New Delhi: Textiles, pharmaceuticals, chemicals, engineering goods, gems and jewellery exports will receive a boost from the free trade agreement between
India and the 27-nation European Union, according to exporters. The conclusion of negotiations for the agreement is likely to be announced on January 27. The industry estimates that with tariffs having been phased out due to the FTA, exports to the EU will double over the next three years, they said.
The free trade agreement (FTA) would provide a stable and predictable framework for exporters, allowing Indian firms to plan long-term investments, integrate into European value chains, and secure market access, even as global economic uncertainties persist, they noted. “This FTA will be a game changer in terms of reducing our dependence on any single market,” Apparel Export Promotion Council Chairman A Sakthivel said, adding that with the US tariffs on Indian goods being too high, domestic exporters face higher costs and reduced competitiveness in a major market, which is pushing Indian exporters to diversify the export market.
Successive negotiations have emphasised sectors where India has a strong export footprint in the EU. Textiles and apparel, pharmaceuticals, engineering goods, petroleum products and chemicals are central to these discussions, he added. Textiles and apparel currently attract 12-16 per cent import duty in the EU, which makes Indian goods less competitive. The average import duty for ready-made garments in the EU is 12 per cent, which apparently comes to 9.6 per cent as India enjoys preferential access under the EU’s Generalised Scheme of Preferences (now called DCTS).
Kanpur-based Growmore International MD Yadvendra Singh Sachan said that domestic leather exporters should use this opportunity to significantly boost shipments. “The FTA will be a game changer for Indian exporters,” Sachan said. Federation of Indian Export Organisations (FIEO) said substantial increases in US tariffs are affecting a spectrum of Indian exports, and it underscores the need for diversification of export markets and trade strategies. Against this backdrop, it said, concluding a comprehensive India-EU Free Trade Agreement is not only timely, but it is strategically vital.
The EU remains one of India’s largest trading partners, accounting for about 17 per cent of India’s goods exports and a significant share of services trade. “Reducing tariff and non-tariff barriers with the EU will partially offset adverse impacts from tariff pressures elsewhere, especially the United States, strengthening India’s global trade footprint,” FIEO Director General Ajay Sahai said.
He said that India is a major supplier of generics and speciality chemicals, and easier access under the trade pact will help scale exports. Reduced duties on engineering goods and electrical machinery will enhance the competitiveness of Indian manufactured goods, he added. Besides gems and jewellery, exports are expected to benefit from tariff concessions and streamlined regulatory convergence, while petroleum products and iron and steel export lines will gain improved market access under the FTA regime, Sahai said.
The major service segments, which will benefit from the pact, include IT, Legal, consulting, accounting, and management. Bilateral goods trade between India and the EU was approximately USD 136.5 billion in 2024-25, with India exporting roughly USD 75.8 billion to the EU. The two sides are constantly engaged in talks.
