By Pradeep S Mehta and Dr Riti Srivastava
Over the past five years, India’s trade policy has entered a new phase. It has concluded or operationalised free trade agreements (FTAs) with Australia, the UAE, EFTA and the UK, while negotiations with the European Union, Oman, New Zealand and other partners continue. As India’s network of trade agreements expands, the challenge is no longer confined to securing market access through negotiations. Increasingly, the success of these agreements will depend on whether India possesses the institutional capacity to implement, monitor and adapt them over time.
This question has become more significant because trade policy today extends far beyond tariffs. It is increasingly shaped by geopolitics, geoeconomics and economic security considerations-from resilient supply chains and critical minerals to food, energy and digital security. In this environment, effective trade governance requires institutions capable of translating negotiated commitments into sustained commercial and strategic outcomes.
Modern FTAs, Traditional Institutions
Modern trade agreements create continuing obligations that require regulatory coordination, technical expertise and sustained engagement across institutions. Unlike earlier agreements that focused largely on tariffs and quotas, today’s FTAs cover digital commerce, sanitary and phytosanitary measures, services regulation, intellectual property, investment facilitation, environmental standards and dispute settlement, each with its own technical rules and international jurisprudence (WTO, 2024; OECD, 2023).
Managing these responsibilities requires specialised expertise, institutional memory and continuity. While India’s higher civil services provide strong administrative leadership, frequent rotations across sectors inevitably make it difficult to accumulate deep expertise in rapidly evolving areas such as trade law, digital commerce, SPS regulation, carbon accounting and dispute settlement. Modern trade governance therefore requires institutional mechanisms in an executive position, and not just advisory, that retain specialised knowledge over time.
Why Institutions Matter Beyond Negotiations
State capacity refers to the ability of public institutions to design, implement, coordinate, monitor and adapt policies effectively over time. In the context of trade agreements, it encompasses not only negotiating capability but also technical expertise, institutional continuity, inter-agency coordination, effective Centre–State coordination, and the ability to respond to changing international trade rules.
Policy frameworks that are not periodically reviewed can gradually become misaligned with changing economic realities. Trade agreements present a similar governance challenge: commitments negotiated today must be continuously monitored, updated and implemented if they are to deliver sustained benefits.
Under the WTO’s public stockholding framework, reference prices for calculating domestic support continue to be based on the 1986–88 period, which is quite unfair. In terms of policy significance, this appears to be a minor issue. Yet it carries a very clear message—international trade outcomes depend not only on negotiated rules but also on institutions’ capability to adapt to changing economic circumstances. This was agreed by our generalist trade negotiators as soon as the Uruguay Round was concluded without understanding its implications. Today, we are struggling to resolve the same.
Effective trade governance requires institutions capable of continuously reviewing emerging challenges, identifying outdated provisions and adapting strategies as global trade evolves. The broader lesson extends beyond public stockholding. The unilateral European Union’s Carbon Border Adjustment Mechanism (CBAM) offers another example. As climate-related trade rules become more common, exporters will increasingly rely on domestic institutions to help them meet new compliance requirements. Otherwise, the market access secured through trade agreements may not translate into actual exports.
Why India Needs a Professional Trade Service
Addressing these challenges requires institutional reform rather than incremental administrative adjustments. Given the increasing complexity of trade governance, specialised trade expertise should be represented at the highest levels of policy formulation and decision-making.
India already possesses an institutional foundation in the Indian Trade Service (ITS). Revitalising the ITS through greater career continuity, stronger representation in senior decision-making and wider deployment across Union and State governments would strengthen India’s capacity for modern trade governance. They should be placed at par with the IAS; otherwise, the service will not attract good people or allow them to be effective trade policy managers.
South Korea, Singapore and the Office of the United States Trade Representative (USTR) illustrate a common model of trade governance in which specialised expertise is built and retained within professional institutions (Office of the United States Trade Representative, 2025; Ministry of Trade and Industry, 2025).
State Capacity as Competitiveness
Small and medium enterprises (MSMEs) rely disproportionately on public institutions for information, certification support, export facilitation and dispute resolution. Unlike large firms, they often lack the financial and technical resources to independently navigate complex regulatory requirements across multiple export markets.
Strengthening trade-related state capacity is therefore not merely an administrative concern but a direct instrument of inclusive growth. Strong institutions equipped with technical expertise, continuity and effective coordination can help businesses respond more quickly to changing regulatory requirements and make better use of market access created through trade agreements.
This need is becoming more urgent as global trade is reshaped by geopolitical tensions, supply-chain realignments, climate-related trade measures and sustainability standards. Countries with stronger trade institutions are likely to adapt more quickly to these changes, while weaker institutional systems risk delayed responses, underutilised trade agreements and missed commercial opportunities (World Bank, 2017; World Bank, 2020).
Beyond Negotiation: The Next Frontier of Trade Policy
India’s expanding network of strategic economic partnerships marks a new phase of economic integration. However, success will ultimately be measured not by the number of agreements concluded but by their contribution to higher international trade, participation in global value chains and broader economic opportunities.
Achieving this requires moving beyond a negotiation-centred view of trade policy. As trade increasingly advances broader strategic and foreign policy objectives, closer coordination between economic and diplomatic institutions will be essential for effective trade governance.
Negotiating an FTA opens the door to new markets; state capacity determines whether a country walks through it. As India’s trade architecture becomes deeper and more complex, investing in specialised institutions, technical expertise and institutional continuity may matter as much as the agreements themselves. The next frontier of India’s trade policy therefore lies not only in negotiating better agreements but in overhauling and building the state capacity needed to make them work.
The authors work for CUTS International, a 40+ year old global public policy research and advocacy group.
To read the original published version, please visit the IMC website and refer to Pages 33–34 of the IMC Journal (May–June 2026).