India is strategically leveraging its newly finalized trade agreement with the European Union to boost specific imports while simultaneously safeguarding the interests of its domestic industries, according to recent statements by Commerce and Industry Minister Piyush Goyal. The landmark deal, which is expected to take effect by the end of 2026, is designed to be a mutually beneficial pact that will fuel India's economic growth.
Under the terms of the agreement, India will reduce or eliminate tariffs on 96.6% of EU exports, while the EU will reciprocate with similar reductions, eventually covering nearly 99% of India's shipments by trade value. Goyal has emphasized that this is not a zero-sum game, but a "win-win" situation that will create a plethora of opportunities for Indian businesses and citizens.
One key aspect of India's strategy involves easing norms for Completely Knocked Down (CKD) imports. This move is intended to incentivize European Original Equipment Manufacturers (OEMs) to establish assembly units within India. The envisioned progression is for foreign companies to gradually shift from importing vehicles to assembling them locally, and ultimately, to full localization through the development of domestic supply chains.
Goyal has actively countered criticism of the India-EU Free Trade Agreement, asserting that it will open up large opportunities for businesses and citizens. He questioned claims that the agreement is "hugely hyped," highlighting the combined GDP of $25 trillion, combined global trade of $11 trillion, and a common market of 2 billion people that the deal brings together. He also noted that $33 billion of India's labor-intensive exports will go to zero duty on day one of the agreement.
Furthermore, Goyal emphasized that the FTA protects key sectors like dairy, agriculture, and fisheries. The agreement also addresses regulatory practices and safeguards the Indian automobile market. According to Goyal, India remains open to negotiating with economies that believe in fair trade, do not hurt India's interests and respect its sensitivities.
Goyal has stated that the EU trade deal offers an opportunity for Indian manufacturing to scale up and emerge as an alternative to China as a supplier for the 27-member European bloc. To take full advantage of the opportunities presented by the FTA, Indian industry needs to create capacities, ramp up production, and improve quality. The government is engaging with industry associations, regional and local chambers to make them aware of the opportunities presented by the FTAs that India has signed.
In addition to the EU deal, Goyal provided an update on trade negotiations with the United States, stating that they are "moving towards closure". While he did not provide a strict timeline, he indicated that no "sticky issues" remain to be resolved.
