India as the Next Nearshoring Hub: 5 Trade Agreements Your Competitors Have Not Found Yet

Most supply chain conversations about China diversification jump immediately to Vietnam or Mexico. Both are valid. Both are also crowded. Freight rates to Vietnam have spiked as capacity compressed. Mexico is facing new regulatory scrutiny on origin documentation. India has been sitting quietly with a set of trade agreements that most US importers have not mapped.

India does not have a free trade agreement with the United States. That limits direct US-India preferential tariff access. But India's network of bilateral and regional agreements changes the economics for supply chains that pass through India to final assembly destinations, and for companies evaluating where to place manufacturing investment for export to non-US markets.

This is a different way of thinking about India. Not "cheap labor that ships direct to US at MFN rates," but "strategic manufacturing base with preferential access to markets that complement your US supply chain."

The Starting Point: India's Trade Position

India's manufacturing sector has grown substantially. The Production-Linked Incentive (PLI) scheme has attracted investment in electronics, pharmaceuticals, textiles, chemicals, and automotive components. The government has been aggressively signing new trade agreements since 2022 after a decade of relative inactivity.

For US importers, the calculus is: US-India has no FTA and MFN rates apply (Generalized System of Preferences was revoked in 2019 and has not been restored). But India to third markets has five major agreements that change your supply chain math.

Agreement 1: India-UAE Comprehensive Economic Partnership Agreement (CEPA, 2022)

The India-UAE CEPA was signed in February 2022 and entered into force in May 2022. It is the most significant bilateral trade agreement India has signed in decades.

What it covers for manufacturers:

• 99% of Indian goods enter UAE at 0% duty (from previous rates of 4-5% on most industrial goods)
• UAE serves as a re-export hub to GCC (Gulf Cooperation Council) markets under unified GCC customs
• Electronics, textiles, pharmaceuticals, engineering goods, gems and jewelry all benefit

Why this matters for supply chain strategy: UAE is one of the world's major re-export hubs. Goods manufactured in India can reach Saudi Arabia, Kuwait, Bahrain, Qatar, and Oman through UAE with minimal additional friction. For companies serving Middle Eastern buyers alongside US buyers, India becomes a single manufacturing base with preferential access to both markets.

Agreement 2: India-Japan Comprehensive Economic Partnership Agreement (CEPA, 2011)

The India-Japan CEPA has been in force since 2011 but remains underutilized by US companies. Japan agreed to eliminate duties on approximately 97% of goods from India over a phase-out period that is now largely complete.

Key product categories with preferential access:

• Machinery and mechanical appliances (Chapter 84): many sub-categories reduced to 0%
• Electrical machinery (Chapter 85): significant reductions
• Textiles and apparel: phased elimination on most categories
• Chemicals and pharmaceuticals: near-complete elimination

For US companies evaluating contract manufacturing in India for components that also need to reach Japanese OEMs or Tier 1 suppliers, the India-Japan CEPA changes the economics. You can serve both the US (at MFN) and Japan (at preferential rate) from a single India facility.

Agreement 3: India-South Korea Comprehensive Economic Partnership Agreement (CEPA, 2010)

The India-South Korea CEPA entered into force in January 2010. South Korea agreed to eliminate duties on approximately 93% of Indian goods.

Why it matters for US supply chains: South Korea is a major manufacturer of intermediate goods that often find their way into US supply chains: semiconductors, automotive components, steel, chemical feedstocks. Companies that source intermediate inputs from Korea and finish-manufacture in India could benefit from lower input costs, then ship finished goods to the US at MFN.

Indian manufacturers supplying Korean electronics assemblers can do so at preferential rates. If your contract manufacturer in India is also supplying Korean OEMs, the CEPA is relevant to their pricing and stability.

Agreement 4: India-Australia Economic Cooperation and Trade Agreement (ECTA, 2022)

The India-Australia ECTA entered into force in December 2022, with a full FTA still being negotiated. The interim ECTA covers Australia eliminating duties on 96% of Indian goods by value immediately, and India eliminating duties on 85% of Australian goods phased over 10 years.

For US importers, the ECTA is relevant in two scenarios:

• If you are sourcing Australian raw materials (minerals, agricultural inputs, certain chemicals) and processing in India. The ECTA reduces Australian input costs for Indian manufacturers.
• If you are building supply chains that serve both the US and Australian markets. India's proximity and preferential access to Australia is a genuine logistical and cost advantage.

Agreement 5: India-ASEAN Free Trade Agreement (AIFTA, 2010)

The India-ASEAN FTA covers trade in goods between India and the 10 ASEAN member states (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam). It entered into force in 2010 for initial members.

ASEAN-India creates a manufacturing corridor that is entirely outside of China's export patterns. A supply chain that sources components from Malaysia, does intermediate manufacturing in Vietnam, final assembly in India, and ships to the US operates across four countries in a tariff-advantaged corridor before the goods ever touch US customs.

ASEAN-India is also relevant for the Vietnam transshipment risk question. Companies that have relied heavily on Vietnam for final assembly can evaluate whether moving final assembly steps to India changes their transshipment risk profile with CBP.

The Constraint: US-India Tariff Reality

None of these agreements change what a US importer pays at the US border. Goods manufactured in India and shipped direct to the US face standard MFN rates. For many categories that were previously subject to Section 301 China tariffs, this represents a significant improvement.

But India does not have access to:

• USMCA preferential rates (0% on qualifying goods)
• GSP (revoked 2019, not restored as of early 2026)
• Any US-India FTA (negotiations have not been announced as imminent)

Section 232 applies to Indian steel and aluminum at the full non-USMCA rate (25% steel, 10% aluminum). Section 122 (active February 24, 2026) applies to Indian goods. The Section 122 exemptions are for USMCA partners only.

So for US importers, the India argument is not "lower tariffs into the US." It is: elimination of Section 301 surcharges compared to China-origin goods, preferential market access to third markets that complement US distribution, lower per-unit manufacturing costs on labor-intensive products, and government incentive programs (PLI) that reduce capex for qualifying manufacturers.

How to Map India Tariff Rates

Triangle Trade Intelligence covers India in its 9-market tariff database (10,997 records from India's CBIC tariff schedule). If you are modeling a supply chain with Indian manufacturing for non-US market access, you can run multi-market comparisons across all 9 markets simultaneously.

The API's multi-market-compare endpoint accepts an HS code and returns duty rates across US, Mexico, Canada, EU, Brazil, Japan, Vietnam, India, and CPTPP markets in a single call. This is designed for exactly this scenario: evaluating where to place manufacturing based on where your end customers are located.

Is India Right for Your Supply Chain?

India makes sense if:

• Your primary US tariff problem is Section 301 China exposure, not Section 232 steel/aluminum
• You have or are building sales in UAE/GCC, Japan, Korea, Australia, or ASEAN markets
• Your product category benefits from PLI incentives (electronics, pharma, textiles, auto components)
• Your landed cost model can absorb MFN rates on US shipments while benefiting from cheaper manufacturing

India is a more complex move than Vietnam or Mexico but potentially more durable. The trade agreements are in place. The manufacturing base is developing. The companies mapping this now are a few years ahead of the crowd that will arrive once Vietnam conditions deteriorate further.

Start by mapping where your end markets actually are, not just the US. The five agreements above might change what India's supply chain economics look like for your specific situation.