India and the European Union have formally concluded their Free Trade Agreement (FTA), a landmark deal covering nearly 99% of Indian exports to the EU and 97% of EU exports to India. While the pact is expected to deepen economic engagement over the long term, brokerages have offered measured assessments on its immediate sectoral impact, particularly on autos, textiles, and exports.
Autos: Limited Immediate Pressure
Brokerages such as JPMorgan and Jefferies indicate that the near-term impact on Indian automakers is modest. Tariff reductions may raise European vehicle imports by around 1 lakh units, primarily in the luxury segment, representing just 2% of total vehicle demand in India. Many EU car brands already assemble vehicles locally using CKD kits under favourable duties, limiting potential disruption. However, auto components, EV supply chains, and tyres could see moderate export growth of 5–7% amid phased liberalisation.
Textiles and Labour-Intensive Exports: Medium-Term Boost
Avendus Spark highlights textiles and apparel as key beneficiaries, with tariff cuts enhancing India’s competitiveness versus regional peers like Bangladesh and Vietnam. Labour-intensive sectors stand to gain from zero-tariff EU access, supporting the China+1 diversification strategy noted by Citi. However, ratification timelines may push these gains into 2027–2028, implying back-ended benefits.
Also Read: Will the India-EU Trade Pact Boost Ties amid Global Instability?
Other Sectors and Strategic Implications
Pharmaceuticals, engineering goods, and chemicals are likely to see incremental growth, while sensitive sectors like dairy and certain agri products remain protected. Kotak Institutional Equities views the FTA as a strategic hedge against US tariff uncertainties and global geopolitical risks. Select consumer categories, such as chocolates and pet food, could face heightened competition, and luxury autos may experience phased pressure. IT and services exports may benefit over time through improved mobility, data adequacy, and market access.
Overall, brokerages describe the deal as structurally positive with medium- to long-term gains, while near-term market impact is likely modest, emphasising gradual opportunities across export-orientated and labour-intensive sectors.
Also Read: Piyush Goyal: India-EU FTA to Form 2 Billion-Person Market, Likely by End-2026