India-EU FTA to help redirect $10-11 bn exports from US to Europe

The proposed India-European Union Free Trade Agreement (FTA) could help India redirect exports worth an estimated $10-11 billion from the United States to the European Union, reducing dependence on a single export market while expanding India’s presence in Europe, according to a report by Rubix Data Science.

The report said that by streamlining customs procedures and reducing technical and regulatory barriers, the India-EU FTA could reinvigorate bilateral goods trade and help diversify India’s export destinations beyond the major EU member states. It stated, “Export diversification efforts could also help India redirect a portion of exports currently bound for the United States, with an estimated $10-11 billion potential shift into the EU market.”

According to the report, export diversification could allow India to shift a portion of exports currently destined for the United States into the European market, thereby strengthening India’s export resilience amid changing global trade dynamics.

The report said the FTA is expected to significantly improve India’s international competitiveness by gradually phasing out tariffs on key labour-intensive and high-value export sectors, including textiles, leather, engineering goods and chemicals. It added that preferential market access under the agreement would restore tariff advantages that India lost following the withdrawal of the Generalised Scheme of Preferences (GSP), enhancing the competitiveness of Indian exports against other global suppliers.

The report also highlighted the potential benefits for India’s services sector. It said predictable market access in sectors such as information technology, professional services, education, financial services and construction would support the expansion of India’s globally competitive service providers across Europe.

It noted that the European Union has historically been a major investor in India, accounting for around 16.5 per cent of the country’s total FDI equity. The agreement is expected to attract higher and more diversified investments into sectors such as renewable energy, manufacturing, chemicals and services.

The report comes as Union Commerce and Industry Minister Piyush Goyal is leading a high-level Indian business delegation to Spain, Belgium and Finland from July 13 to 17 to strengthen economic partnerships with Europe. The visit is focused on boosting trade, investment, technology, innovation and sustainability, while also leveraging opportunities arising from the proposed India-EU Free Trade Agreement.

The Indian delegation includes leading companies from sectors such as advanced manufacturing, clean energy, digital technologies, gems and jewellery, food processing, healthcare and design.

Earlier this year, on January 27, Prime Minister Narendra Modi and European Commission President Ursula von der Leyen jointly announced the conclusion of the India-EU Free Trade Agreement during the 16th India-EU Summit held in India.

According to official figures, bilateral trade in goods between India and the European Union stood at $136.54 billion in 2024-25, with India’s exports valued at $75.85 billion and imports at $60.68 billion. Trade in services between the two sides reached $83.10 billion during the same period.

The report said the India-EU FTA is expected to deepen economic integration between two of the world’s largest economies, creating fresh opportunities for trade, investment and long-term economic cooperation.