India's rush to sign a web of bilateral trade agreements: Driven by good economics or smart geopolitics?

First, trade pacts serve as instruments of political signalling, allowing India to deepen strategic partnerships while preserving strategic autonomy.Second, they function as tools for hedging risks in an uncertain global trade environment, helping diversify economic relationships and reduce over-dependence on China.Third, deeper engagements provide greater protection for investors by clarifying rules on investment, dispute settlement and regulation.Finally, bilateral agreements help pre-empt exclusion amid the formation of trade blocs that increasingly mirror geopolitical alignments.Our agreements with Oman and New Zealand illustrate this shift. Neither is a major merchandise trade partner.

Oman’s importance lies more in labour migration, energy linkages and its strategic location near the Strait of Hormuz.New Zealand, accounting for just $0.6 billion of Indian exports, has a small economy; the rationale lies instead in strengthening Indo-Pacific ties.Both agreements emphasize services, labour mobility, recognition of qualifications and investment protection more than tariff liberalization.While tariff concessions are extensive on paper, their economic impact is limited by small market sizes and already low applied tariffs. India’s comparative advantages and strategic interests are thus their focus.Seen this way, India’s recent deals are best understood not as conventional trade agreements aimed at boosting exports, but as geopolitical insurance policies in a fragmenting global order.

At the same time, a good beginning has been made with services trade getting attention.Trade in services tends to need greater alignment of regulatory policies and hence much higher levels of diplomacy. Such agreements could take time and