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Mar

Can Private Standards Undermine the Gains of Free Trade Agreements?

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Anil Jauhri

New Delhi | Monday | 2 March 2026

Amid the growing optimism surrounding India’s recently signed Free Trade Agreements (FTAs)—often described as the “mother of trade deals”—a question that may appear misplaced at first glance deserves serious attention: Can private standards undermine the benefits of FTAs?

Since private standards exist outside the formal framework of trade negotiations, they are rarely discussed in the context of FTAs. However, ignoring their impact could lead to a significant misunderstanding of the real barriers that exporters face in global markets.

Indian industry today operates in a complex regulatory environment. Businesses must comply with domestic regulations while simultaneously meeting the regulatory requirements of importing countries if they wish to access international markets. These foreign regulations are often far more stringent than India’s own. In addition to these official regulations, exporters must also contend with voluntary or private standards, which are frequently demanded by international buyers. These standards, though technically voluntary, are increasingly becoming essential for participation in global supply chains—and are now even spreading into the domestic market.

Much of the enthusiasm around India’s FTAs stems from tariff reductions, which indeed offer clear financial benefits. Lower tariffs can make exports more competitive and expand market access. However, the reality is more nuanced. India is generally considered a high-tariff economy, whereas many of its trading partners already maintain relatively low tariffs. As a result, trading partners often gain more from tariff reductions than India does.

Article at a Glance
India’s recent Free Trade Agreements (FTAs) have generated optimism due to expected tariff reductions, but private standards imposed by global buyers may limit their benefits. Indian exporters must not only comply with domestic regulations and the stricter rules of importing countries but also meet voluntary certifications demanded by retailers and industry groups.
These standards—covering areas such as environmental protection, labour practices, food safety, and supply chain transparency—often become de facto mandatory for market access, especially in sectors like agriculture, textiles, and food. Compliance can be costly, particularly for MSMEs. The article argues that these requirements may offset the advantages gained from tariff reductions under FTAs.
To address this challenge, India should promote local certification schemes, build technical capacity, and increase industry participation in international standard-setting processes. A holistic trade strategy must consider tariffs, regulations, and private standards together to ensure genuine export competitiveness.

Moreover, many of India’s strongest export sectors—such as agri-food products, pharmaceuticals, and textiles—are heavily regulated worldwide. Exporters in these industries must comply with strict regulatory standards in foreign markets. The challenge becomes even greater because India’s domestic regulations are sometimes not aligned with international standards. In certain sectors, such as machinery safety, regulations may even be absent or underdeveloped. Consequently, Indian exporters must invest additional effort and resources to meet higher global standards, increasing the cost of doing business.

Compounding this problem is the fact that recent FTAs have not yet secured significant concessions from trading partners regarding the acceptance of Indian testing or certification systems. Without mutual recognition agreements or regulatory alignment, Indian companies must rely on foreign certification systems, which further raises compliance costs.

Even when exporters successfully meet the regulatory requirements of destination countries, they often encounter another hurdle—private standards imposed by buyers. In sectors like agri-food and textiles, retailers and global brands frequently demand certifications that go beyond government regulations. These certifications effectively become mandatory in the marketplace. Without them, exporters cannot sell their products, regardless of whether tariffs have been reduced or regulatory requirements have been satisfied.

This is where private standards can potentially neutralize the gains from FTAs. If exporters must invest heavily in multiple certifications, the financial benefits gained from tariff reductions may be significantly diminished.

Understanding Private Standards

Standards generally provide rules, guidelines, or characteristics for products, processes, and production methods. Under the World Trade Organization’s Agreement on Technical Barriers to Trade (TBT), compliance with technical regulations is mandatory, whereas compliance with standards is voluntary.

In developing countries, voluntary standards are often developed by national standards bodies that are linked to governments. In India, this role is performed by the Bureau of Indian Standards (BIS), which has developed more than 25,000 standards, including over 15,000 product standards. Businesses seeking to improve quality and competitiveness often begin by referring to relevant BIS standards, particularly in non-regulated sectors.

