India–EU Free Trade Agreement Set to Reshape Trade Across Manufacturing, Agriculture and Labour-Intensive Sectors

The India–European Union Free Trade Agreement (FTA) marks a reset in economic engagement between two of the world’s largest economies, thus unlocking preferential access across a market of nearly two billion people. Together, India and the EU account for roughly 25% of global GDP, and the agreement is expected to have far-reaching implications for exports, employment, supply chains, and industrial competitiveness.

Under the pact, India has secured preferential access across 97% of EU tariff lines, covering 99.5 % of its trade value. A large proportion of this access comes through immediate duty elimination, particularly for labour-intensive sectors that are central to India’s export and employment strategy. In return, India has offered market access across 92.1% of its tariff lines, covering 97.5% of EU exports, through a mix of immediate and phased tariff reductions.

Agriculture and Agri-Linked Exports

Agricultural and processed food exports are among the early beneficiaries of the agreement. India has obtained preferential access for a wide basket of agri and food products, including tea, coffee, spices, table grapes, gherkins, cucumbers, sweet corn, dried onion, sheep and lamb meat, and selected fruits and vegetables. This expanded access is expected to improve price competitiveness for Indian products in European markets, particularly for value-added and processed categories.

At the same time, the agreement includes safeguards for sensitive domestic sectors such as dairy, cereals, poultry, soymeal, and specific fruits and vegetables. These protections are designed to ensure that export growth does not come at the cost of domestic food security or farmer livelihoods. The structure of the agreement is expected to support rural incomes, expand opportunities for women in agri-processing, and strengthen India’s positioning as a trusted supplier of premium agricultural products to Europe.

Textiles, Apparel, and Other Labour-Intensive Sectors

Textiles and apparel emerge as some of the most significant gainers under the FTA. Zero-duty access now covers all tariff lines in this category, eliminating EU duties of up to 12%. This opens the door to the European Union’s textile and clothing import market, valued at approximately ₹22.9 lakh crore (USD 263.5 billion).

India’s current textile and apparel exports to the EU stand at about ₹62,700 crore (USD 7.2 billion), out of total global exports of ₹3.19 lakh crore (USD 36.7 billion). With tariff barriers removed, exporters expect stronger demand for yarns, ready-made garments, man-made fibre apparel, and home textiles. Given the sector’s heavy reliance on MSMEs and labour-intensive manufacturing, the agreement is expected to support job creation and improve capacity utilisation across the value chain.

Similar gains are expected across other labour-intensive sectors such as leather, footwear, marine products, sports goods, toys, and gems and jewellery. Collectively, these sectors account for over ₹2.87 lakh crore (USD 33 billion) in exports that were previously subject to EU import duties ranging from 4% to 26%.

Also read: Inside the India–EU Trade Pact with 27 EU States

Leather, Footwear, and Marine Products

The elimination of tariffs of up to 17% across all leather and footwear tariff lines represents a significant competitiveness boost for Indian exporters. India’s leather and footwear exports to the EU are currently valued at approximately ₹20,900 crore (USD 2.4 billion), while the EU’s total imports in this category are estimated at nearly ₹8.71 lakh crore (USD 100 billion).

Marine exports receive full preferential coverage under the agreement, with tariffs of up to 26% reduced to zero. This provides access to the EU’s marine import market, valued at around ₹4.67 lakh crore (USD 53.6 billion). India’s marine exports to the EU currently stand at about ₹8,715 crore (USD 1 billion), and exporters expect higher demand for shrimp, frozen fish, and value-added seafood products. The sector is closely linked to employment and incomes in coastal regions and forms a key pillar of India’s blue economy.

Engineering Goods and Industrial Manufacturing

Engineering exports are another major area of impact. Indian engineering goods currently face tariffs of up to 22% in the EU. Under the FTA, preferential access is expected to enhance India’s competitiveness in machinery, auto components, industrial equipment, and related segments.

India’s engineering exports to the EU are valued at approximately ₹1.44 lakh crore (USD 16.6 billion), while the EU’s total engineering imports are estimated at nearly ₹174.3 lakh crore (USD 2 trillion). Industry participants expect tariff reductions to support scale expansion, industrial modernisation, and deeper integration of MSME suppliers into European manufacturing supply chains.

Electronics, Medical Devices, and Chemicals

Near-zero duty access for electronics, covering more than 99 % of India’s electronics exports to the EU, is expected to reinforce India’s electronics manufacturing ecosystem. The impact extends beyond finished products to include components, sub-assemblies, and industrial electronics, strengthening backward linkages with MSME suppliers and service providers.

Medical instruments and devices also gain from tariff elimination of up to 6.7% across 99.1% of trade lines. Products such as lenses, spectacles, diagnostic equipment, and measuring instruments are expected to become more competitive in European markets.

In chemicals, the FTA ensures zero duty on 97.5% of India’s chemical export basket by value, removing tariffs of up to 12.8%. This is expected to support export growth across inorganic, organic, and agrochemicals, and strengthen India’s role in the EU’s chemical import market, valued at nearly ₹43.57 lakh crore (USD 500 billion).

Gems, Jewellery, Plastics, and Other Segments

The gems and jewellery sector gains preferential access across 100% of trade value, with tariffs of up to 4% eliminated. India’s jewellery exports to the EU, valued at around ₹23,500 crore (USD 2.7 billion), are expected to become more competitive in a market with imports worth nearly ₹6.89 lakh crore (USD 79.2 billion).

Plastics and rubber products also gain improved access to the EU’s import market, estimated at ₹27.67 lakh crore (USD 317.5 billion). India’s current exports to the EU in this category stand at about ₹20,900 crore (USD 2.4 billion), indicating substantial room for growth.

Zero-duty access for minerals and reduced tariffs for home décor, wooden crafts, and furniture are expected to support exports in value-added and design-oriented segments, particularly for MSME and artisan-driven industries.

India’s Market Access Commitments

On India’s side, 49.6% of tariff lines offered to the EU will see immediate duty elimination, while 39.5% will be phased out over five, seven, or ten years. A small set of products is subject to tariff rate quotas to balance domestic sensitivities. Imports of EU high-technology goods are expected to diversify supply chains, reduce input costs, and support India’s integration into global manufacturing networks.

Also read: 'We Did It': Historic India-EU Free Trade Deal 'Win-Win' Pact