Zero-duty access to Europe’s vast consumer market set to lift garments, leather goods, marine products and gems and jewellery
India’s newly concluded free trade agreement (FTA) with the European Union places a major bet on labour-intensive export sectors—including textiles, footwear, marine products, leather goods, chemicals, plastics, and gems and jewellery—by unlocking near duty-free access to one of the world’s largest consumer markets. The agreement, which eases or removes tariffs on more than 90 per cent of traded goods, aims to strengthen India’s export competitiveness at a time when global trade flows are shifting and key markets such as the United States have turned increasingly protectionist.
The conclusion of negotiations was jointly confirmed by Prime Minister Narendra Modi and senior European Union leaders, including Ursula von der Leyen, President of the European Commission, marking a significant diplomatic and commercial milestone. Trade talks between New Delhi and Brussels had stalled more than a decade ago, largely due to disagreements over market access in the automobile sector. The revived negotiations have now yielded a compromise: India gains expanded access for its labour-intensive exports, while the EU secures phased tariff reductions in areas of interest such as automobiles, wines and premium food products.
Zero duties to lift key export sectors
European import duties on a wide range of Indian products in employment-intensive segments will be reduced to zero once the pact is implemented. These include seafood shipments that previously faced tariffs of up to 26 per cent; leather and footwear taxed at up to 17 per cent; garments and textiles that attracted duties of up to 12 per cent; chemicals charged up to 12.8 per cent; and plastics and rubber products subject to levies of up to 6.5 per cent. Gems and jewellery, which earlier faced duties of up to 4 per cent, along with toys and sports goods taxed up to 4.7 per cent, will also benefit from lower trade barriers, according to the commerce ministry.
“Rs 6.41 lakh crore (USD 75 billion) of exports are poised for take-off, of which USD 33 billion from labour-intensive sectors such as textiles, leather, marine products, and gems and jewellery are set to gain significantly from preferential access under the FTA,” a Bank of Baroda report said.
“Zero-duty access to the world’s largest consumer market empowers export hubs in Gujarat, Rajasthan, Maharashtra and West Bengal to scale up shipments of precious jewellery—plain and studded—silver jewellery and imitation jewellery, capitalising on India’s strong design capabilities. With exports to the US down by 44 per cent, this timely pact will help Indian exporters recover lost ground,” said Kirit Bhansali, Chairman of the Gem & Jewellery Export Promotion Council (GJEPC).
GJEPC data show that EU jewellery imports from India remain relatively modest at USD 628 million, including USD 573 million in precious jewellery and USD 55 million in fashion (imitation) jewellery. These categories currently attract duties of 2–4 per cent, leaving the market dominated by suppliers from countries that already have free trade agreements with the EU. The removal of these duties is expected to unlock significant export potential for Indian jewellers across the 27-member bloc.
The tariff cuts are also expected to make Indian products more price-competitive across European retail and industrial supply chains, particularly against rivals such as Vietnam and Bangladesh, which already enjoy preferential EU access.
Praveen Khandelwal, Member of Parliament from Chandni Chowk and Secretary General of the Confederation of All India Traders (CAIT), said major beneficiary sectors include textiles and apparel, leather and footwear, gems and jewellery, engineering goods and auto components, pharmaceuticals and healthcare, IT and digital services, agriculture and processed foods, as well as MSMEs and start-ups that will gain new avenues for global collaboration.
Apparel, textiles and leather eye larger EU share
Manufacturing clusters across India are expected to feel the impact of the pact. Indian garment and textile exporters will gain zero-duty access across all EU tariff lines, replacing earlier duties of 10–12 per cent. The EU’s annual textile and apparel import market is estimated at USD 263.5 billion, yet India currently accounts for only around USD 7.2 billion. Industry executives say the removal of tariffs could help Indian suppliers substantially expand their market share, particularly as competitors such as Bangladesh and Vietnam already benefit from preferential access.
Clusters such as Tiruppur in Tamil Nadu, Ludhiana in Punjab and Ichalkaranji in Maharashtra are expected to see higher export orders as European buyers diversify sourcing.
The leather and footwear industry is also set to gain, with EU duties falling from as high as 17 per cent to zero. Export hubs in Kanpur and Agra in Uttar Pradesh, and Vellore and Ambur in Tamil Nadu, are likely beneficiaries. The sector, largely driven by small and medium enterprises, is a significant employer, including a high proportion of women workers in finishing and component manufacturing.
Coastal regions including Veraval, Kochi and Alappuzha may see stronger demand for shrimp, tuna and other marine exports, while chemical and plastics manufacturers in industrial belts such as Bharuch and Vadodara stand to benefit from the removal of European tariffs on most product lines.
Alcoholic beverages: sharp duty cuts
The agreement also provides for steep tariff reductions on European alcoholic beverages entering India. Import duties on wine will be cut from 150 per cent to 20 per cent for premium labels and 30 per cent for mid-range wines. For spirits, tariffs will fall from levels of up to 150 per cent to 40 per cent, while beer duties will be reduced from 110 per cent to 50 per cent.
These changes are expected to make European alcoholic beverages significantly more price-competitive in India’s premium and urban retail markets over time.
“Thanks to this historic trade agreement, markets representing nearly two billion people are being brought closer together. Our agri-food exports to India have long been constrained by extremely high tariffs. Under this agreement, European wines, spirits, beer, olive oil, confectionery and other products will gain preferential access to India’s rapidly growing market,” said Christophe Hansen, European Commissioner for Agriculture and Food.
As European firms expand manufacturing and services operations in India, apprenticeships are also expected to emerge as a preferred pathway to build export-ready skills, improve employability and integrate Indian youth into globally competitive roles.
“The India–EU trade deal is not merely a commercial agreement, but a strategic partnership that will accelerate India’s journey towards a USD 5 trillion economy and strengthen its leadership in global trade,” Khandelwal added.
