Trade deficit with FTA partners growing: Niti Aayog

Even as India goes on signing Free Trade Agreements (FTAs) with countries across the globe, focusing now on developed countries, data shows Indian exports are growing slower than imports with FTA countries. A Niti Aayog report shows that in the second quarter of 2024-25, trade deficit with FAT countries grew by 23% year-on-year to $26.7 billion.

According to the report, exports to FTA countries totalled $37.4 billion during the quarter, reflecting a 4% y-o-y decline.

Key regions like ASEAN (-10%), Singapore (-19%), and Australia (-19%) saw notable declines, which contributed to the overall drop. However, there was growth in exports to Japan (31%), Bhutan (22%) and Sri Lanka (11%) highlighting opportunities in these markets.

In comparison, imports from FTA countries grew by 5% YoY during the quarter, reaching $64.3 billion. UAE led the growth with a significant 48% increase, driven by strong demand for key commodities. Imports from Japan (11.3%), Thailand (26%), and Mauritius (30%) also witnessed strong growth.

However, imports from Malaysia (-34%), Australia (-20%), and Sri Lanka (-17%) experienced sharp decline.

The report highlighted the areas of strength and weaknesses in India’s textile exports. It says that though India ranks 6th in global textile exports, its basket remains skewed towards natural fibers with a strong presence in cotton and carpet threads. However, global textile exports are moving towards manmade and technical textiles.

The report says that knitted and non-knitted apparel and clothing accessories account for approximately 60% of global textile export demand, but India holds only a 6% share. This, the report says, reflects India’s continued focus on traditional textiles and natural fibers while facing challenges in expanding its presence in the high-growth synthetic and technical textile segments.