India’s Trade Policy Shift: From Free Trade Agreements to Strategic Protectionism

Since gaining independence, India's trade policy has concentrated on non-reliance and protectionism, setting it apart from other nations. The 35 years following independence were characterized by extremely high tariffs, strict import controls, and a complicated licensing system designed to promote rising Indian diligence while securing multitudinous sectors. This emphasis on non-reliance fostered domestic production, but it also constrained import expansion and limited India's integration into the global market.

At the launch of 1991, India initiated significant reforms that marked the beginning of a transition towards a more open and market-driven economy, a process that was both gradual and irreversible. This change has not followed a straight path, with ups and downs, as India has gone through times of staying, starting over, and now picking up speed. So, India's Free Trade Agreements show how the country is trying to balance its pretensions to lead in global trade with the need to cover its large and occasionally fragile original diligence.

Revitalising Free Trade Agreements

India is making it a top priority to subscribe to free trade agreements with the United States, the European Union, the United Kingdom, and other advanced countries, which are seen as good mates with strong competition and business-friendly surroundings.

Table 1. India’s imports and exports with select economies, 2009-10 and 2023-24, in US$ million

Imports

Exports

Country/Region	2009-10	2023-24	CAGR %	2009-10	2023-24	CAGR %
EU	34	61.5	4.3	29.9	75.9	6.9
EFTA	15.6	22	2.5	0.8	1.9	6.2
UK*	4.5	8.4	4.6	6.2	13	5.4
US	17	42.2	6.7	19.5	77.5	10.4
Australia*	12.4	16.2	1.9	1.3	7.9	13.3
ASEAN#	25.8	79.7	8.4	18.1	41.2	6.1
GCC	53.5	105.5	5	30.8	56.3	4.5
China	30.8	101.7	8.9	11.6	16.7	2.6
Japan#	6.7	17.7	7.1	3.6	5.2	2.5

SAARC

1.7

5.2

8.5

8.4

25.6

8.3

Source: Author’s calculations based on data from the Department of Commerce, Government of India.

IMPACT OF PAST FTAs-

BENEFITS OF FTAs-

Rise of Strategic Protectionism

India’s recent tariff conduct has sparked debate about whether they represent a protectionist shift or a realistic policy response to global and domestic challenges. Factually, India did increase numerous import tariffs in the late 2010s, reversing a lengthy period ofpost-1991 liberalisation. The simple average of India’s tariffs rose by roughly 25 percent over the last decade, reaching 11.1 percent in 2020- 21. This increase marked a departure from the steady tariff reductions of previous decades and has been described as a “ creeping rise in protectionist tariffs. ”

In budgets from 2018 onwards, the government raised customs duties on products like electronics, toys, cabinetwork, bus corridor, and fabrics, explicitly encouraging domestic manufacturing under the “ Make in India ” and Atmanirbhar Bharat (tone- reliant India) enterprise. Similar measures, alongside frequent antidumping conduct (India initiated 233 anti-dumping examinations in 2015 – 2019 alone), have led numerous spectators to market India’s trade approach as increasingly protectionist.

Indeed, the World Bank noted in 2024 that India’s import tariffs on crucial inputs( from China and others) raise costs and undermine its participation in global value chains. A protectionist station may affect India, being barred from trade arrangements that grease GVC( Global Value Chains) integration. For example, rising tariffs since 2014 have been cited as a factor that could stop India from raising force chains( similar to the Quad’s semiconductor action) unless reversed.

Way Ahead

Indian industry today occupies a transitional space. On one hand, tariff protection offers temporary sequestration within a large domestic market; on the other, long- term competitiveness depends on lowering costs, perfecting quality, and integrating with global product networks. Challenges similar to precious imported inputs, uneven FTA issues, policy queries, and import competitiveness gaps suggest that tariff-grounded protection, if dragged or inadequately calibrated, may stymie rather than enable artificial elevation. A formative path forward lies in rationalising tariff structures and aligning them with broader artificial and trade objects. Associations similar to CII and FICCI can play a critical part by engaging policymakers to advocate for predictable, transparent, and growth-aware trade programs.

Crucially, protection should be treated as a transitional instrument rather than an endless guard. When tariffs reduce competitive pressure, enterprises risk recession. Forward-looking enterprises must rather use this window to invest in productivity- enhancing technologies, pool upskilling, exploration and development, and spare manufacturing practices. By perfecting effectiveness and securing products, Indian enterprises can constrain cost disadvantages that tariffs temporarily obscure.

In an increasingly fractured global trade terrain, India must precisely balance its profitable engagements across regions while aligning trade policy with geopolitical and geo-profitable precedences. Strategic openness rather than magpie protection will be essential if India is to secure durable earnings from global trade integration.

BY AASHI MEENA THE INDIAN NETIZENS