Over the past 12 months, the two issues have dominated global headlines, especially since Donald Trump took office as the 47th President of the United States in January 2025. The first is the United States’ frequent and increasingly disruptive policy pronouncements and frequent rejection of the well-established rules-based global order. The blatant disregard for the legitimacy and effectiveness of global institutions such as the United Nations, the World Trade Organization (WTO) and climate protection efforts has forced most countries and organizations to grapple with many questions on issues of global relevance in a rapidly changing world order. Unilateral tariffs, particularly by the US, the inability of the well-established dispute settlement mechanism in the WTO to counter it, and the threat of economic sanctions are forcing countries to look beyond the US to diversify trade options and seek new markets.
The second set of developments, which have made headlines especially in India, are highly valued and strategically placed trade deals. Prominent among them are the India-UK free trade deal (FTA) in July 2025, the Comprehensive Economic Partnership Agreement (CEPA) with Oman in December 2025 and the India-EU FTA signed on January 27, 2026, dubbed the ‘mother of all deals’. And, finally, on February 2, there was a truly surprising announcement by President Trump that the US and India have finalized the framework of the trade agreement, the ‘father of all trade deals’. The announcement was followed by a preliminary outline released through a joint statement on February 6, 2026. But anything on the US trade deal remains to be seen as many more layers could be unveiled before the agreement is signed at the end of the year.
What do these two sets of developments have in common? While the first is forcing countries to look beyond traditional trade partners, the second set of developments has the potential for countries with similar interests to seek new alignments and international connectivity corridors such as the India-Middle East-Europe Economic Corridor (IMEC) as the exponentially increased flow of trade volumes will soon exceed the capacity of existing trade routes. When you add to the mix that many existing trade routes (sea routes) are often being blocked or restricted due to conflicts and sanctions, the situation creates even greater challenges.
For India, these developments present challenges as well as opportunities. The challenge is because, as trade volumes increase, there will be a need for additional trade routes that are not only safer from conflict but also faster and more efficient than traditional trade routes. Developing such international routes is no easy task as it requires not only huge funds but also very detailed coordination with partner countries. However, the opportunity is also huge as it forces India to think beyond existing options, towards new trade corridors that are shorter, faster, modern, technology enabled and away from traditional bottleneck points and conflict zones.
Let’s take each deal into context. The India-UK FTA, signed in July 2025, removes tariffs on about 99% of Indian exports to the UK and 90% of UK exports to India. It aims to double the current bilateral trade of $56 billion by 2030. It provides an unprecedented duty-free access to 99% of India’s exports to the UK, covering almost 100% of the trade value. This includes labor-intensive sectors such as textiles, leather, marine products, gems and jewelery and toys, as well as high-growth sectors such as engineering goods, chemicals and auto components.
Under the India Oman CEPA, signed in December 2025, Oman will provide zero-duty access on 98.08% of its tariff lines, benefiting key Indian exports such as engineering products, electronics, textiles, pharmaceuticals, gems and jewelery and agricultural commodities. Furthermore, it aims to significantly increase bilateral trade which is currently pegged at $10.6 billion (FY 2024-25), once again highlighting the need for more containers and shipments. However, unlike the UK, Oman is located right across the Arabian Sea and hence, logistics can be managed easily.
Next is India EU FTA. Bold in nature and extremely vast in terms of trade opportunities, this FTA aims to enable deeper market integration between the world’s fourth and second largest economies. It brings a combined market estimated at over $24 trillion and unique opportunities for India’s two billion people. The FTA provides unprecedented market access to over 99% of India’s exports by trade value, with the aim of increasing and perhaps doubling the current bilateral trade of $136.54 billion (FY 2024-25) over the next decade.
Amidst all this, the President of UAE also visited India on January 19. The highlights were the signing of the Letter of Intent for concluding a Strategic Defense Partnership and the decision to increase bilateral trade from $115 billion currently to $200 billion by 2032. How did this happened? This is courtesy of CEPA that was signed with the UAE in February 2022, which aimed to increase trade to $115 billion by 2027 but the target was achieved only by the end of 2024-25.
