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UPSC Notes

International Economic Cooperation and Trade Agreements

PYQs

15

Articles

5

Momentum

41

Phase IFoundation

Background

Overview

India's engagement in international economic cooperation and trade agreements is rooted in its constitutional commitment to promote international peace and security (Article 51) and its economic imperative to integrate with the global economy. The Foreign Trade (Development and Regulation) Act, 1992, provides the legal framework for governing foreign trade. India is a founding member of the World Trade Organization (WTO), which establishes the multilateral rules-based trading system.

FTAs are crucial for India's economic policy, international relations, and have significant implications for various sectors, including agriculture, manufacturing, and services, impacting livelihoods and national sovereignty. Their negotiation and impact are recurring themes in UPSC.

Key facts

Constitutional Basis

Article 51 (Directive Principle of State Policy)

Legal Framework

Foreign Trade (Development and Regulation) Act, 1992

Multilateral Anchor

World Trade Organization (WTO) member since 1995

Policy Body

Directorate General of Foreign Trade (DGFT)

Phase IIStatic core

Facts & tables

Overview

International economic cooperation involves various forms, from informal dialogues to formal trade agreements, aiming to foster economic growth, stability, and mutual benefit among nations. These agreements can be bilateral (between two countries), regional (among a group of countries), or multilateral (involving many countries, like the WTO).

Trade agreements typically aim to reduce or eliminate tariffs, quotas, and other non-tariff barriers to trade in goods and services, facilitate investment, protect intellectual property rights, and streamline customs procedures. They can range from preferential trade agreements (PTAs) offering limited tariff concessions to comprehensive economic partnership agreements (CEPAs) covering a wide array of economic activities.

Key facts

Most Favoured Nation (MFN)

A WTO principle requiring members to treat all other members equally in trade matters, with exceptions for FTAs/Customs Unions.

Rules of Origin

Criteria used to determine the national source of a product, crucial for preferential treatment under FTAs.

Early Harvest Scheme

A precursor to a full FTA, where countries identify certain products for immediate tariff reduction/elimination to build confidence.

Trade Facilitation Agreement (TFA)

A WTO agreement aimed at simplifying and modernizing customs procedures to expedite the movement, release, and clearance of goods.

India's FTA Strategy

Focus on 'Look East' (now 'Act East'), West Asia, Africa, and developed economies to diversify trade and investment.

RCEP Withdrawal

India withdrew from the Regional Comprehensive Economic Partnership (RCEP) in 2019 due to concerns over potential adverse impacts on domestic industries and agriculture.

India-UK FTA

Signed in July 2025, but not yet operationalised.

India-UAE FTA

Signed in 2022, strengthening economic ties.

Reference table

Types of Economic Integration Agreements

Type of AgreementKey Features
Preferential Trade Agreement (PTA)Reduced tariffs on certain products for member countries, but not necessarily zero tariffs.
Free Trade Agreement (FTA)Elimination of tariffs and quotas on most goods and services traded among members, but each member maintains independent external tariffs.
Customs UnionFTA features plus a common external tariff policy towards non-member countries.
Common MarketCustoms Union features plus free movement of factors of production (labor, capital) among members.
Economic UnionCommon Market features plus harmonization of economic policies (e.g., monetary, fiscal policy).
Comprehensive Economic Partnership Agreement (CEPA)/Cooperation Agreement (CECA)Broader than FTAs, covering trade in goods, services, investment, competition, IPR, and other areas of economic cooperation.

Reference table

India's Key Bilateral/Regional Trade Agreements (Examples)

AgreementPartnersStatus/Year of Implementation
India-ASEAN FTA10 ASEAN Member StatesGoods: 2010, Services & Investment: 2015
India-Japan CEPAJapan2011
India-South Korea CEPARepublic of Korea2010
India-UAE CEPAUnited Arab Emirates2022
India-Australia ECTAAustralia2022 (Economic Cooperation and Trade Agreement)
India-EFTA FTAEuropean Free Trade Association (Iceland, Liechtenstein, Norway, Switzerland)Signed 2024

