Competing on equal terms: How trade agreements can reshape India’s growth model

India's recent trade agreements signify a transformative shift in its economic strategy, moving from a focus solely on cost and production capabilities to prioritizing market access. With a structural current account deficit largely due to energy and electronics imports, enhancing export competitiveness is crucial for maintaining macroeconomic stability. The evolving landscape of global trade emphasizes the importance of preferential tariff access, as even minor tariff advantages can significantly influence sourcing decisions. In this context, India's negotiations with major economic powers like the United States, the UK, and the European Union reflect a newfound strength, showcasing the country as a capable participant in global trade rather than a vulnerable negotiator. The India-EU trade agreement, in particular, opens doors to deeper economic ties and preferential access to a market that constitutes about 25% of the global GDP, potentially boosting exports in labour-intensive sectors. By improving tariff alignment, India aims to enhance its competitiveness and participation in global production networks. As a result, these agreements are steering India towards a more robust export-oriented model, fostering greater manufacturing scale and employment opportunities while positioning the nation on equal footing with other major economies in global trade dynamics.