India’s recent trade agreements with Europe and the United States mark a structural shift towards “managed openness”, but their success will hinge on whether they catalyse technological upgrading and deeper integration into global value chains, Rajeev Singh, Director General (DG), Indian Chamber of Commerce (ICC), told BW Businessworld.
In an interaction with BW, Singh said the India-EU trade deal represents more than a tactical response to global realignments, even as it was accelerated by geopolitical upheaval. “It involves both,” Singh said, referring to whether the India-EU and prospective India-US trade agreements signal a structural shift or a tactical adjustment. Notably, India and the US have agreed to reschedule the planned meeting of their chief negotiators in Washington to finalise the interim trade pact following the Supreme Court order.
“The India-EU trade deal is a structural shift in India’s trade policy as we are strategically looking towards newer markets and integrating into global supply chains.” He described the agreement as a recalibration by both sides, hastened by global volatility. Europe’s reassessment, driven by China’s assertiveness, supply-chain fragility exposed during Covid and the geopolitical rupture following Russia’s invasion of Ukraine, has made India a more plausible long-term partner, he added.
India–EU goods trade rose from €88 billion (about USD 105.1 billion) in 2021 to €120 billion (USD 143.4 billion) in 2024, Singh said. Services trade tripled to €66 billion (USD 79 billion), led largely by IT and consulting. “These are respectable gains, but the volatility in global trade made recalibration essential for them too,” he noted.
Singh argued that the India-EU deal, alongside the India-UK free trade agreement and the EFTA pact, effectively opens up the entire European market for Indian entrepreneurs. Employment-intensive sectors such as textiles, apparel, leather, footwear, marine products, gems and jewellery, handicrafts, engineering goods and automobiles stand to gain significantly, he said.
By contrast, he characterised the India–US interim trade deal as a rollback of steep tariffs and an effort to rebuild a strained economic relationship. “For India, the question is not whether these agreements matter — they do — but can they alter our small footprint in global trade?” Singh said.
Since independence, India’s share of world merchandise exports has not exceeded 2 per cent, compared with China’s 14 per cent, he said. “We have grown into a nearly USD 4 trillion giant, but the task at hand is integration into global value chains to evolve into an Indian giant.”
From Protectionism To Managed Openness
Singh rejected the notion that India remains largely protectionist. Nearly 70 per cent of global trade markets are open to India through preferential access secured via free trade agreements, he said. “India has concluded nine FTAs with 38 developed countries. These agreements are part of the plan to make India self-reliant and a developed nation by 2047,” he said.
He described the approach as “beneficial or managed openness”, calibrated to protect India’s interests while expanding access. Still, he acknowledged that liberalising trade and investment must be accompanied by continuous domestic economic reforms. India’s export profile remains limited, dominated by services and low-value manufacturing. Industrial production has stagnated at roughly 13 to 15 per cent of gross domestic product (GDP) for decades, and technology absorption remains uneven, he said.
“We need to build comparable engines of transformation. The agreements of early 2026 create opportunity, but only if they catalyse a strategic shift,” Singh said. “India must treat trade not as a diplomatic spectacle, but as a lever for technological and industrial upgrading.”
For Singh, the real test of the new trade architecture lies beyond tariff reductions. “Bilateral agreements should prioritise technology transfer, joint ventures and R&D collaboration over narrow tariff concessions,” he said.
He suggested that the EU’s sustainability provisions could become conduits for green-technology investment, while cooperation with the United States could anchor collaboration in semiconductors, artificial intelligence and advanced manufacturing, rather than energy purchases alone.
Singh pointed to production-linked incentive (PLI) schemes as early signs of this shift, particularly in manufacturing and defence. However, he said PLI must be benchmarked against global performance standards. India also needs to “scale up capital through technology” from the government to help start-ups and MSMEs adopt advanced manufacturing systems and upgrade continuously, he added.
Logistics, ports, customs clearance and financial access must be modernised with speed. He said the 2026–27 budget had taken steps in this direction with a long-term vision.
Measuring Success Requires Patience
On how India should evaluate the success of its trade and investment agreements, Singh urged caution. “It is premature to judge these agreements now,” he said, quoting Prime Minister Narendra Modi’s position that FTAs are designed to reduce non-tariff barriers and expand market access for MSMEs in sectors such as textiles, leather, processed food, engineering goods, chemicals, handicrafts and gems and jewellery.
Singh suggested that export growth alone would be an incomplete metric. Technology transfer, job creation and integration into global value chains should also be considered, particularly given India’s ambition to double its share of global trade. In a world where supply chains are fragmenting rather than globalising, Singh sees opportunity in disruption.
“If trade policy can be aligned with technological upgrading, India’s global share could plausibly rise to 4 or even 5 per cent by its centenary year of independence in 2047,” he said. That shift would transform both India’s economic standing and its geopolitical leverage, he argued. “The alternative is familiar: celebrated agreements that generate modest gains while structural weaknesses persist.”
Beyond tariffs and incentives, Singh underscored the importance of regulatory certainty and dispute resolution in shaping investor perceptions. India’s economic momentum is undeniable, he said, but the legal machinery underpinning commercial certainty is under scrutiny as cross-border deals expand. “The way India handles business disputes is increasingly central to how global stakeholders perceive risk,” he said.
Mandated mediation provisions are beginning to show results, though practical implementation varies widely, Singh noted. In-house legal teams are experimenting with AI-driven tools for drafting and compliance checks, but experts believe more customised solutions are required. Such institutional reforms, he suggested, may ultimately matter as much as headline tariff cuts in determining whether India is seen as a genuinely open economy.
Risks And The Road Ahead
Asked whether “managed openness” poses risks to long-term competitiveness or investor confidence, Singh said he does not see an inherent threat. However, he added a word of caution: structural reforms remain essential if India is to achieve double-digit economic growth alongside calibrated liberalisation.
Looking ahead five to ten years, Singh declined to identify a single decisive reform that would determine whether India remains selectively protectionist or becomes meaningfully open. “In an increasingly unstable and non-linear global environment, it is difficult to pinpoint any single reform,” he said. Instead, he pointed to a cluster of priorities: deeper international trade integration, tax policy reform, infrastructure development and innovation.
For Singh, the “tale of two deals” Europe and the United States marks only the opening chapter of a larger transformation. “In a fractured world, opportunity lies in the cracks,” he said. “We as a nation need to capitalise on the moment of global fragmentation to build the capabilities that have not been there.” Whether India’s managed openness evolves into a decisive break from its protectionist past may depend less on the ink on trade agreements and more on the country’s ability to convert access into capability. |
