The India-EU Free Trade Agreement (FTA) provides cushion to India's exports as the country can achieve more diversified exports in the next one-two years, S Mahendra Dev, Chairman of Prime Minister's Economic Advisory Council said on Wednesday.
In the short-term, there maybe some problems due to US tariffs, said Mahendra Dev. "For instance, textiles and other sectors may get affected, but in the next one-two years, we can achieve more diversified exports."
"So that way, I think India's growth is not affected due to US tariffs," he added.
Further, the EAC-PM Chairman called the India-EU FTA a great opportunity for both parties. "India will benefit with this. Exports in many labour intensive commodities, like textiles, gems and jewelry and auto parts will benefit."
"And similarly, Europe also will benefit from their exports to India, many commodities, including wines and also the luxury cars," added Mahendra Dev.
The EAC-PM Chairman called the FTA a part of India's strategy to diversify its exports.
On the Carbon Border Adjustment Mechanism (CBAM), Mahendra Dev said that its terms are being negotiated so that India can benefit from the FTA, despite the regulations being in place.
"We also have to be more technology oriented where carbon emissions can be reduced," he said.
CBAM is an EU policy tool designed to put a fair price on the carbon emitted during the production of carbon-intensive goods (such as steel, cement, aluminum, fertilizers, electricity, and hydrogen) entering the EU.
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.
An official release on Tuesday had said that the India–EU FTA is projected to deliver a Rs 6.4 lakh crore boost to Indian exports to the EU, while opening EU markets to Indian MSMEs, manufacturers, farmers, students, and professionals.
By eliminating 9,425 tariff lines and improving market access, the agreement will expand opportunities for labour-intensive sectors such as textiles, apparel, leather, gems & jewellery, handicrafts, agriculture exports in tea, spices, marine products and high-tech manufacturing exports of engineering goods, electronics, pharmaceuticals and medical devices, the release had said.
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