ANALYSIS FTA with EU could give an initial $5 billion boost to Indian exports

India EU FTA

A free trade agreement with the European Union could boost India’s exports by $3–5 billion more in the near term. Indian exports to the bloc stood at $75.9 billion in 2024-25.

India and the EU are expected to announce the conclusion of the proposed trade deal later today, after nearly two decades of negotiations.

To be sure, the benefits from tariff reductions or eliminations will materialise once the FTA is implemented, which may take at least a year after the deal is signed.

The projected increase in exports is based on an estimated 5–8 percent rise in FTA-sensitive exports, excluding refined petroleum products, which are less affected by such reductions.

This assumption is a standard trade-policy rule of thumb, commonly used by governments, WTO or UNCTAD studies, and research institutions to estimate near-term gains from tariff cuts and reduced regulatory barriers.

Refined petroleum products, which topped India’s exports to the EU at $15.0 billion in FY25, are unlikely to be significantly affected by the FTA, as they face minimal tariffs and are largely driven by global oil prices rather than trade barriers.

Electronic goods, at $11.3 billion, were the second-largest export category.

Other key exports included textiles and apparels worth $7.6 billion, machinery and computers at $5.0 billion, organic chemicals $5.1 billion, iron and steel $4.9 billion, pharmaceuticals $3.0 billion and gems and jewellery shipments stood at $2.5 billion.

India’s automotive exports to the EU were also significant at $2.2 billion, led by auto parts, tractors, motorcycles and scooters, dumpers, and cars. Other key labour-intensive shipments included tyres, footwear, and coffee.

Bilateral trade between India and EU surpassed $136 billion in FY25, out of which India’s imports from the bloc stood at $60.7 billion led by high-end machinery such as turbojets, and specialised industrial machines.