India-EU FTA Seen Expanding Trade Opportunities and Export Diversification: Report

Report highlights potential gains in trade, market access and long-term demand growth under the proposed India-EU Free Trade Agreement

Prime Minister Narendra Modi’s recent four-nation tour of Europe was aimed at consolidating strategic relations with key European partners amid evolving geopolitical and trade conditions.

According to a report by the Porelia Research Foundation (PRF), the finalisation of the India-EU Free Trade Agreement represents a significant development in economic cooperation between the two sides.

The report states that reducing barriers to goods and services could enable the EU to diversify its partnerships and strengthen its presence in one of the world’s fastest-growing markets. At the same time, it could support India’s efforts to expand exports, attract investment, upgrade industries and integrate more deeply into global value chains.

Trade Relationship in Focus

The report highlights that in 2024, the EU was India’s second-largest trading partner after China, accounting for 11 per cent of India’s total trade. India represented 1.7 per cent of the EU’s global trade and ranked as its tenth-largest trading partner.

While the EU remains a major export destination for India, the report notes that India continues to represent a relatively smaller share of EU trade despite its growing importance as a partner.

According to the report, the India-EU FTA could help narrow this gap by supporting stronger Indian export growth into European markets while improving access for EU companies operating in India.

Export Diversification and Market Access

With a market of close to 1.5 billion people and expanding middle-class demand, India offers the EU an important source of export diversification and long-term demand growth.

For India, the agreement presents an opportunity to expand exports and increase participation in the EU market. Under the proposed FTA, the EU has committed to eliminating tariffs on over 90 per cent of tariff lines, covering 91 per cent of the trade value.

The report states that these measures could create opportunities for export growth and increase India’s share of EU imports.

Tariff Reductions Across Key Sectors

The report further notes that the FTA is expected to deepen EU penetration in high-value sectors while increasing India’s access to advanced technologies and industrial inputs.

According to the report, the provisions are expected to reduce tariff disadvantages faced by Indian exporters in sectors where even small price differences can influence market competitiveness.