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FTAs and Customs Revenue: India’s Duty Foregone Explained

5 March 20251 min read
ECONOMYFTAs and CustomsRevenue: India’sDuty ForegoneExplained5 March 2025safalsetu.com

Why in the news

Trade talks with the US, EU and UK may squeeze customs revenue, projected to grow just 2.1% to ₹2.4 trillion in FY26.

Key facts

  • Total duty foregone in FY25: ₹94,172 crore.
  • Only 25% of imports are under FTAs now; expected 60-65% after the new deals.
FTA partnerDuty foregone (FY25)
Japan₹12,038 crore
ASEAN₹37,875 crore
South Korea₹10,335 crore
Australia₹5,234 crore
UAE₹4,841 crore

Deals in the pipeline

  • US: bilateral trade agreement (BTA) talks to start in 7-8 months.
  • EU: deadline December 2025.
  • UK: no deadline; Piyush Goyal stressed speed, not haste.

Concerns

High Indian tariffs mean deep cuts under FTAs, so revenue loss grows; policymakers must balance liberalisation with protecting domestic industry.

Test yourself

1. Which FTA partner accounted for the largest customs duty foregone by India in FY25?

ASEAN accounted for ₹37,875 crore, the highest.

2. What share of India's imports currently comes under FTAs, per these notes?

Only 25% of imports are under FTAs; 60-65% is the expected future share.

3. By when is the India-EU free trade agreement targeted to be concluded?

The EU FTA deadline is set for December 2025.