Indian Economy Quiz: India's Free Trade Agreements

The correct answer is C, Brazil. India has no bilateral free trade agreement with Brazil. Its only preferential link with Brazil is through the limited India-MERCOSUR Preferential Trade Agreement, which covers a short list of products at reduced duty and is not a free trade agreement. Option A is wrong because India signed a Comprehensive Economic Partnership Agreement with South Korea that came into force in 2010, covering goods, services and investment. Option B is wrong because the India-Japan Comprehensive Economic Partnership Agreement came into force in 2011 and removes duties on the great majority of goods traded between the two countries. Option D is wrong because India has an Early Harvest Scheme with Thailand from 2004 and, more importantly, covers Thailand through the India-ASEAN Trade in Goods Agreement, since Thailand is a member of ASEAN.

The correct answer is B, European Free Trade Association. TEPA was signed on 10 March 2024 in New Delhi with the four EFTA states, Iceland, Liechtenstein, Norway and Switzerland, and came into force on 1 October 2025. Option A is wrong because the European Union is a separate bloc of which none of the EFTA four is a member; India's negotiations with the European Union are a different track altogether and this is the commonest trap in the question. Option C is wrong because India has no bloc-level agreement with the Gulf Cooperation Council; its Gulf deal is a bilateral Comprehensive Economic Partnership Agreement with the United Arab Emirates alone. Option D is wrong because the agreement with ASEAN is the India-ASEAN Trade in Goods Agreement, which came into force in 2010, well before TEPA was even negotiated.

The correct answer is C, Denmark. The European Free Trade Association has exactly four members today: Iceland, Liechtenstein, Norway and Switzerland. Denmark was among the seven countries that set up EFTA in 1960, but it left to join the European Communities and is today a member of the European Union, not of EFTA. Option A is wrong because Norway is an EFTA member and has chosen to stay outside the European Union. Option B is wrong because Switzerland is an EFTA member and is India's largest trading partner among the four, which is why gold was kept out of the TEPA duty cuts. Option D is wrong because Iceland is an EFTA member; the fourth member, Liechtenstein, is the smallest of them and is often left out of the options to test recall.

The correct answer is D, Mauritius. The India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement, or CECPA, took effect in 2021 and is the first trade agreement India concluded with any African country. It covers goods, services and economic cooperation. Option A is wrong because India has no free trade agreement with South Africa; the two are linked only through the limited India-Southern African Customs Union talks, which have not produced an agreement, and through groupings such as BRICS, which are not trade agreements. Option B is wrong because India has no free trade agreement with Egypt, although the two countries have long-standing trade ties. Option C is wrong because India has no bilateral trade agreement with Kenya either, so Mauritius remains the answer for the African first.

The correct answer is C, 2022. The India-UAE Comprehensive Economic Partnership Agreement was signed on 18 February 2022 and came into force on 1 May 2022, a gap of barely ten weeks that makes it one of the fastest agreements India has brought into operation. Option A is wrong because 2019 is the year India announced at Bangkok that it would not join the Regional Comprehensive Economic Partnership, a different event altogether. Option B is wrong because no major Indian trade agreement entered into force in 2020; negotiations with the United Arab Emirates had not even formally begun by then. Option D is wrong because 2024 is the year the Trade and Economic Partnership Agreement with the EFTA states was signed, on 10 March, and that agreement entered into force only on 1 October 2025.

The correct answer is B, 2019, Bangkok. At the Regional Comprehensive Economic Partnership summit held in Bangkok in November 2019, India announced that it would not join the agreement. Its objections were a likely surge of cheap Chinese imports, the use of 2014 as the base year for tariff reduction, the absence of a workable safeguard against import surges and the failure to open services and professional mobility. Option A is wrong because the 2017 Manila summit was a stage of the negotiations, not the point of withdrawal. Option C is wrong because the remaining fifteen countries signed RCEP in 2020 at a virtual summit chaired by Vietnam, after India had already stayed out. Option D is wrong because no RCEP decision of India was taken at Jakarta in 2021.

