India pushing for FDI-linked FTAs to attract global investors, says Commerce Secy Rajesh Agrawal

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India is steering its ongoing free trade agreement (FTA) negotiations toward securing foreign direct investment (FDI) commitments from partner countries, Commerce Secretary Rajesh Agrawal said, signalling a strategic shift in how upcoming trade pacts are being structured by the country.

Speaking at FICCI's annual general meeting and annual convention, he said integrating with "big consumer markets" was essential, and a wider FTA network would give global investors tariff predictability and clarity, encouraging them to invest in India.

Agrawal said India is actively nudging developed economies to bring specific FDI-related commitments to the negotiating table. "In other FTAs that we are negotiating, which are coming to the fore in the next calendar year, you will find many of them will have this provision—like the EFTA deal—wherein FDI is something that will be committed by our partner country," he said.

India's recent trade pact with the European Free Trade Association (EFTA) has become a template for the government's push to secure investment-linked outcomes through FTAs. Under the agreement, EFTA countries agreed to mobilise $100 billion in FDI over 15 years across sectors such as manufacturing, infrastructure and technology in exchange for gradual tariff concessions from India. Commerce ministry officials said the government views this structure as a model for future FTAs, arguing that pairing market access with assured long-term investments strengthens India’s industrial base and gives global firms greater confidence to localise operations.

The commerce secretary added that India’s expanding market and rising demand would draw significant investment into manufacturing as well. “This demand has to be met by producing locally; it cannot be met only by imports. Global investors are aware of that and will be looking at India as an investment market,” he said.

Rupee and Trade Deficit

On the rupee’s movement, Agrawal said the issue will be best addressed by the Department of Economic Affairs, but added that exporters typically do not suffer when the currency weakens. “From the export perspective, when the rupee devalues, the exporter in the room does not feel bad, so that’s not a problem,” he said.

He attributed October’s wider trade deficit to a sharp spike in precious metals imports. “If you look deep down, one of the key drivers for the trade deficit was our precious metals imports. There was pent-up demand for gold and silver. In the first six months, our imports in this category were 75 percent lower on-year. This year that pent-up demand has all been met in October, leading to a higher trade deficit,” Agrawal said.