Reference table

Static syllabus anchors

TypeReference
Conceptual areaInternational Relations
Conceptual areaIndian Economy
Conceptual areaEconomy
Conceptual areaInternational Trade
Conceptual areaEconomic Diplomacy
Conceptual areaEconomic Liberalization

Reference table

Institutions & roles

BodyRole
Ministry of Commerce and IndustryNegotiates and implements
European Free Trade Association (EFTA)Partner in agreement
European Union (EU)Partner in agreement
Ministry of Commerce and Industry (India)Negotiates and implements
Department for Business and Trade (U.K.)Negotiates and implements
World Trade Organization (WTO)Framework
Phase IIIExam lens

Prelims angle

Overview

UPSC Prelims often tests definitional aspects of trade agreements (e.g., difference between FTA and CEPA, MFN principle, Rules of Origin), examples of India's major trade partners, and the objectives of such agreements. Questions may also cover the institutional framework like the WTO and its agreements (e.g., TFA).

For UPSC Mains (GS3 Economy), questions can delve into the rationale behind India's pursuit of trade agreements, their impact on various sectors (agriculture, manufacturing, services), challenges faced by domestic industries, and the role of these agreements in achieving India's economic goals (e.g., 'Make in India', export promotion). Policy implications, the balance between protectionism and liberalization, and the way forward for India's trade policy are common themes.

Quick revision

  • India-EFTA trade agreement came into force last year.
  • India-EU FTA expected to be ratified/signed this year.
  • Aims to diversify supply chains and markets.
  • Enhances economic ties with Europe and Nordic countries.
  • Part of broader economic diplomacy efforts.

Elimination traps

Body vs treaty — Distinguish between EFTA (an intergovernmental organization) and the India-EFTA Trade Agreement (a treaty).

Treaty = agreement between states; body = institution.

High-confidence PYQs

2026Cause and effect relationships, Multi-statement analysis

Which of the following is/are the most significant implication(s) of obtaining Oeko-Tex certification for Eri Silk in the global textile industry? 1. It all...

EconomyOpen question

In what way(s) does the Vizhinjam International Seaport represent a structural shift in India's maritime trade and logistics policy? 1. By functioning exclu...

EconomyOpen question
2026Multi-statement analysis, Conceptual understanding

Which of the following is/are the most significant implication(s) of obtaining Oeko-Tex certification for Eri Silk in the global textile industry? 1. It all...

EconomyOpen question

In what way(s) does the Vizhinjam International Seaport represent a structural shift in India's maritime trade and logistics policy? 1. By functioning exclu...

EconomyOpen question
2025Statement-based questions, Factual recall

Consider the following statements: I. India has joined the Minerals Security Partnership as a member. II. India is a resource-rich country in all the 30 cri...

EconomyOpen question
2021Multi-statement analysis, Conceptual understanding

Consider the following statements: The effect of devaluation of a currency is that it necessarily:- 1. improves the competitiveness of the domestic exports i...

EconomyOpen question
2020Multi-statement analysis, Factual recall

Consider the following statements: 1. The value of Indo-Sri Lanka trade has consistently increased in the last decade. 2. “Textile and textile articles” con...

International RelationsOpen question

With reference to the international trade of India at present, which of the following statements is/are correct? 1. India’s merchandise exports are less tha...

EconomyOpen question

With reference to the Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct? 1. Quantitative restrictions on imports b...

EconomyOpen question
2020Multi-statement analysis, Factual recall

Consider the following statements: 1. The value of Indo-Sri Lanka trade has consistently increased in the last decade. 2. “Textile and textile articles” con...

International RelationsOpen question

With reference to the international trade of India at present, which of the following statements is/are correct? 1. India’s merchandise exports are less tha...

EconomyOpen question

With reference to the Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct? 1. Quantitative restrictions on imports b...

EconomyOpen question
2020Multi-statement analysis, Conceptual understanding

Consider the following statements: 1. The value of Indo-Sri Lanka trade has consistently increased in the last decade. 2. “Textile and textile articles” con...

International RelationsOpen question

With reference to the international trade of India at present, which of the following statements is/are correct? 1. India’s merchandise exports are less tha...

