- India-EU FTA will boost India's export competitiveness with preferential tariff access
- Chemical exports to EU worth $7.2B gain edge with up to 12.8% tariff removal
- Electronics tariffs cut by 14%, aiding India's shift to high-value segments
India's competitiveness across export-oriented sectors is set to rise following the conclusion of the India–EU Free Trade Agreement, with preferential tariff access helping Indian firms claw back market share from entrenched global competitors.
Firstly, EU's nearly $500 billion chemicals import market offers a vast opportunity for Indian exporters, who currently ship just $7.2 billion worth of chemicals to the bloc. With duties of up to 12.8% eliminated on nearly the entire chemical export basket, Indian producers gain a price edge over suppliers from the US (8.4% market share in EU), China (8.3%), South Korea and Japan (1.6%). The move is expected to boost competitiveness across inorganic and organic chemicals, fertilisers, pharmaceuticals and detergents, while strengthening MSME clusters in Gujarat, Maharashtra, Karnataka and Andhra Pradesh.
In electronics, the FTA reduces tariffs of up to 14%, allowing India to compete more effectively with China (38%), the US (23%), Taiwan (13%) and Vietnam (6%). With the EU electronics market estimated at $744 billion, the agreement could accelerate India's transition from volume-based manufacturing to higher-value segments such as semiconductors, laptops and industrial electronics, anchored by hubs like Bengaluru, Noida, Chennai, Pune and Hyderabad.
Pharmaceuticals and medical devices are another big beneficiary. The EU imports over $572 billion worth of pharma and med-tech products annually, while India's exports remain under-penetrated at $4 billion. Tariff-free access, achieved through the removal of duties of up to 6.7%, improves India's positioning against US (35.2%), China (14.6%) and Japan (5.8%) suppliers, strengthening export prospects from clusters in Telangana, Karnataka, Gujarat and Andhra Pradesh.
In leather and footwear, the FTA removes tariffs as high as 17%, giving Indian exporters duty-free access across all tariff lines. This sharply improves competitiveness against Vietnam (12.8%), Indonesia (4%), Cambodia (1.6%) and Bangladesh (1.2%), while boosting production hubs in Agra, Kanpur, Ranipet, Kolhapur and Tamil Nadu.
Engineering exports stand to gain from tariff cuts of up to 22% in an EU market valued at nearly $2 trillion, helping India compete more effectively with China, the UK and the US, while advancing the goal of $300 billion in engineering exports by 2030.
Finally, textiles and apparel exporters gain parity with duty-free competitors like Bangladesh, Vietnam and Turkey, unlocking access to a $263.5-billion EU market and strengthening India's labour-intensive manufacturing base.
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