India stands at a pivotal moment in global trade, with proposed free trade agreements (FTAs) with the European Union (EU) potentially unlocking access to a massive USD 875 billion market currently dominated by Chinese and ASEAN imports, according to Rahul Jain, India head at Boston Consulting Group (BCG). This follows India’s landmark FTA with the United Kingdom, signed last month, which is set to boost bilateral trade by USD 34 billion annually and provide duty-free access for 99% of Indian exports, including textiles, leather, and marine products.
Jain highlighted a global shift from “just-in-time” to “just-in-case” supply chains, driven by pandemic-era vulnerabilities and rising geopolitical tensions. “Geopolitics and economic nationalism now rival cost-efficiency in shaping trade,” he told PTI, noting that India’s strategic location, vast domestic market, young workforce, and manufacturing push position it to capitalize on this transformation.
The UK-India FTA opens a market importing USD 98 billion from China and USD 33 billion from ASEAN, while an EU-India deal could tap into a market importing USD 570 billion from China and USD 175 billion from ASEAN. “This is a rare opportunity for India to compete on tariff parity with ASEAN and gain a pricing edge over China,” Jain said, emphasizing the need for India to secure critical raw materials and invest in R&D to bolster sectors like semiconductors, electronics, and rare earth minerals.
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However, challenges remain. The EU’s Carbon Border Adjustment Mechanism (CBAM) could raise costs for carbon-intensive exports like steel and aluminium unless India accelerates decarbonization efforts. Jain stressed the importance of adopting cleaner technologies and renewable energy to meet stringent environmental standards. Additionally, India must enhance state-level infrastructure to attract foreign investment and compete with ASEAN’s lower labor costs and simpler regulations.
India’s Production Linked Incentive (PLI) schemes have already driven USD 20.3 billion in investments since 2020, fueling USD 191 billion in domestic production and creating nearly one million jobs. Successes in pharmaceuticals, electronics, and solar PV manufacturing— including India’s rise to producing 20% of global iPhones in FY25, with a target of 32% by 2026-27—demonstrate its growing prowess.
With US tariffs on Indian exports set to rise to 50%, strategic FTAs with the UK and EU offer a buffer against protectionism, opening new growth markets for labor-intensive sectors. “India is at an inflection point,” Jain said. “By leveraging FTAs, building domestic capabilities, and adapting to sustainability standards, India can emerge as a global manufacturing and technology powerhouse.”
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