Why is India striking so many trade deals?

Summary

Business Daily (BBC World Service)

Episode: Why is India striking so many trade deals?
Host: Rahul Tandon
Date: February 19, 2026

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Main Theme

This episode investigates India's surge in global trade agreements and the factors driving so many countries to strike deals with the world's fastest-growing major economy. The discussion explores India's economic transformation over the past few decades, the opportunities and challenges these deals present, and the implications for India's vast population—particularly those engaged in sensitive sectors like agriculture.

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Key Discussion Points and Insights

1. India’s Economic Transformation and Global Interest

• Rapid Economic Growth:
  India has evolved from the world’s 11th largest economy a decade ago to being on the verge of entering the top three.
  “Then we were the 11th largest economy in the world. Now we are knocking on the doors of the top three.” — Rahul Tandon [02:16]

• Digital Revolution:
  The country now boasts 800-900 million smartphone users, marking a massive leap in technology and consumer behavior.
  “You've got a country of 1.4 billion people, Rahul, and you've got over 800 to 900 million smartphone users.” — Aruna Dair Mukherjee [04:16]

• Growing Middle Class and Consumption:
  The middle class is estimated at 400-500 million, fueling demand for goods and services, including imported products.

2. Trade Agreements: The 'Mother of All Deals'

• Major Recent Deals:
  India has secured high-profile agreements with the EU, New Zealand, and the UK, and established a framework with the US.
  “We did it. We delivered the mother of all deals. We are creating a market of 2 billion people.” — Ursula von der Leyen (EU Commission President, via clip) [03:07]

• Mutual Benefit:
  These deals are viewed as win-win, reflecting India’s emergence as a vital partner in the global economy.

3. Legacy of Economic Liberalization

• Liberalization of the 1990s:
  Former Prime Minister Manmohan Singh’s economic reforms opened India to foreign goods and capital.
  Clips recall how once-exotic products like Coca-Cola were kept out and later became everyday items after liberalization.
  “There was a long period of time when we didn't have big foreign brands...and then you had liberalization thanks to then Finance Minister Dr. Manmohan Singh...” — Aruna Dair Mukherjee [04:59]

• Visible Change:
  The interviewees recount personal anecdotes about how the emergence of global brands and digital payments, even in tin-roof tea stalls, have changed everyday life. “You've got this small shack on the side of the road...The guy's selling tea, but he's accepting digital payments. So I think those are things which are definitely something that I find very, very interesting as I look at India's growth story.” — Aruna Dair Mukherjee [08:12]

4. Challenges: Poverty, Unemployment, and Inequality

• Mixed Impact:
  While 171 million people have exited poverty in the last decade (per the World Bank), significant numbers still face hardship and unemployment. “The World Bank says 171 million people have been lifted out of poverty in the last decade. But it's important to point out that huge challenges remain and that life remains difficult for millions of Indians. And unemployment is still a challenge.” — Rahul Tandon [09:44]

5. The Intricacies of Trade Negotiations

• Complexity and Duration:
  Trade agreements can take decades; the EU deal took over 20 years due to the difficulty of aligning so many interests. “To bring all of this together in a trade agreement where it is binding...becomes quite a task. There are huge teams from both sides. They are continuously talking. It's a very...difficult task.” — Sangeeta Godwale, former Indian trade negotiator [11:04]

• The Role of the US and Geopolitics:
  Shifts in global trade frameworks, such as the US under Donald Trump, have accelerated some negotiations, particularly with the EU. “Donald Trump's tariffs have helped some countries come together.” — Sangeeta Godwale [15:57]

6. Risks: Domestic Sectors under Threat

• Agricultural Sensitivities:
  Over 50% of India’s workforce is in agriculture, making this sector highly sensitive to liberalization. “One of the big concerns has been from the Indian agriculture sector, which employs well over 50% of India's workforce.” — Aruna Dair Mukherjee [17:54]