EconomyOpen question

With reference to the Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct? 1. Quantitative restrictions on imports b...

EconomyOpen question
2019Factual recall, Conceptual understanding

Among the following, which one is the largest exporter of rice in the world in the last five years?

EconomyOpen question

Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

EconomyOpen question

Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without regis...

EconomyOpen question
2019Factual recall, Definition-based questions

Among the following, which one is the largest exporter of rice in the world in the last five years?

EconomyOpen question

Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

EconomyOpen question

Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without regis...

EconomyOpen question
2019Factual recall

Among the following, which one is the largest exporter of rice in the world in the last five years?

EconomyOpen question

Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

EconomyOpen question

Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without regis...

EconomyOpen question
2017Multi-statement analysis, Factual recall

Consider the following statements: 1. India has ratified the Trade Facilitation Agreement (TFA) of WTO. 2. TFA is a part of WTO’s Bali Ministerial Package o...

International RelationsOpen question

Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and

International RelationsOpen question

Which of the following has/have occurred in India after its liberalization of economic policies in 1991? 1. The share of agriculture in GDP increased enormo...

EconomyOpen question
2017Factual recall, Terminology-based question

Consider the following statements: 1. India has ratified the Trade Facilitation Agreement (TFA) of WTO. 2. TFA is a part of WTO’s Bali Ministerial Package o...

International RelationsOpen question

Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and

International RelationsOpen question

Which of the following has/have occurred in India after its liberalization of economic policies in 1991? 1. The share of agriculture in GDP increased enormo...

EconomyOpen question
2017Multi-statement analysis, Conceptual understanding

Consider the following statements: 1. India has ratified the Trade Facilitation Agreement (TFA) of WTO. 2. TFA is a part of WTO’s Bali Ministerial Package o...

International RelationsOpen question

Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and

International RelationsOpen question

Which of the following has/have occurred in India after its liberalization of economic policies in 1991? 1. The share of agriculture in GDP increased enormo...

EconomyOpen question
2016Statement-based questions, Conceptual understanding

With reference to the ‘Trans-Pacific Partnership’, consider the following statements: 1. It is an agreement among all the Pacific Rim countries except China...

International RelationsOpen question

Consider the following statements with reference to ‘IFC Masala Bonds’ - 1. The International Finance Corporation, which offers these bonds, is an arm of th...

EconomyOpen question
2016Multi-statement analysis, Conceptual understanding

With reference to the ‘Trans-Pacific Partnership’, consider the following statements: 1. It is an agreement among all the Pacific Rim countries except China...

International RelationsOpen question

Consider the following statements with reference to ‘IFC Masala Bonds’ - 1. The International Finance Corporation, which offers these bonds, is an arm of th...

EconomyOpen question
Phase IVLatest

Current affairs

Overview

India has recently accelerated its engagement in bilateral trade agreements, signing significant pacts with the UAE and Australia, and concluding negotiations with the EFTA bloc, while actively pursuing agreements with the UK and EU to enhance market access and integrate into resilient global supply chains.

The signing of the India-EFTA Trade and Economic Partnership Agreement (TEPA) in March 2024 marks a significant milestone, offering India market access to developed European economies and attracting investment, particularly in pharmaceuticals, machinery, and textiles, in exchange for tariff concessions.

Topic timeline

International RelationsIndian EconomyEconomyInternational Trade
Prelims 2016· Statement-based questions, Conceptual understanding

With reference to the ‘Trans-Pacific Partnership’, consider the following statements: 1. It is an agreement among all the Pacific Rim countries except China...

Open question

Consider the following statements with reference to ‘IFC Masala Bonds’ - 1. The International Finance Corporation, which offers these bonds, is an arm of th...

Open question
Prelims 2016· Multi-statement analysis, Conceptual understanding

With reference to the ‘Trans-Pacific Partnership’, consider the following statements: 1. It is an agreement among all the Pacific Rim countries except China...

Open question

Consider the following statements with reference to ‘IFC Masala Bonds’ - 1. The International Finance Corporation, which offers these bonds, is an arm of th...

Open question
Prelims 2017· Multi-statement analysis, Factual recall

Consider the following statements: 1. India has ratified the Trade Facilitation Agreement (TFA) of WTO. 2. TFA is a part of WTO’s Bali Ministerial Package o...

