The global trading system is shifting from a rule-based order to a more fragmented, transactional, and power-oriented system shaped by geopolitical contestation, regional conflicts, trade protectionism, supply chain realignment, the rise of regionalism, and bilateralism.

According the World Trade Organisation, a total of 69 RTAs has been implemented globally between 2020 and 2025. India has also signed trade agreements with Mauritius, Australia, the United Arab Emirates, Oman, and the United Kingdom. Recently, it has formalised a trade agreement with the European Union and has released a joint statement to sign a trade deal with the United States.

Some policymakers, and geopolitical experts contend that India’s increased interest in FTAs in the post-pandemic world demonstrates a broader shift in its trade strategy from defensive to a more calibrated and pragmatic approach.

India’s trade agreements with the UK and the EU are portrayed as vehicles for improved market access, export diversification, supply chain realignment, and regulatory convergence. These trade agreements undoubtedly open up new business opportunities for domestic firms and integrate them into global value chain networks.

The broader discourse of these two trade agreements presents a rose-tinted view in terms of potential economic gains in labour-intensive sectors, such as textiles and clothing, gems and jewellery, leather, pharmaceuticals, and machinery products. They are also considered as important source of economic dynamism and competitiveness in a rapidly changing global trading environment.

However, this narrative largely overlooks how India’s commitments in these trade agreements undermine its trade policy flexibilities. The potential implications of these commitments in the case of the India-UK CETA and India-EU FTA are immense and extend beyond bilateral contexts. Such commitments not only sabotage India’s economic interests but also set precedents that may constrain India’s trade policy autonomy and negotiating space in future trade deals.

India-UK CETA

First, the chapter on government procurement under the India-UK CETA states that procuring entities in both countries shall receive “no less than favourable treatment” to goods, services, and suppliers. It further contends that UK firms can qualify as class II local suppliers with a domestic content of 20 per cent, thereby possibly enjoying the same preferential treatment as Indian suppliers.

This provision may enable UK firms to access Indian government procurements and tenders thereby limiting the potential business opportunities for domestic companies. Given the relative financial strength, scale and technological capabilities, it is unlikely that Indian suppliers can compete with UK firms in government tenders.

Furthermore, it significantly constrains the ability of Indian policymakers to incentivise MSMEs and start-ups participate in government tenders. This will adversely impact India’s grand initiatives, such as Atmanirbhar Bharat and Make in India, which focus on bolstering domestic manufacturing capabilities.

Second, a close review of disciplines related to intellectual property rights under the India-UK CETA states that parties recognise the importance of “preferable and optimal route to promote and ensure access to medicine is through voluntary mechanisms, such as voluntary licensing.” The inclusion of the voluntary licencing mechanism in the IPR chapter dilutes India’s well-established practice of invoking compulsory licencing to allow domestic generic producers to supply medicines at the time of a national emergency.

The most concerning provision of the IPR chapter is the elimination of the patent working disclosure requirement, thereby giving undue favour to global pharmaceutical giants. This has significant implications for our generic drug producers, as they primarily rely on “working disclosure” as an important source of market information and intelligence. This can delay the entry of generic drugs into the market, thereby severely limiting access and availability of low-cost medicines for millions of people.

EU agreement

Third, a significant concern for India in its trade agreement with the EU is the chapter on trade and sustainable development, as it integrates non-trade issues (labour and environment) in India’s FTA template. Provisions related to labour and the environment can easily be instruments of disguised protectionism. It is a different matter that the legal text clearly states that these disciplines should not be used for “protectionist trade purposes”, and that the “violation of fundamental principles and rights” at work cannot be invoked.

This provision is open to different interpretations. It provides significant leeway to EU policymakers to challenge Indian exports produced in sectors where labour practices and wage structures differ from EU norms, creating space for them to invoke disguised barriers to trade.

In this context, the EU’s green trade measures such as deforestation regulations, CSDDD, and CBAM, will certainly impose strict scrutiny on India’s labour and environmental practices. These green trade measures may offset the potential market access benefits of India’s labour-intensive exports.

Fourth, provisions on digital trade in trade agreements with the UAE, the UK, and the EU are in ‘best endeavour’ language; however, the real challenge is likely to arise when India negotiates digital trade disciplines in ongoing FTA talks with the US and South Korea.

Interestingly, the digital trade chapter of the India EU FTA prevents India from demanding access to source code of EU firms’ software and AI systems thereby significantly constraining power of Indian regulators to understand and regulate AI system.

Further, it also places restrict on Indian authorities to audit algorithms even during investigations. There is a high possibility that the US trade negotiators will put tremendous pressure on Indian trade negotiators to convert these ‘best endeavour’ languages into slightly stronger language, possibly hard commitments in a few areas. Digital trade commitments through trade agreements could subsume significant policy space to frame domestic digital policies.

Indian policymakers should be cautious and pragmatic while negotiating trade agreements, ensuring that the quest for market access, export diversification, and GVC integration does not come at the cost of policy sovereignty, regulatory constraints, and, most importantly, development imperatives.

The writer is an Associate Professor, Jindal School of Liberal Arts and Humanities, O.P. Jindal Global University, Sonipat. Views expressed are personal

Published on May 23, 2026