Share this
The recently concluded India–EU Free Trade Agreement is being viewed as a major inflection point for India’s trade strategy, particularly amid rising global protectionism. Dubbed the “mother of all deals”, the pact is expected to support India’s long-term export ambitions under the Viksit Bharat 2047 vision.
The agreement comes as Indian exporters face mounting pressure from the US, where baseline tariffs have climbed sharply. Against this backdrop, improved access to the European Union provides diversification and stability, especially for sectors facing high duties elsewhere.
Strategic hedge against US tariffs
The timing of the India–EU FTA is significant. While the EU’s average tariff on Indian goods was already relatively low at around 3 per cent, several product categories faced steep duties. In contrast, Indian exports to the US are now subject to a baseline tariff of 50 per cent, materially impacting competitiveness.
By removing high-duty barriers in specific sectors, the EU deal offers targeted relief and reduces India’s dependence on any single export destination.
Textiles and agri exports emerge as key gainers
The biggest benefits are expected in labour-intensive and high-duty sectors. Tariffs on textiles and apparel, which were earlier above 10 per cent, will be reduced to zero, providing a major boost to a sector under strain from higher US tariffs.
The agri-food sector is also set to gain. Deloitte India estimates that agri-food exports to the EU could nearly double, rising from $4.2 billion to around $8 billion. Products likely to benefit include table grapes, gherkins, soluble coffee, tea and seafood. India is also aiming to regain lost market share in the European grape market and tap strong EU demand for gherkins.
Sensitive sectors kept out of full liberalisation
India has retained protection for several sensitive agricultural categories to shield domestic producers. Dairy, poultry, cereals, soymeal and certain fruits and vegetables have been excluded from full tariff liberalisation under the agreement.
Experts note that to fully capitalise on the FTA, India will need parallel domestic reforms. These include strengthening farmer producer organisations, improving access to credit and upgrading quality certification and traceability systems to meet EU standards.
Energy exports and carbon rules pose challenges
Despite the overall positive outlook, risks remain. Fuel products, India’s largest export category to the EU, face uncertainty due to European sanctions on products refined from Russian crude.
In addition, energy-intensive sectors such as chemicals and metals, while benefiting from lower tariffs, remain exposed to the EU’s Carbon Border Adjustment Mechanism. Without concessions or transitional support, compliance costs under CBAM could erode some of the gains from tariff reductions.
Outlook
Overall, the India–EU FTA is expected to strengthen India’s export resilience and support growth in key sectors, even as challenges persist around energy trade and carbon regulations. The agreement’s success will depend not only on tariff cuts but also on India’s ability to align domestic policies, infrastructure and compliance frameworks with EU market requirements.