• Public Concerns and Protests:
  Worries abound about foreign goods undermining local farmers and industries.
  “That is going to further push into a much more acute crisis. So against that, it is a fight for our survival and we will go to any extent to ensure that our struggle is successful.” — Viju Krishnan, farmer leader [17:35]

• Political Critique:
  Some politicians (e.g., Shashi Tharoor) warn of strategic disadvantages and ‘economic preemption’ by agreeing to terms that may disadvantage Indian producers.
  “No major economy has ever neutralized its own trade leverage in this manner…This is not strategic balancing. It is economic preemption.” — Shashi Tharoor (parliamentary clip) [16:22]

• Need for Caution and Preparation:
  “We need to be prepared. If we are well prepared, we can create really magic out of these opportunities. Otherwise, well, it will be difficult.” — Sangeeta Godwale [01:34, 15:10]

7. India's Newfound Bargaining Power

• Stronger Position at the Table:
  India commands more respect and gets better terms, but remains cautious to avoid flooding markets with cheap imports. “Now, India is the fastest growing economy…so you can imagine the consumption that India is going to do in the coming years. And that is why all the developed countries or all the rich countries want to strike a deal with this huge aspirational mass of young people, well trained and growing very rapidly.” — Sangeeta Godwale [12:32]

• Changing Nature of Imports:
  Rising prosperity means shifting import trends, from basics to luxury and lifestyle goods. “Imported fresh fruit, their import doubled in the last five years…because the per capita income and the per capita GDP is also growing, there is a huge young aspirational class which wants the best in the world.” — Sangeeta Godwale [13:25]

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Notable Quotes & Memorable Moments (with Timestamps)

• On rapid social change:
  “The speed at which the changes have happened for this generation have been much faster…than perhaps any previous generation.” — Aruna Dair Mukherjee [04:16]

• On the liberalization ‘moment’:
  “A crisis therefore is also an opportunity. And I am going to use this crisis to begin a process of structural change.” — Manmohan Singh (archival clip) [05:10]

• On digital transformation at street level:
  “The guy's selling tea, but he's accepting digital payments. That was unthinkable a few years ago.” — Aruna Dair Mukherjee [08:12]

• On India’s motivations and risks:
  “We need to guard against being overwhelmed by cheaper imports. So as you would have noticed, we have not done an FTA with China…” — Sangeeta Godwale [15:10]

• On geopolitical shifts in trade negotiations:
  “Donald Trump's tariffs have helped some countries come together.” — Sangeeta Godwale [15:57]

• On protests and opposition:
  “So against that, it is a fight for our survival and we will go to any extent to ensure that our struggle is successful.” — Viju Krishnan, farmer leader [17:37]

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Important Timestamps

• [02:36] – The scale of India’s economic transformation and the New Delhi AI summit
• [03:07] – EU-India ‘mother of all deals’ quote
• [04:16] – Personal experiences of economic change and the spread of technology
• [11:04] – Trade negotiation complexities (Sangeeta Godwale)
• [12:32] – India’s market appeal to the developed world
• [15:10] – Risks and cautious approach in trade negotiations
• [16:22] – Parliamentary opposition and Shashi Tharoor’s critique
• [17:35] – Voices from India’s farm sector on trade deals

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Closing Reflection

The episode captures India’s pivotal moment in global trade: ambitious, teeming with economic promise, but still grappling with deep challenges and dissent at home. Whether these trade deals will power India further ahead or generate new social and economic turbulence remains an open question—one with immense consequences both for Indian citizens and the global economy.

Transcript

[A]

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[B]

We need to be prepared. If we are well prepared, we can create really magic out of these opportunities. Otherwise, well, it will be difficult.

[A]

Today we're asking, is the world's fastest growing major economy about to go into overdrive? That's all coming up here on Business Daily from the BBC. In one decade, India has seen a massive transformation. Then we were the 11th largest economy in the world. Now we are knocking on the doors of the top three. That of course is the Indian Prime Minister Narendra Modi on a recent trip to Malaysia talking about the country's growing economic clout. He's confident as always about its rapid development. And we've seen another example of that this week as India has been at the center of lots of global business news headlines.

