress was made on key chapters, including trade in goods and services, rules of origin, customs procedures, dispute settlement, and critical minerals. Both sides have agreed to continue with further rounds, with the next slated for New Delhi in early 2026.

In the case of Chile, India is negotiating a Comprehensive Economic Partnership Agreement (CEPA), which builds on an existing preferential trade arrangement.

The fourth round of CEPA negotiations was completed in December 2025, covering a wide range of issues including market access and critical minerals.

With Canada too, India recently restarted talks on a comprehensive trade deal, with critical minerals as a strategic area of collaboration.

Apart from that, FTAs with New Zealand and Israel are also in the pipeline, with negotiations expected to conclude soon, while India has initiated talks to secure an agreement with the Eurasian Economic Union (EAEU) bloc of nations, led by Russia.

At a time when India’s merchandise exports, down nearly 12 percent in October, are under pressure and tariffs are being weaponised, trade deals have become a key tool for India to counter the current volatility.