India Should Reassess FTAs And Move Toward Sector-Based Investment Screening: Report

• The report urges India to audit existing FTAs and align future agreements with industrial and export priorities.

• It recommends a sector-specific, national-security-led investment screening framework.

• The report also calls for stronger coordination and clearer market-access goals.

India should reassess the effectiveness of its existing Free Trade Agreements (FTAs), modernise its investment screening architecture, and adopt a more coordinated trade and industrial policy framework as geopolitical fragmentation reshapes global commerce, a report said on Thursday.

The report said that India’s economic strategy must move beyond reactive policymaking and focus on proactive integration through calibrated partnerships, stronger institutional coordination and clearer market access objectives.

Among its key recommendations, the report calls on India to audit existing FTAs, assess whether they have met intended objectives, and align future trade agreements more closely with industrial and export priorities.

It also recommended that India explore high-quality market arrangements and utilise multilateral institutions and bilateral investment treaties to secure greater predictability for businesses and investors.

The report titled 'Resilience in a Fragmenting World: India’s Economic Relations with Great Powers' is released by Koan Advisory Group, in association with Chintan Research Foundation, the Information Technology Industry Council, and the Institute of Chinese Studies.

"Trade agreements cannot be treated as ends in themselves. India needs a clearer understanding of what each agreement delivers in terms of market access, supply-chain resilience and industrial capacity. In a more uncertain and protectionist world, evaluating whether our FTAs have met their objectives becomes even more important," said Shishir Priyadarshi, president, Chintan Research Foundation.

The report also addresses the contested question about economic engagement with China amid strategic competition and manufacturing dependence.

Rather than relying solely on geography-based restrictions, participants recommended a sector-specific and national-security-led investment screening framework, coupled with a phased strategy to reduce dependence on Chinese inputs where vulnerabilities exist, it said.

India’s manufacturing ambitions, particularly in electronics, clean energy and advanced technologies, remain linked to global supply chains that include Chinese capital and components, it said.

The report recommends utilising Chinese investment and technology in non-strategic sectors while strengthening screening mechanisms in genuinely sensitive areas.

"India faces the dual challenge of reducing strategic vulnerabilities while sustaining manufacturing growth and competitiveness. That requires moving beyond blunt restrictions toward a more calibrated framework that distinguishes between legitimate national security concerns and economically productive investment’, said Deep Pal, director, Koan Advisory Group.