'Game-Changer' for Industry: CII and FICCI hail India-EU FTA as competitiveness milestone

India will eventually gain $75 billion in exports under the free trade agreement.

• India-EU FTA grants preferential access for over 99% of Indian exports to EU
• Deal expected to boost India's exports by $75 billion and EU exports by 2032
• Key sectors like textiles, auto components, and pharma to see strong growth

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The India-EU FTA "decisively improves competitiveness" of Indian exports in the EU’s market, anchors Indian manufacturers and service providers deeper into global value chains, and accelerates investment and technology inflows, said industry associations on the "mother of all deals" signed on Monday.

"This landmark agreement represents a strategic breakthrough in India’s global trade engagement and significantly deepens the partnership between two major democracies and economies that together account for nearly 25% of global GDP," Chandrajit Banerjee, Director General, CII said in a statement.

India and the 27-nation European Union concluded talks for a free trade agreement on January 27 granting greater market access to both sides once the deal kicks in. India will eventually gain $75 billion in exports under the free trade agreement, with preferential access on over 99 percent of goods, while the EU is expected to double its outbound shipments to by 2032 due to tariff cuts or eliminations.

India’s bilateral trade in goods with the European Union reached about $136.5 billion in 2024-25 with Indian exports worth $75.85 billion and imports of $60.68 billion, making the bloc South Asian nation’s largest trading partner.

"The unprecedented preferential access secured for over 99% of Indian exports is a game-changer for Indian industry. It decisively improves competitiveness in the EU’s high-value market, anchors Indian manufacturers and service providers deeper into global value chains, and accelerates investment, technology inflows, and scale," the CII said.

Anant Goenka, President, FICCI said, “The European Union represents the most expansive and high-potential market covered under India’s recent FTA engagements, opening new avenues for deeper economic collaboration."

"The India–EU FTA is poised to unlock substantial untapped trade and investment opportunities, enabling deeper market access, stronger value-chain integration, and enhanced export competitiveness across manufacturing and high-value sectors,” added Goenka.

For India, the FTA provides immediate duty elimination for 70.4 percent of tariff lines covering 90.7 percent of India’s exports, including key labour-intensive sectors such as textiles, leather and footwear, tea, coffee, spices, sports goods, toys, gems and jewellery, and certain marine products.

Another 20.3 percent of tariff lines, covering 2.9 percent of exports, will see zero duty over 3–5 years for certain marine products, processed foods, and arms and ammunition, while 6.1 percent of lines, covering 6 percent of exports, will receive preferential access through tariff reductions or quotas for cars, steel, and select seafood.

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In return, India has agreed to progressively liberalise tariffs on European goods.

India has offered concessions on 92.1 percent of EU’s tariff lines offered, covering 97.5 percent of EU exports, including high-tech goods, fruits like apples, pears, peaches, and kiwi, and other industrial and consumer products.

Immediate and phased duty cuts will reduce costs for EU exporters, diversify supply chains, and open new opportunities for integrating Indian suppliers into global markets.

"The EU–India Free Trade Agreement (FTA), alongside the Investment Protection Agreement (IPA) and Geographical Indications (GI) Agreement, is expected to generate a sustained expansion in India’s exports to the European Union with India’s overall exports to the EU are estimated to grow by 35–45% over a five-year period following implementation," PHDCCI said in a statement.

The organisation expects pharmaceuticals sector to record 8–12% annual growth, along with Engineering goods which include electrical machinery and industrial equipment, could grow at 7–10% annually, with deeper integration into European supply chains.

"Auto components and emerging electric-vehicle components, a key industry in terms of employment generation in India, are projected to experience faster growth, in the range of 10–15% annually, and potentially higher for EV-linked products, given currently high EU tariffs and India’s cost competitiveness," PHDCCI said.

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Saurabh Agarwal, Partner, EY India said that the overall impact on the Indian auto industry is expected to remain limited. "Vehicles imported in CKD form continue to attract a significantly lower duty of around 15%, and this route is also widely used by European, Japanese and Korean manufacturers. This model is likely to continue, helping maintain price stability for consumers while supporting local manufacturing, investment and employment in India.”

Pratik Jain, Partner at Price Waterhouse & Co said that the real strategic win for the tax boardroom is the progress on Carbon Border Adjustment Mechanism (CBAM). “Having secured forward looking MFN assurances on flexibilities, enhanced technical cooperation on recognition of carbon prices, recognition of verifiers, etc. the deal ensures that Indian exporters in the steel and aluminum sectors aren’t unfairly penalized during Europe’s green transition,” he added.