Open question

Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and

Open question

Which of the following has/have occurred in India after its liberalization of economic policies in 1991? 1. The share of agriculture in GDP increased enormo...

Open question
Prelims 2017· Factual recall, Terminology-based question

Consider the following statements: 1. India has ratified the Trade Facilitation Agreement (TFA) of WTO. 2. TFA is a part of WTO’s Bali Ministerial Package o...

Open question

Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and

Open question

Which of the following has/have occurred in India after its liberalization of economic policies in 1991? 1. The share of agriculture in GDP increased enormo...

Open question
Prelims 2017· Multi-statement analysis, Conceptual understanding

Consider the following statements: 1. India has ratified the Trade Facilitation Agreement (TFA) of WTO. 2. TFA is a part of WTO’s Bali Ministerial Package o...

Open question

Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and

Open question

Which of the following has/have occurred in India after its liberalization of economic policies in 1991? 1. The share of agriculture in GDP increased enormo...

Open question
Prelims 2019· Factual recall, Conceptual understanding

Among the following, which one is the largest exporter of rice in the world in the last five years?

Open question

Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

Open question

Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without regis...

Open question
Prelims 2019· Factual recall, Definition-based questions

Among the following, which one is the largest exporter of rice in the world in the last five years?

Open question

Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

Open question

Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without regis...

Open question
Prelims 2019· Factual recall

Among the following, which one is the largest exporter of rice in the world in the last five years?

Open question

Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

Open question

Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without regis...

Open question
Prelims 2020· Multi-statement analysis, Factual recall

Consider the following statements: 1. The value of Indo-Sri Lanka trade has consistently increased in the last decade. 2. “Textile and textile articles” con...

Open question

With reference to the international trade of India at present, which of the following statements is/are correct? 1. India’s merchandise exports are less tha...

Open question

With reference to the Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct? 1. Quantitative restrictions on imports b...

Open question
Prelims 2020· Multi-statement analysis, Factual recall

Consider the following statements: 1. The value of Indo-Sri Lanka trade has consistently increased in the last decade. 2. “Textile and textile articles” con...

Open question

With reference to the international trade of India at present, which of the following statements is/are correct? 1. India’s merchandise exports are less tha...

Open question

With reference to the Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct? 1. Quantitative restrictions on imports b...

Open question
Prelims 2020· Multi-statement analysis, Conceptual understanding

Consider the following statements: 1. The value of Indo-Sri Lanka trade has consistently increased in the last decade. 2. “Textile and textile articles” con...

Open question

With reference to the international trade of India at present, which of the following statements is/are correct? 1. India’s merchandise exports are less tha...

Open question

With reference to the Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct? 1. Quantitative restrictions on imports b...

Open question
Prelims 2021· Multi-statement analysis, Conceptual understanding

Consider the following statements: The effect of devaluation of a currency is that it necessarily:- 1. improves the competitiveness of the domestic exports i...

Open question
Prelims 2025· Statement-based questions, Factual recall

Consider the following statements: I. India has joined the Minerals Security Partnership as a member. II. India is a resource-rich country in all the 30 cri...

Open question
Prelims 2026· Cause and effect relationships, Multi-statement analysis

Which of the following is/are the most significant implication(s) of obtaining Oeko-Tex certification for Eri Silk in the global textile industry? 1. It all...

Open question

In what way(s) does the Vizhinjam International Seaport represent a structural shift in India's maritime trade and logistics policy? 1. By functioning exclu...

Open question
Prelims 2026· Multi-statement analysis, Conceptual understanding

Which of the following is/are the most significant implication(s) of obtaining Oeko-Tex certification for Eri Silk in the global textile industry? 1. It all...

Open question

In what way(s) does the Vizhinjam International Seaport represent a structural shift in India's maritime trade and logistics policy? 1. By functioning exclu...

Open question

​Home and abroad: on the Prime Minister’s five-nation diplomatic tour

23 May 2026 · India actively pursues international economic cooperation through bilateral and multilateral trade agreements (e.g., India-EFTA, India-EU FTA) to diversify its supply chains, expand market access for its goods and services, and enhance overall economic resilience in a volatile global environment.