[B]

It's a landmark week in New Delhi.

[A]

World leaders are here, tech giants are here, researchers, policy makers.

[B]

They've all gathered for one reason, artificial intelligence.

[A]

That AI summit in New Delhi got us thinking here on Business Daily about the recent trade deals that have been struck with India. And there have been quite a few. The biggest was with the eu. Here's the President of the European Commission, Ursula von der Leyen, Prime Minister, distinguished friend. We did it. We delivered the mother of all deals. We are creating a market of 2 billion people.

[B]

And this is the tale of two giants.

[A]

The world's second and fourth largest economies. Two giants who choose partnership in a true win win fashion. That was not the only one. New Zealand and the UK have also signed what are known as FDA's or free trade agreements. And there's been the framework agreement with the world's biggest economy, the us. So why are they all so keen on improving their trade ties with India? Well, one reason is its huge internal market. It is a country of more than 1.4 billion people and its cash rich middle class, well that's growing. It's difficult to get exact numbers, but it's now between 4 and 500 million people. I lived in India for more than a decade and saw and reported on how the country was changing. And I've been talking about that with our India business correspondent, Aruna Daim Mukherjee.

[C]

The speed at which the changes have happened for this generation have been much faster in many ways than perhaps any previous generation. Because you know, you've seen the kind of development in the digital space. I think that really stands out. I mean you've got a country of 1.4 billion people, Rahul, and you've got over 800 to 900 million smartphone users.

[A]

I've been going to India since I was born here in the uk, My parents obviously from India. I lived in India for quite a long period of time. What I've seen is a huge growth in consumption. You go to the shops, you know, when I went as a kid there was hardly any products because not many products were allowed into India. That has changed. And the consumption model has changed as well, hasn't it?

[C]

For sure. And I mean that is credited to the early 90s when we were growing up. There was a long period of time when we didn't have big foreign brands coming into the country. And then you had liberalization thanks to then Finance Minister Dr. Manmohan Singh, you remember, who then later became the Prime Minister. We would have mortgaged the economic independence of this country. A crisis therefore is also an opportunity. And I am going to use this crisis to begin a process of structural change. That's the message of structural change. We will ensure that our industrial economy becomes a vibrant industrial economy.

[A]

That is the former Indian Prime Minister Manmohan Singh who opened up the country's economy in the 1980s when he was Finance minister that allowed foreign products into what had been a closed economy. It was a moment that triggered India's economic growth. It is now the fastest growing major economy in the world. This year, it's expected to expand by around 7%. Here's Arunidha again.

[C]

It is. India continues to be, on paper, one of the fastest growing economies in the world. You've got a lot of indicators that are pointing towards the same. There is this growth story that there is recognition for. You know, just last year you saw big tech companies like Google, Amazon coming up and promising billions of dollars in investment. So there is this sort of positioning that India has been trying to do in the world as this leader of the global south, that this is the country to look at. This is what the destination should be for big tech players for other countries as they try to stitch relationships, especially in an increasingly unpredictable global economic environment.

[A]

We'll pick up on that in a second. But let's get a little bit personal here in terms of when you look at India now economically, as somebody who's grown up with this huge economic change, what strikes you the most? I remember going to India as a kid, you couldn't get Coca Cola because it was not allowed to be sold in India. Of course, you get it everywhere now, along with all the other big brands. That's a very visible symbol for me. What about for you?

[C]

That was definitely a very visible sort of change when Coca Cola came into the country. And it was a very, you know, for Indians. It was also a bit aspirational, you know, to see these big brands coming into the country, you know, which you've heard from your cousins living abroad, you know, who would come into the country with, you know, two small cans of Coke which you would save in your cupboard for months, thinking that I'm going to save that for a special occasion, you know. You know, these were those kind of, what to say, precious sort of items, which gives you a sense of how India was sort of waiting for that change to really happen. And now when it's happened, it's happened so fast that now you just take all of that for granted. You mentioned Coke, but you know, something that strikes me a lot is the way in which over the last few years, and I think this was also spurred on a little bit by Covid, you know, the kind of transactions, financial transactions, the way they've gone digital in a vast country like India, where you had so much of cash being king, you know, right from the small shop and Rahul you visited, you know, the number of Small chai shops, you know, where you can just stand around thousands.

