FTAs boost export prospects, but tighter immigration rules may hit remittances: Economic Survey

The Economic Survey 2025–26 was presented in Parliament on January 29, 2026

The Economic Survey for 2025–26 said that while India’s trade diversification strategy, through agreements with the United Kingdom, Oman, New Zealand and the European Union, as well as ongoing negotiations with the US, supports export prospects, tighter immigration policies in key destination economies may limit remittance growth.

"A proliferation of immigration controls across countries typically favoured by Indian emigrants may cap the growth in remittances," the Survey flagged.

It further cautioned that medium-term outlook for India's external sector faces growing uncertainties due to global developments.

Global trade is increasingly shaped by geopolitical alignments and the use of economic statecraft, trends that could affect India’s export prospects. Against this backdrop, the Survey stressed that enhancing India’s global competitiveness and improving its attractiveness as an investment destination must remain key policy priorities.

The Survey, however, noted that India’s external sector remains comfortably placed in the short run, supported by robust foreign exchange reserves and manageable external debt.

As of January 16, 2026, India’s forex reserves covered more than 11 months of imports and nearly 94 per cent of the country’s external debt outstanding at the end of September 2025, providing a strong liquidity buffer against external shocks.

Weighing on on the free trade agreement between India and the EU, concluded on January 27, the Survey said, the FTA expands market access for India’s labour-intensive manufactured exports while enabling deeper integration with Europe’s technological and manufacturing capabilities.

"The FTA with Europe can support the continent’s efforts to revitalise parts of its manufacturing base and, at the same time, strengthen India’s manufacturing competitiveness, export resilience and strategic capacity. Realising the potential of trade agreements requires that we can produce competitively," the Survey noted.