India Can't Afford Another Trade Deal Failure

India's Early Trade Pacts Failed. The EU Deal Can't Afford To

By Dev Chandrasekhar

The government is reviewing its free trade agreement with Japan, prompted by a deficit that has nearly tripled in a decade and exports that have barely moved. 

The review is overdue and insufficient because it isn’t just the Japan pact that has failed. 

What Delhi wants from it, officials indicate, is more Japanese investment through the pact and easier quarantine and testing rules for Indian farm and drug exports. The formal terms are not yet public. 

India has free trade agreements in force with three G20 economies of South Korea, Japan and Australia, while a fourth G20 member, Indonesia, trades with India under the ASEAN goods pact of the same vintage. 

A fifth, with the United Kingdom, was signed last July and awaits ratification. A sixth, with the European Union, is nearly done. That first batch has been through fifteen years of exams. The grades are due.

What Makes A Good Pact?

Export growth into the partner, the deficit trajectory, how much of the preferential access exporters actually use, and the state of the review each pact eventually required are fair measures to gauge whether a pact is successful or not. 

The last measure is the most significant. 

Trade pacts that deliver results do not typically require years of renegotiation. 

India has, however, been reviewing its pact with South Korea since 2016, ASEAN since 2023 and Japan from this year. When every major agreement ends up being reworked, the issue may lie as much with the approach as with the partners.

One split worth keeping in view as the grades follow: the Japan and Korea gaps are overwhelmingly in goods, the very trade the pacts were meant to grow, while the Indonesia gap is mostly coal and palm oil that India would import regardless.

Unlike the economies India struck deals with in 2010, the United Kingdom and the European Union are markets where India enjoys trade surpluses—an advantage it cannot afford to squander.

The Class Of 2010 And 2011

South Korea went first. 

The Comprehensive Economic Partnership, CEPA in trade shorthand, is India’s label for pacts that cover goods, services and investment together. 

The Korea CEPA, signed in January 2010, set the template for everything that followed. India's deficit with Korea has roughly tripled since, from about $5 billion before the pact to north of $14 billion, as Korean steel, electronics and auto components flowed in at discounted rates. 

Japan's CEPA, in force since August 2011, is the subject of the review now under way. The numbers bear repeating only in outline: a deficit that nearly tripled inside a decade to $15.4 billion, exports that crept from $4.6 billion to $6 billion, a mango trade suspended on quarantine grounds, and officials now describing the agreement's purpose as attracting investment rather than selling goods. 

Indonesia is the failure few people talk about. 

India never signed a bilateral FTA with Jakarta, but the ASEAN goods agreement, in force since 2010, covers it. The trade deficit between India and ASEAN was $43.6 billion last year, with imports of palm oil and steam coal accounting for over $25 billion. 

The review launched in 2023 promises, in the words of the ASEAN-India joint statements, to make the pact "more user-friendly, simple, and trade facilitative"; its 2025 deadline has slipped. Grade: fail. This is the pact Indian negotiators privately say they would most like to renegotiate from scratch.

Unlike the economies India struck deals with in 2010, the United Kingdom and the European Union are markets where India enjoys trade surpluses—an advantage it cannot afford to squander.

Apple’s Starlink Update Sparks Huge Earning Opportunity

Apple just secretly added Starlink satellite support to iPhones through iOS 18.3.

One of the biggest potential winners? Mode Mobile.

Mode’s EarnPhone already reaches 490M+ users that have earned over $1B, and that’s before global satellite coverage. With SpaceX eliminating "dead zones," Mode's earning technology can now reach billions more in unbanked and rural populations worldwide.

Their global expansion is perfectly timed, and investors like you still have a chance to invest in their pre-IPO offering at $0.52/share.

With their recent 32,481% revenue growth and newly reserved Nasdaq ticker, Mode is one step closer to a potential IPO.

Tap into a $1T opportunity — invest now at just $0.52/share and get up to 20% bonus.