[A]

Hundreds of thousands, Millions. Yeah.

[C]

And you have the best kind of conversations there. You'd know, you know, about which politicians said what the kind of gossip going on in the power corridors of the country. And, you know, right after that, you ask the person, how much for tea? And he whips out a QR code. You whip out your phone, you scan it, and you just transfer the money. That's unthinkable. That was unthinkable a few years ago. And I think that really strikes you. You've got this small shack on the side of the road, barely sort of standing on its feet. You've got a makeshift shed. The guy's selling tea, but he's accepting digital payments. So I think those are things which are definitely something that I find very, very interesting as I look at India's growth story.

[A]

Aruna Dai there on those rapid economic changes that have led to growing global interest in the Indian market. You are listening to Business Daily here on the BBC World Service. Are you really buying a car online on autotrader right now?

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I think kid is walking up the slide. Kyle again? Really? Autotrader, Buy your car online. Really? I'm Rahul Tandon, and today we're looking at why so many countries are keen to strike trade deals with India. When I was in India, I saw many people's lives change. The World bank says 171 million people have been lifted out of poverty in the last decade. But it's important to point out that huge challenges remain and that life remains difficult for millions of Indians. And unemployment is still a challenge. So will the trade deals help change that? On behalf of all Americans, let me also extend our warmest wishes to the people of India. I just spoke to your prime minister today. We had a great conversation. We talk about trade. We talk about a lot of things, but mostly the world of trade. He's very interested in, interested in that. The US President Donald Trump there. And whilst there has now been progress on a trade deal, nothing formal with the US has been put in place. And striking one, well, that's not easy. So why do they take so long to conclude? The EU deal took more than 20 years. Let's hear from someone who's been involved in those complicated negotiations. Sangeeta Godwale is a former Indian trade negotiator.

[B]

To bring all of this together in a trade agreement where it is binding, you know, so putting all this together becomes quite a task. There are huge teams from both sides. They are continuously talking. It's a very, very, very, very difficult task.

[A]

As you said that EU deal negotiations for 20 years, when you were part of that negotiating team, were there moments where you just felt, this is never going to happen more years.

[B]

Many of us felt it many times that, look, this is not just not going to happen. And if you notice, in the EU deal, four chapters have just not been, what should I say? They have been left off because the two sides are so far away on these areas that we just can't arrive at any conclusion and therefore it is better to keep the chapters away. So there are many moments when both sides feel, if you have seen the European statement, sometimes their chief negotiator had almost thrown up his hands and said, sorry, we won't be able to do it, but ultimately we did do it.

[A]

Do you think the eu, the uk, the us, New Zealand, countries that are striking deals with India look at India in a very different light now? Because the India of today is very different to the India of 15 years ago. It is this huge market, it is huge potential. Is that a big factor in why we're seeing so many countries wanting to close these deals?

[B]

Yes, absolutely. Not only the current size. Even now, India is the fastest growing economy in the world and on a such a huge base that 5, 6, 7% of growth means a lot. So you can imagine the consumption that India is going to do in the coming years. And that is why all the developed countries or all the rich countries want to strike a deal with this huge aspirational mass of young people, well trained and growing very rapidly.

[A]

And if you just look at some of those numbers, the growing middle class, the largest country by population on this planet. And I think whenever I go to India, what I see is a country which still obviously has huge challenges as well, but a younger population that is willing to spend money.

[B]

Yes, absolutely. There's another data which I just wanted to share with you, you know, things like cosmetics, things like alcohol, things like prepared cereals, things like fresh fruit. Their import. Import. I'm not talking about fresh mangoes or fresh oranges bought from the local market. Imported fresh fruit, their import doubled in the last five years. It means that the Indian market is growing in more ways than one. It is not just that we are buying gold, we are in huge quantities, or energy, or petroleum products or fertilizers, we are buying all of that. But because the per capita income and the per capita GDP is also growing, there is a huge young aspirational class which wants the best in the world.

