Mumbai, Jan 23 (SocialNews.XYZ) India is projected to unlock $10–11 billion in additional exports to the European Union (EU) without creating new product capacity, by redirecting existing highly tariffed US-bound trade under the proposed India-EU Free Trade Agreement, a report showed on Friday.
India's top 15 product categories exported to the United States account for nearly 52 per cent share valued at around $45 billion.
Of these, around $21 billion is concentrated in 12 categories that currently have a limited presence in the EU’s import basket.
According to the report by Rubix Data Sciences, if even 50 per cent of these flows are gradually redirected to the EU through tariff reduction, rules-of-origin alignment, and improved market access, the shift could materially alter India-EU trade dynamics beyond their current stagnation.
This potential rebalancing comes at a critical moment for bilateral trade especially since the EU has suspended export benefits for certain labour-intensive Indian goods that were previously covered under the Generalised Scheme of Preferences (GSP).
According to Rubix’s latest EU Country Report, India–EU goods trade has remained largely flat at $136.5 billion for three consecutive years (FY2023–FY2025), even as the EU emerged as India’s largest bilateral goods trading partner in FY2025, marginally overtaking the United States.
India accounts for only 2.9 per cent of the EU’s imports and 1.9 per cent of its exports, highlighting the gap between strategic intent and realised trade outcomes.
“Trade flows are also highly concentrated, with over 70 per cent of India’s exports to the EU directed to just five member states, increasing exposure to growth slowdowns in core European economies,” said the report.
The EU, a $21.1 trillion economic bloc in 2025, is experiencing moderate and uneven growth of 1.4 per cent, with its largest economies, Germany, France, and Italy, showing subdued momentum.
Meanwhile, the EU’s goods trade surplus with the US widened to $164 billion in 2024, driven by strong exports of high-value manufactured goods, including machinery, vehicles, pharmaceuticals, and chemicals.
However, renewed tariff threats and policy uncertainty risk disrupting these flows, reinforcing the strategic importance of trade diversification for the EU, said the report.
“Against this backdrop, the proposed India–EU Free Trade Agreement takes on added significance,” it added.
Beyond goods trade, the EU remains one of India’s most significant investment partners. Cumulative FDI from the EU into India stood at $119.2 billion between April 2000 and December 2024, accounting for 16.5 per cent of India’s total FDI equity inflows.
Source: IANS
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