India has signed free trade agreements with many countries over the past few years. It is going to happen to many more countries in the coming years. Notably, the pace of FTAs ​​from India picked up when the US President implemented his tariffs to regulate global trade. It means that America’s protectionist attitude is proving positive for India in a way. Had this not happened, the EU deal that has stalled for years would never have been completed on time. The big question would be whether the deal with Britain would have reached its conclusion.

But India pushed through its FTA at a time when the entire world was reeling from Trump’s tariffs. Using a large-scale model of the global economy developed by the World Trade Organization, Bloomberg reports, it is estimated that these agreements could add about $140 billion to India’s GDP by 2035, open new markets, reduce import costs, encourage foreign direct investment and increase productivity. Let’s discuss in detail what information has been provided by Bloomberg.

A new look at the global trade map

1. US tariff hikes are reshaping global trade relations after President Donald Trump returns to the White House in January 2025, Bloomberg reports. After 19 months of fluctuations, the average US tariff rate is projected to be 10.7% in August, up from 2.3% in 2024.
2. It also reflects sector-specific tariffs—particularly on cars and metals—and country-specific levies (approximately 10%-12.5%) imposed under the ‘Section 301’ crackdown on forced labor. At this rate, the tariffs could reduce imports of goods into the US by about 15% compared to the previous administration. Threats and investigations suggest that further increases may occur.
3. Other countries are responding by diversifying trade ties and intensifying negotiations with new partners. Since the beginning of 2025, the EU has signed new or updated agreements with Mercosur and Mexico and completed negotiations with Indonesia, India and Australia.
4. The Association of Southeast Asian Nations (ASEAN) and China signed an upgraded free-trade agreement until October 2025. Canada signed several agreements in 2025-26 and has taken steps toward launching, accelerating or restarting others.
5. India is no different. During 2025-26, agreements with the European Free Trade Association, the UK and Oman came into force. These agreements were in addition to agreements with Australia and the United Arab Emirates that came into effect in 2022.
6. India also signed an FTA with New Zealand and concluded negotiations with the EU. In addition, New Delhi is also in talks with other partners including the Eurasian Economic Union and trying to reach an agreement with the Gulf Cooperation Council.
7. Also, India has sought to deepen trade ties with the US after Trump and Prime Minister Narendra Modi announced plans for a bilateral agreement in February 2025. The relationship has been full of ups and downs.
8. In late 2025, India faced the highest additional tariffs among major US trading partners as Washington imposed reciprocal tariffs of 25% and additional duties of 25% on purchases of Russian oil.
9. Since then the tension has eased. Although sector-specific tariffs are still in place, the US removed 25% tariffs on Russia and cut reciprocal tariffs on India to 18% in February.
10. Additionally, the crackdown on forced labor under Article 301 – which replaced the reciprocal tariff – set the rate for India at 10%, lower than the 12.5% ​​imposed on many other partners. This paves the way for an interim agreement, although reaching a more comprehensive agreement may be difficult.

What the trade shift means for the Indian economy

Using a ‘computable general equilibrium model’, we can predict how India’s trade deals could change its economy over the next decade. Let’s start by assessing the impact of US tariffs at August levels, compared to 2024 duties, according to the report. Bloomberg has calculated that the average tariff on Indian goods sold to the US will rise from 2.4% to 11.6% by 2024.

It is estimated that by 2035, these tariffs will reduce Indian goods exports to the US by about one-fifth. But its impact on the Indian economy should be limited. Less than 2% of its total production depends on the US market, and strong exports elsewhere will cushion the blow. It is estimated that the impact on the Gross Domestic Product (GDP) will be negligible.

Bloomberg then models FTAs ​​(Free Trade Agreements) that have either been completed or are being negotiated in three ways:

• First, Bloomberg reports that bilateral tariffs are revised using a specific schedule that takes into account key elements of the agreement. India’s allies eliminate all tariffs on Indian goods in the first year itself. India removes tariffs on industrial products and halves tariffs on agricultural products; Half of that deduction is applied in the first year and the rest till the 10th year.
• Second, based on Metivier et al (2023), we assume that the cost of non-tariff measures (NTM) on goods and services will gradually decrease by 25% over 15 years. Additionally, there will be additional reductions in non-tariff measures on services as bilateral agreements reduce uncertainty.
• Third, by using Prasad etc. (2008), we include productivity gains from more FDI as promised under the agreements: $100 billion over 15 years for EFTA (of which about $35 billion is expected to be additional), and $20 billion for New Zealand.

For the US-India negotiations, Bloomberg models an interim agreement under which India offers the US roughly the same tariff reductions as in its other agreements. The US Cuts sector-wide duties on automotive products to 15% (including ‘most-favoured-nation’ tariffs), but retains a 50% metal tariff and 10% Section 301 duty on most products – which it has provided to other deal partners such as the EU or Japan. We still hope that this agreement will reduce tension and uncertainty and reduce NTM (Non-Tariff Measures) like India’s other FTAs.

A Bloomberg analysis shows that FTAs ​​already in place should raise India’s GDP by 1.2% over the baseline by 2035; If the agreements with the EU and New Zealand come into force from 2027, this will rise to 1.7%, a gain of around $140 billion in constant US dollars by 2025. A deal with the US would add 0.2 percentage points to that. If negotiations with the EAEU, GCC and Israel are concluded over the next few years, the benefits could increase by another 0.2 percentage points, resulting in 2.1% more GDP (about $170 billion) by 2035.

The volume of trade will grow faster. If all the agreements are implemented, by 2035 Indian exports could increase by about 10% over the baseline. Imports will also increase as households and businesses gain access to new products and services and producers become more connected to global value chains.

How domestic trends could fuel this growth

Signing an FTA (Free Trade Agreement) is only the first step. To take full advantage of this, India will have to maintain the pace of its reforms. to implement effectively; reliable access to energy, essential minerals and advanced technology; And harnessing the potential of India’s vast workforce – all these things will be important.

Bloomberg analysts say we model an upside scenario in which two domestic trends benefit more:

• Low cost of production. India has cut corporate taxes, provided subsidies, increased investment in infrastructure to reduce logistics costs, and encouraged upskilling workers. In addition to trade-related activities, some of these benefits may have already been realized. In this best-case model, we expect a further increase in producers’ capacity, which we attribute to a reduction in production costs of about 2%. This could increase export profits by about 1 ppt and GDP by 0.5 ppt by 2035.
• Harnessing the potential of India’s agricultural workforce. More than 40% of Indian workers are still employed in agriculture – little changed over the past decade – and low unemployment is high. In comparison, Vietnam’s rapid industrialization has reduced this share from 40% to about 25%, while farm output per worker has grown rapidly and is now about 60% higher than India’s. We model the same growth in productivity over a decade in India, so that workers can move to the growing manufacturing and service sectors. This leads to an increase in export growth of a little more than 1 ppt and a gain in GDP of about 2 ppt.

India is combining an ambitious industrial strategy with an equally ambitious trade agenda. If the combination is right, it could be a powerful new engine of long-term growth. US tariffs are a barrier. For India and the world, the right response can lead to development wins.