Read article

PM Modi holds bilateral talks with leaders of U.K., UAE on the sidelines of G7 Summit

17 Jun 2026 · Free Trade Agreements (FTAs) are bilateral/multilateral pacts to reduce trade barriers, boosting economic ties. India has signed FTAs with the UK (July 2025, not operational) and UAE (2022), aiming for enhanced economic cooperation and integration.

Read article

July opens the biggest chapter in India-U.K. trade relations

29 Jun 2026 · Free Trade Agreements are comprehensive pacts designed to liberalize trade by reducing barriers, fostering economic growth, and integrating economies. The India-U.K. FTA exemplifies a modern, broad, and deep agreement covering goods, services, digital trade, and sustainability.

Read article

PM Modi to make first official visit to New Zealand next week

03 Jul 2026 · FTAs are agreements to liberalize trade by reducing barriers like tariffs. India uses them to boost exports, attract investment, and strengthen economic ties with strategic partners, impacting its external sector and overall economic growth.

Read article

Farmers’ outfits urge MPs, MLAs to speak out against trade deals; seek scrapping of all FTAs

18 Aug 2026 · FTAs are international agreements to liberalize trade, often leading to debates on their impact on domestic industries, agriculture, and economic sovereignty, as highlighted by farmer protests against potential agri-product imports.

Read article

Related topics

Current topic

International Economic Cooperation and Trade Agreements

Often confused with

India's Foreign Policy and Diplomatic Engagements

Open notes
Often confused with

Global Supply Chains

Coming soon
Often confused with

Balance of Trade

Coming soon
Often confused with

Foreign Direct Investment

Coming soon
Often confused with

Economic Growth

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Often confused with

Strategic Autonomy in Foreign and Economic Policy

Open notes

Practice writing on this topic

UPSC has asked 15 linked questions on International Economic Cooperation and Trade Agreements in Mains. Write an answer to one — and get it evaluated.

See Mains PYQsEvaluate an answer

UPSC Prelims PYQs on International Economic Cooperation and Trade Agreements

Practice official previous year questions asked by UPSC related to this concept.

Consider the following statements: 1. India has ratified the Trade Facilitation Agreement (TFA) of WTO. 2. TFA is a part of WTO’s Bali Ministerial Package o...

2017·International Relations
Solve

Consider the following statements: 1. The value of Indo-Sri Lanka trade has consistently increased in the last decade. 2. “Textile and textile articles” con...

2020·International Relations
Solve

Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and

2017·International Relations
Solve

Among the following, which one is the largest exporter of rice in the world in the last five years?

2019·Economy
Solve

Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

2019·Economy
Solve

With reference to the international trade of India at present, which of the following statements is/are correct? 1. India’s merchandise exports are less tha...

2020·Economy
Solve

Which of the following is/are the most significant implication(s) of obtaining Oeko-Tex certification for Eri Silk in the global textile industry? 1. It all...

2026·Economy
Solve

With reference to the Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct? 1. Quantitative restrictions on imports b...

2020·Economy
Solve

In what way(s) does the Vizhinjam International Seaport represent a structural shift in India's maritime trade and logistics policy? 1. By functioning exclu...

2026·Economy
Solve

Which of the following has/have occurred in India after its liberalization of economic policies in 1991? 1. The share of agriculture in GDP increased enormo...

2017·Economy
Solve

Consider the following statements: The effect of devaluation of a currency is that it necessarily:- 1. improves the competitiveness of the domestic exports i...

2021·Economy
Solve

Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without regis...

2019·Economy
Solve

With reference to the ‘Trans-Pacific Partnership’, consider the following statements: 1. It is an agreement among all the Pacific Rim countries except China...

2016·International Relations
Solve

Consider the following statements: I. India has joined the Minerals Security Partnership as a member. II. India is a resource-rich country in all the 30 cri...

2025·Economy
Solve

Consider the following statements with reference to ‘IFC Masala Bonds’ - 1. The International Finance Corporation, which offers these bonds, is an arm of th...

2016·Economy
Solve

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