What do all these trade deals mean for India and the region? To fully utilize the benefits of the deals, commodities will have to be moved faster and more efficiently, especially bulk commodities like grain that spoil faster than other commodities. Furthermore, the increased value of trade will mean an increase in trade volume which will require the transportation of additional containers. This is where the search for a multimodal transport corridor begins that not only passes through areas where such deals have been signed, but also promises faster, shorter, cheaper and more efficient transport. And, this is where IMEC comes into play.
IMEC, launched at the G20 Summit in New Delhi in September 2023, is a bold vision of connecting India to Europe across the deserts of the Arabian Peninsula. It envisions a multi-modal economic corridor integrating railways, ports, highways, energy networks and digital infrastructure to enhance trade, investment and connectivity. Unlike conventional transport corridors, IMEC is envisioned as a holistic and multidimensional infrastructure project, which, in addition to sea and rail links, includes value additions such as high-speed data connectivity, green hydrogen pipelines and undersea links to the international energy transmission grid.
The success of the project includes development of ports, connecting and developing a seamless and integrated railway network and an efficient regulatory mechanism. The plans also include infrastructure for electricity and digital connectivity, as well as pipelines for green hydrogen exports.
When fully implemented, IMEC has the potential to facilitate faster and more efficient movement of goods, remove existing bottlenecks, reduce shipping delays, reduce greenhouse gas emissions and cut costs. It aims to secure regional supply chains, improve trade access and facilitate the economic prosperity of the people and countries affected by the project.
IMEC was conceived keeping in mind several factors, chief among them being to provide an alternative and safe route to the Suez Canal and the Red Sea and to unlock the economic potential of integrating the region together through connectivity corridors and trade relations. It was also projected as an expression of India’s rise as a global power politically and economically, roughly coinciding with it becoming the 5th largest global economy. The ability of this corridor to reduce transportation time, logistics costs and the potential to boost trade volumes between participating countries over the next decade were also important factors.
In terms of trade between the EU and India, IMEC is being seen as an economic game changer and an opportunity to strengthen the strategic partnership. European Commission President Ursula von der Leyen, during her visit to India in March 2025, had advocated IMEC as an important cornerstone for enhancing India-EU trade. He described IMEC as “a modern golden road – directly connecting India, the Arabian Gulf and Europe”. Even at the time of signing of the India EU FTA, the importance of IMEC was highlighted in clear terms.
IMEC has been stalled for the past three years due to the Gaza war. Now with the war over and trade agreements signed, there is strong hope that IMEC is ready to move forward. At the first meeting of IMEC Sherpas organized by the Indian NSA in Delhi on August 5-6, 2025, there was a consensus that IMEC could not wait any longer. The fact that the India-US standoff on trade and tariffs is finally moving towards an end means that President Trump may be willing to visit India later in the year for the first IMEC summit.
Meanwhile, India is not sitting idle. It has started work on modernizing its ports and integrating them with the internal road and rail infrastructure within the country. Also, it has already started working bilaterally with the UAE through initiatives such as MAITRI (Master Application for International Trade and Regulatory Interface), a digital platform that connects existing trade portals in both countries, aiming at seamless and paperless connectivity. As Maitri India is part of the UAE Virtual Trade Corridor, a comprehensive regulatory mechanism involving customs, transit fees, security issues etc. needs to be put in place concurrently so that loading from one point at IMEC does not face delays due to regulatory issues.
The trade deals that India has struck in recent times are key to its continued growth as the fastest growing major economy in the world. As these deals materialize, there will be a massive increase in trade volume, which existing ports, infrastructure and trade routes may find difficult to handle. Additionally, any future disruptions due to conflicts and blockage of critical choke points (such as the Red Sea during the Gaza war) will result in delays and huge cost implications. This is where modern, multimodal economic corridors like IMEC will become important. An international connectivity corridor like IMEC that not only transports containers but also integrates economies and ensures shared prosperity along its alignment will be the key to India’s growth in the 21st century.
This article is written by Colonel Rajeev Aggarwal (Retd), Senior Research Advisor, CRF.
