EU trade deal can soften blow for 84% of India’s exports hit by US tariffs

• EU trade deal may absorb 84% of Indian exports affected by US tariffs
• Gems, jewelry, seafood, and textiles may gain from better EU market access.
• Not all sectors, like carpets and spices, can easily shift exports to the EU

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A trade agreement with the European Union, described by EU Commission president Ursula von der Leyen as the “mother of all deals”, would come as a huge relief for a large share of India’s exports hit hard by punitive US tariffs.

Of the roughly $47 billion Indian exports facing 50 percent or more in US tariffs, nearly $40 billion , or 84 percent, can be absorbed by the 27-nation bloc, a Moneycontrol analysis shows.

Von der Leyen and European Council president António Costa will be in Delhi as the chief guests at Republic Day celebrations on January 26. The two sides widely expected to ink the landmark agreement the next day.

Sectors that can benefit

Indian goods, especially those hit hardest by Trump tariffs, can find a big market in EU if the deal sales through.

Gems and jewellery stand out. India exported $3.1 billion worth of precious metal jewellery to the US in 2024 but only $784 million to the EU. The bloc imported $17.2 billion worth of precious metal jewellery during the year.

The gap indicates substantial untapped capacity for Indian exporters should market access improve under a trade agreement.

A similar pattern emerges in seafood. India exported close to $1.9 billion worth of frozen shrimp to the US in 2024, while shipments to the EU were roughly a third of that value. Total EU imports of frozen shrimp stood at about $3.9 billion, suggesting room for India to scale up exports if tariff and non-tariff barriers are eased.

Textiles and apparel exporters, among the worst hit by US tariffs that took effect late August, could also find meaningful relief through Europe.

The EU remains one of the world’s largest apparel markets, and India’s penetration is modest across multiple product categories, leaving scope for expansion.

Not all sectors will find an easy alternative in Europe. Carpets, spices such as cumin seeds and certain chemicals, including sulphur, face limited substitution potential due to either demand constraints or regulatory barriers.

Non-industrial diamonds would find it even tougher. While the US accounted for about a third of India’s diamond exports, EU imports from the rest of the world, excluding India, were just $3.6 billion in 2024, well below the $4.8 billion the United States imported from India alone.

An EU trade deal would not fully offset the US tariff shock but it could significantly cushion the blow, especially for high-value manufacturing and labour-intensive sectors where India’s global competitiveness is already established.