The correct answer is C, Customs union. A customs union removes duties on trade among its members and, in addition, requires every member to levy the same tariff on goods coming from outside the union, which is the common external tariff. Option A is wrong because a preferential trade agreement only lowers duties on a listed set of products and leaves external tariffs entirely to each country. Option B is wrong because a free trade area removes internal duties but each member keeps its own external tariff; this is the single commonest confusion in the topic. Option D is wrong because an economic union is a higher stage that already includes a common external tariff but adds the free movement of labour and capital and common economic policies, so the defining feature asked about belongs to the customs union stage.

The correct answer is A, Australia. The India-Australia Economic Cooperation and Trade Agreement, abbreviated ECTA, was signed in April 2022 and came into force in December 2022 as an interim step towards a wider comprehensive agreement. Option B is wrong because India and Canada have held talks on an Early Progress Trade Agreement but have signed no trade agreement, so no abbreviation attaches to Canada. Option C is wrong because the agreement with the United Kingdom is the Comprehensive Economic and Trade Agreement, or CETA, signed on 24 July 2025. Option D is wrong because the agreement with Japan is the Comprehensive Economic Partnership Agreement, a CEPA, in force since 2011. Keeping ECTA with Australia and CETA with the United Kingdom apart is exactly what this question tests.

The correct answer is B, 100 billion US dollars over 15 years. Article 7.1 of TEPA commits the EFTA states to increase foreign direct investment in India by 50 billion US dollars in the first ten years and a further 50 billion in the following five years, a total of 100 billion over fifteen years, with the stated aim of generating one million direct jobs in India. This is the first time any free trade agreement signed by India has carried a binding investment commitment. Option A is wrong because 50 billion is only the first instalment of the pledge, not the whole of it. Option C is wrong because the period is fifteen years and not twenty-five. Option D is wrong because no figure of 200 billion appears anywhere in the agreement.

The correct answer is B, ensure that concessions go only to goods genuinely produced in a partner country. Rules of origin test whether a product really originates with the partner, usually by requiring a change in its tariff classification there together with a minimum share of value added in that country. Without them a non-member could route its goods through a partner and claim duty concessions it never negotiated, a practice called trade deflection. Option A is wrong because a common external tariff is a feature of a customs union and has nothing to do with origin tests. Option C is wrong because the currency of settlement is a matter for payment arrangements, not for origin rules. Option D is wrong because origin rules concern goods, and no agreement caps the value of services in this way.

The correct answer is B, 1 January 2006. SAFTA was signed at the twelfth SAARC summit held in Islamabad in January 2004 and came into force on 1 January 2006, replacing the earlier and far weaker South Asian Preferential Trading Arrangement of 1995. Option A is wrong because 2004 is the year of signature at Islamabad, not of entry into force, and this gap between signing and operation is the trap. Option C is wrong because 1 January 2010 is the date on which the India-ASEAN Trade in Goods Agreement and the India-South Korea Comprehensive Economic Partnership Agreement took effect. Option D is wrong because nothing of the kind happened in 2016; the SAARC summit scheduled for Islamabad that year was in fact called off.

The correct answer is A, Asia-Pacific Trade Agreement, earlier the Bangkok Agreement. Concluded in 1975 under the auspices of the United Nations Economic and Social Commission for Asia and the Pacific, it was renamed the Asia-Pacific Trade Agreement in 2005 and its members are India, Bangladesh, China, South Korea, Sri Lanka, Laos and Mongolia. Option B is wrong because SAFTA was signed only in 2004 and took effect in 2006. Option C is wrong because the India-Sri Lanka Free Trade Agreement was signed in 1998 and became operational in 2000, more than two decades after the Bangkok Agreement. Option D is wrong because the agreement with Singapore dates from 2005. APTA also has the distinction of being the only such arrangement that links India and China.