News and Articles

• Preferential tariff access under the FTA covers the vast majority of trade between India and the EU
• Labour-intensive sectors including textiles, leather, marine products, and gems stand to gain significantly
• Agricultural and processed food exports receive improved access with safeguards for sensitive items
• Manufacturing segments like engineering, electronics, chemicals, and medical devices see reduced duties
• India’s phased market opening aims to support competitiveness while managing domestic priorities

The India–European Union Free Trade Agreement signals a renewed phase in economic ties between two major global economies and opens preferential trade access across a combined market approaching two billion people. Together accounting for about a quarter of global GDP, India and the EU are expected to see wide-ranging effects from the pact, spanning exports, employment generation, supply chain restructuring, and industrial competitiveness. The agreement reshapes trade conditions for goods across sectors that are central to India’s growth and job creation priorities.

Under the agreement, India has secured preferential access across 97 percent of EU tariff lines, covering 99.5 percent of its export value. A substantial share of this access comes through immediate removal of duties, particularly in sectors that rely heavily on labour and small manufacturers. In exchange, India has committed market access across 92.1 percent of its tariff lines, representing 97.5 percent of EU exports, with a combination of immediate cuts and phased reductions spread over several years.

Agriculture and processed food products stand among the early beneficiaries. Preferential access has been granted to a broad range of Indian exports, including tea, coffee, spices, grapes, gherkins, cucumbers, sweet corn, dried onion, sheep and lamb meat, and selected fruits and vegetables. Improved tariff treatment is expected to enhance price competitiveness for Indian producers in European markets, especially for processed and higher value food categories that offer better margins and stable demand.

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At the same time, the agreement builds in safeguards for sensitive domestic segments including dairy, cereals, poultry, soymeal, and certain fruits and vegetables. These measures are intended to protect food security and farmer incomes while allowing export growth to continue in less vulnerable areas. The structure of the pact is expected to support rural livelihoods, encourage participation of women in agri-processing, and strengthen India’s reputation as a reliable supplier of quality agricultural products.

Textiles and apparel emerge as some of the most significant gainers from the agreement. Zero duty access now applies across all tariff lines in this segment, removing EU duties that previously went as high as 12 percent. This creates new opportunities in a European textile and clothing import market valued at about ?22.9 lakh crore. India’s current textile and apparel exports to the EU are relatively modest compared to the size of the market, suggesting considerable headroom for expansion once tariff barriers are removed.

The expected gains extend across yarns, ready-made garments, man-made fibre apparel, and home textiles. Given the sector’s dependence on MSMEs and its high employment intensity, improved access to the EU market is likely to support job creation, higher factory utilisation, and greater investment in capacity and compliance standards.

Similar benefits are anticipated for other labour-intensive industries including leather, footwear, marine products, sports goods, toys, and gems and jewellery. These sectors together account for exports exceeding ?2.87 lakh crore that previously faced EU import duties ranging from low single digits to over 25 percent. Duty elimination significantly improves the competitive position of Indian exporters against suppliers from other regions.

In leather and footwear, the removal of tariffs of up to 17 percent across all product lines offers a notable boost. India’s exports in this category to the EU are currently a fraction of the bloc’s total imports, pointing to strong growth potential. Marine products also receive full preferential coverage, with tariffs of up to 26 percent reduced to zero. This opens greater access to the EU’s large seafood import market and is expected to lift demand for shrimp, frozen fish, and processed seafood, supporting incomes in coastal regions.

Engineering goods represent another area where the agreement is likely to have a meaningful impact. Indian exporters currently face duties of up to 22 percent on machinery, auto components, and industrial equipment. Preferential access under the FTA is expected to enhance competitiveness, support scale expansion, and encourage deeper integration of Indian suppliers into European manufacturing networks, including MSME participation in cross-border value chains.

Electronics manufacturing is also set to benefit, with near zero duty access covering more than 99 percent of India’s electronics exports to the EU. The impact is expected to extend beyond finished products to components and sub-assemblies, strengthening domestic supplier networks. Medical devices and instruments gain from the removal of tariffs of up to 6.7 percent across most trade lines, improving prospects for products ranging from diagnostic equipment to precision instruments.

In chemicals, the agreement ensures zero duty treatment on the bulk of India’s export basket by value, removing tariffs that previously reached double digits. This is expected to support export growth across organic, inorganic, and agrochemical segments and reinforce India’s role in supplying a large and diverse European chemicals market.

Gems and jewellery receive full preferential access, with duties of up to 4 percent eliminated across the entire trade value. Plastics and rubber products also gain improved access to a sizeable EU import market, while reduced tariffs and zero duty treatment for minerals, home décor, wooden crafts, and furniture are expected to benefit MSMEs and artisan-driven industries focused on value-added exports.

On the import side, India has structured its commitments to balance market opening with domestic sensitivities. Nearly half of the tariff lines offered to the EU will see immediate duty elimination, while a significant share will be phased out over five to ten years. Limited use of tariff rate quotas aims to manage sensitive products. Increased imports of European high-technology goods are expected to diversify supply sources, lower input costs for Indian manufacturers, and support closer integration with global production networks.