^{Please read the offering circular and related risks at invest.modemobile.com. This is a paid advertisement for Mode Mobile’s Regulation A+ Offering.}

^{Mode Mobile recently received their ticker reservation with Nasdaq ($MODE), indicating an intent to IPO in the next 24 months. An intent to IPO is no guarantee that an actual IPO will occur.}

^{The Deloitte rankings are based on submitted applications and public company database research, with winners selected based on their fiscal-year revenue growth percentage over a three-year period.}

Policy Roadblocks Could Pull Back Unabated Growth Of E-commerce In India

By Katya Naidu

What? 

India’s $60 billion e-commerce market, with over 270 million users, has been keeping up with its double-digit growth, but experts believe the sector lacks the policy clarity needed for companies, small businesses and consumers to fully benefit.

While India allows 100% FDI, Press Note 3 of 2016 permits foreign-funded e-commerce companies to operate only under the marketplace model and not the inventory-based model.

Jay Gullish, senior director of digital economy, media and entertainment at the USIBC, said, “As the market matures, there is an opportunity to change Press Note 3, to allow foreign investment into the inventory-based market.”

He argued it is “blatantly unfair to treat foreign companies differently from domestic companies.”

Why?

Experts said policy consistency is becoming as important as capital.

Ashish Fafadia, partner at Blume Ventures, said, “If we see flip-flops on a policy basis, we will end up getting discounted; and if we see consistency, we end up getting a premium.”

While the government seeks to protect MSMEs, small retailers and kiranas, he cautioned against uncertainty, adding, “the whole plurality of competitiveness as a market needs to be more consistently driven as a message of reassurance; that what you see today is going to be the landscape for the next 10 years.”

Gullish also argued the sector is being regulated as though it were “an immature new technology” even though it has existed for years, calling for “a top-to-bottom review of what has and hasn’t worked, with a holistic approach.”

Why Now?

India has over 800 million Internet users, but only about a fourth shop online, leaving significant room for growth. At the same time, the US removal of the de minimis exemption in 2025 has made it harder for small Indian exporters selling through global e-commerce platforms. De minimis refers to the minimum value of goods that can be imported without incurring any duties.

Moreover, this rule has also impacted the way international platforms think about the Indian market, as it impacts their ability to create vendor networks. International platforms, be it from the US, Europe, or Asia, have already been finding it difficult to develop such networks in India due to return policies, payments and more such issues.

Gullish said, ““I think it changed the way a lot of the mid-tier and smaller platforms think about entering India. It's not just American e-commerce; there are a lot of sizable and innovative e-commerce platforms in Europe and elsewhere in Asia that also haven't really stepped into the Indian market for various and different reasons. That vendor network is really critical. And that's where I think India's actually competitive edge is.”

As India’s e-commerce market enters its next phase of growth, experts argue that clear, predictable policies could help attract investment, support MSMEs and unlock the sector’s full potential at home and abroad.

Brought to you in partnership with Flipkart. Watch the full podcast here.

Rs 3.82 billion

That's the net loss IndiGo posted for the quarter ended June 30, its second consecutive quarterly loss, against a profit of Rs 21.61 billion a year earlier. India's largest airline was hurt by soaring fuel prices and uncertainty stemming from the West Asia conflict, and forecast flat capacity growth for the current quarter.

Catch Up Quick: Total expenses jumped 35.1%, outpacing a 20% rise in revenue, as fuel costs surged nearly 86% to Rs 108.3 billion after the Iran war pushed crude above $100 a barrel.

Setup: Managing Director Rahul Bhatia said fuel costs and rupee depreciation together cost the carrier around Rs 2 billion, with more than 60% of expenses tied to the dollar. IndiGo expects available seat kilometres to stay broadly flat in the July-September quarter. Shares closed 1.8% lower ahead of the results.

Govt Pushes Back, CJP Holds Ground

The Delhi High Court has agreed to hear on Friday a public interest litigation (PIL) by petitioner Satish Kumar Aggarwal, who claimed the Cockroach Janata Party (CJP) protesters “have made entire Delhi hostage” by blocking roads and disrupting public life. He further questioned the “true nature, purpose, and objectives of the protest” given the alleged participation of activists, political leaders and “foreign-funded organisations.”