[A]

The fact that that India economically is now so much stronger, does that mean that when these trade negotiations are being concluded that India is getting better deals?

[B]

The thing is that most of the developed countries and the rich countries, they have low tariffs. So since they already have low tariffs, tariffs are not going to come down much. But India is able to enter the markets in areas that it could not do very well, for example. So in that sense, these FTAs could be a good deal.

[A]

But there is a danger as well, isn't there? There is a reason why India has not opened up its economy. It's still a young country. 1947 was when it got independence. And in agriculture, we're already seeing great concern that if other countries can bring their products in more cheaply to India, it could destroy those sectors.

[B]

You are right in the sense that we need to guard against being overwhelmed by cheaper imports. So as you would have noticed, we have not done an FTA with China especially. SMEs would be worried. They don't want to be completely decimated at the hands of cheaper reports. All experts are saying the same thing. We need to be prepared. If we are well prepared, we can create really magic out of these opportunities. Otherwise, well, it will be difficult.

[A]

Yeah. I mean, I suppose that is the question. We look at India, it's a huge market, but are these deals being struck because of that market or are they being struck because Donald Trump has torn up the trade notebook rulebook and instead we're in a completely different era?

[B]

I think so. Both, I mean, both, definitely. For example, the deals with Australia, with uk, with the uae, with Oman, they were not struck under pressure from the U.S. but the EU? Yes, definitely. I think it forced both partners to take it at a very realistic level and agree that, okay, let's do it quickly. Otherwise, in that sense, I think Donald Trump's tariffs have helped some countries come together.

[A]

As Sangeeta said, there are concerns about opening up the Indian economy. And they have been expressed in Parliament by many opposition politicians, including Shashi Tharoor. We have surprisingly promised to buy $500 billion worth of American goods over five years. No major economy has ever neutralized its own trade leverage in this manner. While the US continues to impose import tariffs of up to 18%, we have committed ourselves, apparently, according to this joint statement that I've been seeing here, to impose tariffs up to 18% on Indian exports and we to slash tariffs to near zero levels, open agriculture, dilute data localization, soften intellectual property safeguards, and even redirect strategic energy imports, especially away from Russia, to meet purchase targets. This is not strategic balancing. It is economic preemption. And we're already seeing signs of unease in some sectors about the deals. Farmers across India, as we heard there, have been holding protests. Here is one of their leaders, Viju Krishnan. Now, the latest trade deal with America.

[B]

That is going to further push into.

[A]

A much more acute crisis. So against that, it is a fight for our survival and we will go to any extent to ensure that our struggle is successful. And that is a huge problem for these trade deals as millions of Indians work in this sector. Here's Arundhai.

[C]

Again, I have to point out that one of the big concerns has been from the Indian agriculture sector, which employs well over 50% of India's workforce. It's still a very important part of the Indian economy, which is why a lot of these trade deals have been stalled in the past or, or have been slow simply because India has been very aggressive in protecting the agricultural sector. You're already seeing a little bit of dissatisfaction from farmers unions. One of them has called for a nationwide protest. They've said that the India US Trade deal is essentially a case of India submitting itself, surrendering itself under US Pressure. While the Indian government insists that they have protected sensitive sectors like dairy and agriculture, they believe that's not the case. They believe that this essentially leaves room for them to open themselves up and create a situation in which foreign goods are being dumped in India's agricultural sector, which is a huge concern.

[A]

Trying to balance the economic needs of 1.4 billion people is not easy. And India is continuing trade negotiations with many countries. So we could see more trade deals soon. But as we've heard, it's unclear whether that will accelerate growth in the world's fastest growing major economy or lead to some sectors slowing down. And that will have an impact on the lives of hundreds of millions of Indians. Thank you for listening to Business Daily I'm Rahul Tanden. The producer of this program was David Can. Planning another business trip soon. When you fly Emirates, you can really make the most of your journey.

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