Fresh Delhi: India’s recently concluded Free Substitute Settlement (FTA) with the European Union is predicted to lift vital beneficial properties for various Indian sectors, including textiles, prescribed tablets, chemical substances, agriculture, leather, and marine products, as the EU stays one of India’s finest and most important buying and selling partners.
The India-EU FTA, finalised in January 2026 after lengthy negotiations, eliminates tariffs on over 90 per cent of items traded between the 2 aspects.
In accordance with a sectoral evaluation by credit rating company ICRA, the settlement grants India preferential zero-accountability in finding entry to on 97 per cent of EU tariff lines, conserving nearly ninety nine.5 per cent of the associated rate of Indian exports, while India will lower or assign away with tariffs on 92 per cent of its tariff lines for EU imports.
The textile and apparel sector is predicted to be amongst the finest beneficiaries. ICRA eminent that accountability-free in finding entry to to the EU market will place Indian exporters on par with competitors equivalent to Bangladesh, Vietnam, and Turkey, which previously loved tariff benefits. Attire and dwelling textiles, in particular, are anticipated to seem at improved export competitiveness and higher lengthy-term investment.
Prescribed tablets and healthcare products are also space to back below the EU FTA. The EU on the second accounts for spherical 12 per cent of India’s pharmaceutical exports and 46 per cent of its pharma imports.
Elimination of EU import tariffs on Indian medicines is predicted to boost export competitiveness, while lower EU tariffs on imports of medicines, bulk medication, and scientific devices will lower domestic enter and healthcare charges, ICRA said.
The EU is a key vacation place for India’s natural chemical exports, accounting for roughly a quarter of shipments.
Following the FTA’s implementation, Indian chemical companies are anticipated to toughen their competitiveness in opposition to global suppliers, including these from China.
Engineering items equivalent to iron and steel, machinery, and automobile parts will also care for shut pleasure in improved market in finding entry to, even though done steel exports would possibly perhaps also continue to face challenges ensuing from the EU’s Carbon Border Adjustment Mechanism (CBAM), which appears to be like to be to tumble exterior the scope of the latest deal.
Agricultural and processed meals exports, equivalent to tea, coffee, spices, fruits, vegetables, and marine products, will prevail in preferential in finding entry to to the EU market. Marine exports are anticipated to care for shut pleasure in tariff reductions of up to 26 per cent, supporting coastal employment and export development.
Labour-intensive sectors equivalent to leather, footwear, furniture, and rubber products are also anticipated to seem at beneficial properties. At the identical time, aloof sectors, including dairy, cereals, and poultry, enjoy been safeguarded to supply protection to farmers and MSMEs.
Merchandise trade between India and the EU grew at a compound annual development payment of seven per cent between 2015-16 and 2024-25, with India affirming a trade surplus since 2020-21.
“The FTA enhances India’s competitiveness across labour-intensive, agricultural, engineering, services, and advanced manufacturing sectors. It also safeguards micro, small and medium enterprises (MSMEs), farmers, and skilled professionals while strengthening India’s position in European value chains. With effective implementation, bilateral trade is expected to rise well beyond the current USD 137 billion and spur investment, innovation, job creation, and long-term export growth,” ICRA said.
