FTA partners accounted for a third of India’s goods trade gap at $31 billion in Q2 FY26

Export performance across FTA partners was uneven.

India’s trade deficit with countries and blocs it has free trade agreements with stood at $31 billion in July–September of 2025-26, even as exports to these markets grew 7 percent year-on-year, according to the sixth edition of the Trade Watch Quarterly released by NITI Aayog on February 13.

India’s exports to its FTA partners amounted to $38 billion during the second quarter of the current fiscal, while imports rose 5 percent year-on-year to $69.8 billion, resulting in a sizeable trade gap.

With India’s total merchandise exports at $108 billion and imports at $196 billion in Q2 FY26, the overall trade deficit in goods stood at about $88 billion, indicating that roughly a third of this gap came from FTA partners.

Overall, India’s merchandise exports rose 8.4 percent year-on-year in the second quarter of the current fiscal year, while goods imports increased by 5 percent.

Export performance across FTA partners was uneven.

The report noted that contraction in shipments was led by ASEAN, where exports declined 16.8 percent year-on-year. Sharp falls were also recorded in Singapore, Malaysia, Australia, and Mauritius.

These declines were partly offset by growth in exports to the UAE at 10.5 percent, South Korea at 14.7 percent, Thailand at 16.1 percent, and Sri Lanka at 17.6 percent.