Following years of apparent reluctance to commit to free trade agreements (FTAs) with other countries across Asia and the rest of the world, India has recently adopted a more open policy on trade.

New deals with the likes of Australia and the United Arab Emirates (UAE) have either been signed or come into force this year, while negotiations are progressing with the UK, the EU and other potential partners.

What has driven this shift in strategy by Asia's third-largest economy, and what could the economic and commercial repercussions look like?

India's shift in outlook

India's earlier skepticism around FTAs and trade liberalization was evident in high-profile decisions such as its withdrawal from the Regional Comprehensive Economic Partnership (RCEP) in 2019. Accounting for nearly a third of the world's population and the same proportion of global GDP, RCEP is the largest trade bloc in history, and India had been involved in the negotiations for seven years before pulling out.

The decision was driven by concerns around issues including the reduction of duties on imported goods and the potential widening of India's trade imbalance with China, which could leave domestic businesses facing tougher competition from overseas.

Recently, however, there has been a clear shift in strategy from prime minister Narendra Modi's government, as highlighted by the comprehensive economic partnership agreement with the UAE that came into effect earlier this year. The country also signed a trade pact with Australia that included a commitment to reduce tariffs by 85 percent.

Delhi hopes to seal new deals with high-profile trading partners including the UK and the EU in the coming years, which are expected to generate substantial economic benefits for all parties.

As for the rationale behind this change in approach, India's trade minister Piyush Goyal has said the country is focused on establishing "fair and balanced" FTAs that emphasize collaboration, rather than competition.

Discussing the agreements with Australia and the UAE, Mr Goyal also noted that both countries have been "fair and reasonable in terms of local sensitivities", Fortune India reported.

Potential winners and losers

The various FTAs and trade deals either already in force or moving forward between India and its international partners are expected to generate significant economic benefits for the countries involved.

It has been estimated that a new agreement with the UK, for example, could boost total trade between the countries by up to £28 billion a year by 2035. Fuelled by the value of this new partnership, Indian GDP could grow by the equivalent of up to £8.8 billion over the same period.

The Asian nation's more open attitude to global trade connections could also aid its efforts to compete with China, particularly at a time when several countries around the world are seeking to diversify their supply chains.

Recent research by logistics firm DHL highlighted India, Vietnam and the Philippines as three key markets set to benefit from efforts by many companies to move away from China-centric production and sourcing practices.

However, there have also been concerns raised about what an increase in FTAs and international trade arrangements could mean for local businesses in India.

While some companies, such as clothing manufacturers, could benefit from reduced tariffs on exports, others are concerned about the threat of increased competition from foreign firms.

Gaurav Sekhri, co-founder of the winemaker Fratelli, told the BBC his company has achieved growth of up to 40 percent in recent years thanks to a developing Indian wine sector, but could struggle to maintain this success if cheaper, imported brands are given greater access to the market.

Experts have also questioned how comfortably the new focus on FTAs sits alongside India's broader trade policy, which has prioritized support for domestic producers.

Researchers Surender Singh and Suvajit Banerjee wrote in the journal Economic and Political Weekly: "[The] new-found enthusiasm for FTA seems to conflict with its trade-policy stance under the self-reliant India initiative, whose genesis is on 'vocal for local', thereby promoting domestically produced goods over imported goods."

As the country pursues new deals with trade partners around the world, it seems one of the key questions India will have to answer is how it will balance the benefits of international FTAs with the needs and interests of its homegrown businesses.