India-EU FTA to boost trade, not harm domestic industry: GTRI
25 Jan 2026

The Global Trade Research Initiative (GTRI) has said that the India-EU free trade agreement (FTA), which will be announced on January 27, is likely to lower costs and expand trade.

The think tank emphasized that the economic relationship between India and the European Union (EU) is not one of rivalry but partnership.

This is because both parties operate on "different rungs of the value chain."

India and EU's complementary trade roles
Trade dynamics

GTRI founder Ajay Srivastava explained that India mainly exports labor-intensive, downstream, and processing-based goods. Meanwhile, the EU provides capital goods, advanced technology, and industrial inputs.

This structural complementarity is why the upcoming FTA is expected to lower costs and expand trade instead of threatening domestic industry.

In FY2025 alone, India-EU goods trade exceeded $136 billion (over ₹11 lakh crore).

Tariff cuts to benefit producers and consumers
FTA advantages

Srivastava also noted that tariff cuts under the FTA would mainly reduce input costs, deepen value-chain integration, and increase volumes.

These are classic gains of a free trade agreement (FTA) that benefit both producers and consumers on either side.

Indian exports to the EU include smartphones, garments, footwear, tires, pharmaceuticals among others.

These goods largely replace EU's imports from third countries, rather than competing with EU manufacturing which has long offshored these activities.

EU's exports to India boost productivity
Import benefits

The EU exports high-end machinery, aircraft, core electronic components, chemicals among other things to India.

These goods feed India's factories and recycling industry as well as MSME clusters. This raises productivity and export competitiveness in the country.

Srivastava said tariff elimination compresses the input costs instead of crowding out industry.