Advocacy group flags uneven export gains as new trade pact announced

By A Representative 

The Centre for Financial Accountability (CFA) has cautioned that India’s latest free trade agreement risks widening regional inequality, arguing that export growth remains concentrated in a small number of states despite rising national figures.

In a statement titled Free Trade, Unequal India, CFA said the commerce ministry’s celebration of new trade deals “hides a deeper worry,” pointing to Reserve Bank of India data that reveals a widening geographic divide.

“A handful of states now drive almost all exports. Maharashtra, Gujarat, Tamil Nadu, Karnataka and Uttar Pradesh together control nearly 70 per cent of India’s export basket. This level of concentration is not healthy. It tells us growth is clustering fast and leaving most of the country behind,” the note said.

According to CFA, more than 90 per cent of India’s exports originate from just ten states, leaving the remaining twenty “fighting over scraps.” The organisation highlighted sharp gains in Gujarat, supported by ports, industrial corridors, and long-standing manufacturing ecosystems that attract both private and public investment.

CFA argued that this spatial concentration is reinforced by financial flows. “Money deposited in Bihar or eastern Uttar Pradesh is lent to factories on the coast. Labour migrates. Capital migrates. Goods flow back in. This is not integration. It is dependence,” it stated, adding that high credit-deposit ratios in coastal states contrast with capital outflows from the hinterland.

The group warned that free trade agreements, without accompanying domestic investment, could entrench the divide. “More exports from the same few states will only harden the divide... India risks becoming two economies in one country — a coastal exporter and a stranded hinterland.”

CFA called for long-term public spending, stronger state-level industrial capacity, and banking reforms to ensure credit reaches regions that currently supply labour and savings but lack local industry.