India–EU FTA: "Mother of All Deals" in numbers, sectors, and real-world impact

India and the European Union have concluded a Free Trade Agreement (FTA). The scale is the headline: two large markets coming under one trade framework, with wide tariff cuts spread across thousands of product lines and phased timelines.

For Indian professionals, this matters for one main reason: trade deals do not stay inside policy rooms. They show up in exports, factory orders, sector momentum, hiring, input costs, and eventually in a few consumer categories too.

Trade deal at a glance

Tariff cuts: where the bulk of the action is

EU side: what changes for Indian exports

India side: what changes for EU exports into India

Tariff cuts do not translate into instant retail price cuts. Final pricing depends on GST, competition, and distribution margins. The early transmission is usually through business costs and order flows, not consumer shelves.

Sector and product snapshot: exports, current EU tariffs, and what changes

A combined basket of labour-intensive sectors such as textiles, apparel, marine, leather, footwear, chemicals, plastics/rubber, sports goods, toys, and gems and jewellery is sized at ~USD 33 bn (INR 2.87 lakh crore) of exports, with EU duties stated in the 4%–26% range, moving toward zero duty from the start for the covered basket.

What stays protected and why that matters

Large FTAs usually have two parallel tracks: opening up where trade is scalable, and keeping safeguards where domestic sensitivity is high. Here, safeguards and protection are explicitly maintained for several agriculture and food segments, including dairy, cereals, poultry, soymeal, and some fruits and vegetables.

This design choice matters because it reduces the political and economic shock risk in sensitive areas while still pushing export competitiveness in manufacturing and labour-intensive categories.

What changes on the ground for businesses

Exporters: pricing power and market access

If a product moves from a meaningful import duty to zero duty in a large market, it improves competitiveness even if nothing else changes. That can show up as:

• better landed pricing versus competitors,
• more stable buyer interest over multi-year contracts,
• more incentive to invest in capacity, quality control, and supply chains.

Sectors with already large bases into Europe such as engineering goods and textiles are positioned to benefit from this dynamic simply because small percentage changes on large trade numbers can create a big absolute impact.

Importers and domestic competitors: phased pressure

On the India side, tariff elimination is a mix of immediate and phased cuts. That structure typically creates:

• slow-build competitive pressure in categories where imports rise,
• a longer adjustment runway for domestic producers,
• uneven impact since phase-outs differ across product lines.

What changes for households

Some imports can become more competitively priced over time, but the impact is uneven and often delayed because:

• tariff changes are phased for many lines,
• GST remains the larger component in many categories,
• pricing power sits with brands and distributors.

Where households may notice earlier effects is indirect: jobs, wage growth in export clusters, and business expansion in sectors that ramp up Europe-focused orders.

Who benefits more and who feels the squeeze

Likely beneficiaries

• Export-oriented, labour-intensive segments where duties were a clear handicap such as textiles, leather/footwear, marine products, and parts of chemicals and engineering.
• MSME-linked clusters that supply these export chains.

Likely pressure points

• Domestic producers in select categories where EU imports become more competitive as India’s tariffs reduce, especially if the category is already price-sensitive and import penetration grows.

Takeaway

The announced terms point to a wide market-access shift for Indian exporters into Europe, paired with a phased opening on India’s side and explicit safeguards for sensitive food and agriculture categories. If execution stays on track, the early signals should show up in export momentum and sector-level order books first, with consumer-facing changes being narrower and slower.

Disclaimer: This content is for general information and education only. It is not investment advice, a recommendation, or a solicitation to buy or sell any security or financial product.