Can FTAs deliver India’s $1 trillion export dream? Electronics seen leading the way

India’s recent wave of free trade agreements (FTAs), coupled with Production-Linked Incentive (PLI) schemes and infrastructure investments, could help the country move closer to its ambitious goal of achieving $1 trillion in merchandise exports by 2030, with electronics emerging as the biggest beneficiary, according to a report by YES Securities.

The report argues that India’s latest trade agreements represent a fundamental shift in economic strategy, moving away from cautious protectionism towards deeper integration with global markets.

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Agreements with the UAE, Australia, the UK and the European Free Trade Association (EFTA), along with ongoing negotiations with the European Union and the US, are expected to provide Indian exporters with wider market access and greater tariff certainty.

Unlike earlier trade agreements that often resulted in widening trade deficits, the current FTA cycle is being implemented alongside a broader manufacturing push supported by PLI schemes, investments in industrial corridors, ports, logistics and supply-chain localization initiatives. According to YES Securities, these agreements should be viewed not merely as trade arrangements but as the foundation of a multi-year manufacturing and export-led growth cycle.

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$1 trillion in merchandise exports

At the centre of this strategy is the government’s target of reaching $1 trillion in merchandise exports by 2030. The report says India is increasingly emerging as one of the few economies with the scale, labour force and domestic market size capable of absorbing manufacturing relocation amid the global “China+1” trend.

Among various sectors analysed, electronics stands out as the strongest beneficiary of India’s evolving trade architecture. The sector recorded the highest FTA Opportunity Score and is expected to be one of the biggest winners from improved market access and supply-chain integration.

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India’s electronics industry

According to YES Securities, India’s electronics industry has undergone a structural transformation, evolving from a largely import-dependent sector into one of the fastest-growing contributors to merchandise exports. The growth has been aided by PLI incentives, rising participation by global contract manufacturers and the rapid expansion of smartphone manufacturing ecosystems led by Apple and its suppliers.

The report estimates that electronics exports could reach $233 billion by 2030, surpassing the government’s target of $200 billion for the sector.

Advantage Pharma

Apart from electronics, pharmaceuticals and engineering and machinery goods also emerge as major beneficiaries. Pharmaceuticals are expected to gain from stronger regulatory cooperation and improved access to developed markets, while engineering goods could benefit from lower tariff barriers and ongoing supply-chain diversification.

The report also highlights the role FTAs could play in reviving India’s private investment cycle. With industrial capacity utilisation hovering around 75%, higher export demand could encourage companies to undertake fresh capital expenditure, improve economies of scale and create a virtuous cycle of manufacturing expansion and employment generation.

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However, YES Securities cautions that market access alone will not be enough to ensure export success. India’s biggest challenge, the report says, lies in domestic competitiveness rather than tariffs. High logistics costs, infrastructure gaps, compliance complexity, expensive power and lower labour productivity continue to act as structural bottlenecks.

Textiles, gems and jewellery

The report notes that sectors such as textiles, gems and jewellery and specialty chemicals may not witness the same degree of export acceleration despite their established export presence, as changing global demand patterns and structural constraints could limit the gains from tariff liberalisation.

According to YES Securities, the ultimate success of India’s FTA strategy will depend on whether the country can improve competitiveness, strengthen its position in global value chains and translate preferential market access into sustained export growth.

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