India Strengthens Trade Agreements and Defence Budget in 2026

On February 15, 2026, Prime Minister Narendra Modi emphasized India's recent trade agreements with the European Union and the United States, stating that these were established "from a position of strength." In a written interview with the Press Trust of India, Modi highlighted that these deals aim to enhance global market access for Indian manufacturing and services. He noted that while previous negotiations under the Congress-led United Progressive Alliance (UPA) yielded little, his government has restored investor confidence through "political stability and political predictability."

The Hindu

Modi articulated that the Free Trade Agreements (FTAs) are designed to reduce non-tariff barriers and expand market access for Micro, Small, and Medium Enterprises (MSMEs) across various sectors, including textiles, leather, processed food, engineering goods, chemicals, handicrafts, and gems and jewellery. He asserted that Indian MSMEs are now more export-ready and that the government’s trade policy places them at the center of global integration. Modi urged the private sector to embrace this opportunity, stating, "policy can only create the enabling framework," and emphasized the need for MSMEs to evolve into technologically advanced, globally integrated, and export-oriented enterprises.

The Hindu

In discussing the Union Budget for 2026-2027, Modi described it as a moment of readiness rather than compulsion, reflecting a commitment to becoming a developed nation. He highlighted a significant boost in capital expenditure and called on the private sector to leverage government investments in infrastructure. Modi outlined his government's reform priorities for the next decade, which include structural reforms, innovation, and governance simplification.

The Hindu

Modi also addressed the defence sector, noting a record allocation of INR7.85 lakh crore, a 15% increase from the previous budget. He linked this increase to the lessons learned from Operation Sindoor against Pakistan, asserting that a strong defence is essential for national preparedness. He stated, "the reality is that our country has to be strong and be prepared at all times."

The Hindu

Modi's remarks reflect a strategic vision for India's economic and defence landscape, emphasizing the importance of trade agreements and private sector involvement. He stated, "We invite the whole world’s data to reside in India," highlighting the government's aim to position India as a competitive destination for data infrastructure.

The Hindu

Despite Modi's optimistic outlook, the government faced criticism from opposition parties regarding the terms of the trade deals. Critics argue that the agreements may not adequately protect domestic industries and could lead to adverse economic impacts.

The Hindu

While Modi's government promotes the benefits of the new trade agreements, there are concerns about the actual implementation and effectiveness of these deals. Critics have raised questions about the potential risks associated with increased global competition for Indian MSMEs.

The Hindu

• “Trade competitiveness is not only about tariffs. It is about liquidity, certification, technology adoption and compliance with global standards. Our Free Trade Agreements (FTAs) are designed to reduce non-tariff barriers and expand market access for Micro Small and Medium Enterprises (MSMEs) in sectors such as textiles, leather, processed food, engineering goods, chemicals, handicrafts and gems and jewellery,” — Narendra Modi, Prime Minister of India

The Hindu

• “This Budget reflects this yearning to become a developed nation,” he said, explaining the Budget’s boost for capital expenditure.” — Narendra Modi, Prime Minister of India

The Hindu

• “Yes, the reality is that our country has to be strong and be prepared at all times, and that is what we are doing,” — Narendra Modi, Prime Minister of India

The Hindu

This comprehensive approach to trade and defence reflects India's ambition to enhance its global standing while addressing domestic economic challenges.

The Hindu