However, voluntary standards are not limited to national bodies. Many are developed at the international level. Prominent examples include standards issued by the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC). These include widely adopted management system standards such as ISO 9001 for quality management, ISO 14001 for environmental management, ISO 45001 for occupational health and safety, and ISO 27001 for information security. These standards have become increasingly common across industries worldwide.

Another category includes industry-specific standards created by major global sectors to improve supplier quality. Examples include IATF 16949 in the automotive sector, TL 9000 in telecommunications, and AS 9100 in aerospace. For companies operating within these sectors, obtaining such certifications has become almost unavoidable.

A further and rapidly growing category is that of Voluntary or Private Sustainability Standards (VSS or PSS). These standards are developed by retailers, industry associations, and non-governmental organizations to address concerns such as environmental protection, social responsibility, and supply chain transparency. They often aim to mitigate risks related to liability, child labour, fair wages, workplace safety, environmental compliance, and food safety.

Examples include GlobalG.A.P. for agricultural products, FSC and PEFC for sustainable forest management, GOTS and Textile Exchange standards for textiles, and BRC, IFS, and FSSC 22000 for food safety. Social compliance standards such as SA 8000 and FSSC 24000 are also widely recognized.

While these standards serve important purposes, they present a serious challenge for Indian businesses—particularly MSMEs and startups. Implementing these standards requires both technical capacity and financial investment, and certification costs can be substantial.

Developing Indian Solutions

Encouragingly, India has begun developing local certification schemes that offer more affordable alternatives. For example, the IndG.A.P. and IndiaHACCP schemes developed by the Quality Council of India (QCI), as well as forest management certifications by the Network for Conservation and Certification of Forests (NCCF), provide lower-cost options. When these schemes receive international benchmarking or recognition, they can also facilitate exports.

Indian industry should therefore consider adopting such domestic schemes first, as they can significantly reduce compliance costs while maintaining credibility in global markets.

The Way Forward

Addressing the challenge of private standards requires a deeper understanding of the ecosystem in which they operate—something that remains limited in India. Many stakeholders, including both industry and government, are still unfamiliar with the complexities involved.

It is important to recognize that most private standards are developed outside the government by industry stakeholders or buyers. Governments therefore have limited influence over their design or implementation. Indian industry must take the initiative rather than expecting government intervention.

Private standard organizations often have mechanisms that allow stakeholder participation, including consultations and national interpretations that adapt standards to local conditions. Unfortunately, Indian industry bodies have largely remained absent from these processes.

Another useful approach is the development of local schemes that can be internationally endorsed. Successful examples already exist. NCCF’s forest management and Trees Outside Forests (ToF) certification schemes have received endorsement from PEFC, while IndG.A.P. was previously endorsed by GlobalG.A.P. Such endorsements significantly reduce certification costs while enabling exporters to access global markets.

Where private schemes remain closed and do not allow equivalence arrangements, India must focus on building domestic capacity. This includes training auditors, consultants, and industry professionals who can implement these standards efficiently. Industry associations or specialized organizations can play an important role in developing such capabilities.

Finally, India’s skill ecosystem must better align with industry needs. Sector Skill Councils should incorporate training related to regulatory and voluntary standards so that certified professionals are available to help businesses comply with these requirements.

A Holistic Trade Strategy

A database of more than 300 private sustainability standards already exists on the global platform standardsmap.org. India needs a systematic study to identify which of these certifications significantly affect its export sectors. Based on this analysis, appropriate organizations can be identified to develop local certification schemes, build capacity, and represent Indian industry’s interests internationally.

Ultimately, ensuring effective market access requires a holistic approach that goes beyond tariff negotiations. FTAs may reduce tariffs, but exporters must also navigate non-tariff measures and private standards that shape real-world market access.

If India wishes to fully realize the benefits of its trade agreements, it must address all three dimensions together—tariffs, regulations, and private standards. Only then can Indian industry compete effectively in global markets.

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