How EU-India FTA Opens New Doors to Boost Trade

Prime Minister Narendra Modi’s recent fournation tour of Europe, aimed partly at consolidating strategic relations with key European partners amid the changing geopolitical and trading landscape, has a greater significance in terms of diversifying India’s external economic engagement with access to wider markets. By reducing barriers to goods and services, the agreement can help the EU diversify its partnerships and strengthen its presence in one of the world’s fastest-growing markets, while enabling India to expand exports, attract investment, upgrade its industries and integrate more deeply into global value chains. In 2024, the EU was India’s second-largest trading partner after China, accounting for 11 per cent of India’s total global trade. Meanwhile, India was the EU’s tenth-largest trading partner, accounting for only 1.7 per cent of the EU’s global trade. This shows that while the EU is a major market for India, the latter remains a relatively smaller, though increasingly relevant, partner for the EU. The EU-India FTA could, therefore, help address this gap by supporting stronger Indian export growth to the EU and by improving market access for EU firms in India. With a market of close to 1.5 billion people and an expanding middle class, India offers the EU an important source of export diversification and long-term demand growth. For India, the agreement offers an equally important opportunity. Under the EU-India FTA, the EU has committed to eliminating tariffs on over 90 per cent of tariff lines, covering 91 per cent of the trade value, creating a window for India to drive export growth and increase its share of EU imports. Overall, the FTA is expected deepen EU penetration in highvalue sectors and increase India’s access to advanced technologies and industrial inputs. The key point is that these provisions reduce the tariff disadvantage faced by Indian exporters in sectors where even small price differences can affect market share. This is particularly relevant for textiles and apparel. Indian exporters have historically faced a tariff disadvantage in the EU compared with competitors such as Bangladesh, Pakistan and Turkey, which benefit from preferential access to the European market. The FTA helps correct this gap by improving India’s tariff treatment in the EU’s large textile and apparel market. This could support export diversification while strengthening one of India’s most employment-intensive sectors, which is closely linked to MSME clusters and regional production networks. The potential gains are therefore not only commercial but also developmental, given the sector’s role in job creation and small-firm participation, the article points out. It further underscores that the EU-India FTA provides specific commitments on trade in services between the two regions. This is particularly relevant for India, whose comparative strength in ICT and business services gives services trade a central role in its economic relationship with the EU. Besides, the agreement could also support the expansion of Global Capability Centres in India by improving predictability for cross-border services supply and strengthening links between Indian service providers and European clients. The trade between the EU and India is already coming from a good base, with over 180 billion euros worth of goods and services being traded per year, with almost 10 per cent of that figure coming from trade between India and Ireland, which is something to be proud of. Both sides stand to benefit from the increased competitiveness and openness that will come with this agreement. India will benefit from a massive new market, access to 450 million consumers in the European Union, and there’s a great keenness there to engage with India, for instance, in the tech and innovation sector, everything from that through to textiles, gems and jewellery and pharmaceuticals and so forth here. EU companies certainly will benefit from reduced tariffs into India on the likes of cars, on wine, on olive oil, and very importantly, as well for Ireland on spirits and on our whiskey as well. For Ireland, there are areas where much more business can be done with India, also on highend, high-tech services such as in the AI field, the life sciences, pharma and medtech, as well as fintech. Besides, continued enhanced cooperation in the likes of film and the cultural area. Ireland also wants to do a lot more in the research and innovation space and enter into key partnerships with third-level institutions and state agencies as well. For Ireland, the FTA is good in cybersecurity and software development as well, and India is looking at that part, too. So it is good that Ireland will provide this software, all the tie-ins between India and Ireland in the context of AI, in the context of cyber security, because we are seeing this geopolitical situation, mostly for cyber security, is the main part we have to focus on right now in this digital technology era. Both economies are very large in the technology and innovation space, so we definitely would see scope to collaborate. Ireland hosts the secondhighest number of students from India in the European Union and would like to continue this good relationship in the higher education space.