The CJP has been staging ongoing sit-ins and protests at Jantar Mantar in Delhi since early June 2026, with demonstrations spreading to other cities including Patna, Mumbai, Chandigarh, Surat, Bengaluru, Hyderabad and Lucknow.

Turning Point: The Delhi High Court’s decision comes a day after the Supreme Court declined to urgently list a petition related to police violence against protesters. Chief Justice Surya Kant told the lawyer: “Don’t waste our time, and don’t waste your time.”

Future: As well, the New Delhi Traders Association confirmed that shops, offices and restaurants in Connaught Place will close by 6.30 pm on Thursday amid the ongoing CJP protest, following advice from the New Delhi Municipal Council to avoid any untoward incident.

Aam Aadmi Party (AAP) chief questioned the order on X. “Will the central government once again attack its students at Jantar Mantar today?” he wrote.

The sit-in at Jantar Mantar continues as CJP maintains its demand for Education Minister Dharmendra Pradhan’s resignation.

PVR INOX Turns Profitable

PVR INOX posted a profit of Rs 565 million in the first quarter ended June 2026, a sharp turnaround from a net loss of Rs 545 million a year earlier. It is the latest sign that India's largest multiplex chain is firmly back on its feet after a difficult few years.

Context: PVR and INOX merged in February 2023 to consolidate costs and survive a post-pandemic landscape where audiences had shifted to OTT platforms.

While FY24 losses were contained at Rs 32 crore, FY25 turned significantly worse, losses widened to Rs 277 crore as admissions fell 10% and revenue declined, hurt by a weak content slate and fewer big releases.

By The Numbers: Revenue rose 11.9% year-on-year to Rs 16.22 billion, driven by a 15.9% jump in ticket sales and a 16.7% rise in food and beverage revenue. India's box office grew 20%, with Hindi, regional and Hollywood films performing well across metro and smaller cities.

Managing Director Ajay Bijli said the company is now net cash positive. Shares rose as much as 2.72% on Thursday.

China Curbs Hit Solar

Indian solar panel makers are shutting factories as they face waits of up to eight months for domestic cells to replace Chinese imports, after rules mandating local components took effect June 1, Reuters reported. Nearly a third of India's 140 small and medium module makers have halted output, threatening thousands of jobs and $4 billion in investment.

Overview: Manufacturers lacking cell-making facilities face costs nearly double those using Chinese cells. India has built 200 GW of panel capacity but can produce only 27 GW of cells, with effective output closer to 16-18 GW, analysts said, citing Chinese curbs on manufacturing technology exports.

Critical Moment: The shortage threatens India's 2030 target of 500 GW non-fossil capacity, potentially forcing greater reliance on coal. The government has extended compliance deadlines for some projects to December 2026 but says it expects adequate cell capacity within six months.

Amazon Gets Policy Break

India has relaxed foreign investment rules to allow e-commerce companies to buy products directly from Indian sellers and sell them to overseas customers, a move that benefits Amazon, which had lobbied for the change for months, Reuters reported.

Fast Facts: For years, India had prohibited foreign e-commerce companies from selling goods directly to consumers at home or abroad, allowing them only to operate a marketplace connecting buyers and sellers for a fee.

The rule has now been relaxed specifically to boost exports, the government said in a statement.

The Shift: The change is a significant policy shift for foreign e-commerce players operating in India, as it allows them to move from a pure marketplace model to an inventory-led export model.

Amazon had lobbied the Indian government for months to exempt exports from foreign investment restrictions.

The move also aligns with India's broader push to grow ecommerce exports, particularly from small sellers and MSMEs, and follows the DGFT's recent proposal to exempt low-value export shipments worth up to Rs10,000 from registration requirements.

Win AI Search Without a Big Team

92% of VCs use AI to find companies. 58% of buyers start there too. If you're not showing up in AI answers, you're invisible before the conversation even starts. Join HubSpot for Startups, Anthropic, and Marketing Against the Grain on July 16 (11am ET) for a live AEO teardown. Real startup. Real recs. Register and unlock the free Startup Visibility Bundle.

Register Now