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India – EU trade deal – Textile, Footwear, Jewellery and Marine Products to benefit while negligible impact for autos

ICICIdirect Research 30 Jan 2026 DISCLAIMER

India-EU trade deal will substantially benefit labour intensive sectors such as textile (including apparels), gems & Jewellery, Footwear and Marine products with no tariff on export of products to EU27 countries. Textile, Footwear, Jewellery and Marine Products to attract Zero tariffs; imported beer & wine to cost less
Indian apparel and home textile sector has 2% and 5% market share respectively in EU imports of apparels (~USD197bn) and home textile (~USD21bn) products. India was paying a tariff of 12% on textile exports, which is now reduced to zero providing strong competitive edge to China and Bangladesh. Key beneficiaries are KPR Mill (65% revenues comes from EU), Gokaldas Exports, Pearl Global and Indo Count Industries.
Indian footwear sector has 3% share in EU’s footwear imports. With tariff reduction to zero from earlier 17% will provide opportunities for domestic footwear players to compete with countries such as Vietnam and China. We might see Indian footwear companies installing global standard capacities to explore export opportunities. Key beneficiaries would be Relaxo Footwear, Campus Activewear and Bata India.
India marine product exports to EU 27 countries stands at $1bn (~3% share). EU has recently 102 new fishery establishments, provide significant boost to India’s marine exports (with 604 EU-approved units). With reduction in tariff to Zero from ~26% earlier will further boost the Indian marine product exports to EU27 countries. Key beneficiaries would be Apex Frozen and Avanti Feeds.
India’s gems & jewellery exports to EU 27 countries are around $0.3bn. Tariff on Indian jewellery exports has reduced to zero from 4% earlier.  Key beneficiaries would be Titan.

India – EU FTA: Auto sector turf protected, luxury segment prices to reduce marginally
In auto, India will cut import duties on a limited number of European cars to about 30-35%, down from current levels i.e. 70–110%.
Although import duties on cars will eventually fall from 110% to 10% by the fifth year, this applies only within tightly controlled quotas that start at 100,000 units and rise gradually to 250,000 units by the 10th year, —still ~2% of India’s annual car market.
Importantly, these reduced tariff rates apply to cars prices above 15,000 Euros which eventually will have a landed price of > 22 lakh rupees. Crucially, nearly 90% of India’s passenger vehicle sales lie below the ₹22-lakh bracket, keeping the mass segment insulated.
EV concessions are even more guarded: with no tariff concession for the first 5 years, thereby protecting the interest of domestic OEM’s who are scaling their product offering in this domain. Moreover, the minimum threshold price to be eligible for reduced tariffs in the case of EV’s is 20,000 Euros (landed cost at ~30 lakh rupees) with a limit of 90,000 units by the 14th year.
India – EU FTA also proposes to reduce import duty on CKD (completely knocked down) car imports from existing 16.5% to 8.25% for 75,000 fossil-fuel vehicles annually and reducing it to 50,000 units by year 10. This we believe leaves scope for some price reduction of luxury cars in India which are largely CKD imports (~95%). The gains however will be limited by recent depreciation of Indian rupee and rise in commodity prices.
The structure of the deal clearly favours premium and luxury European brands (can potentially expand the luxury car segment in India which is pegged at ~52,000 units p.a.), while shielding mass-market segments and the strategic EV ecosystem at home for players like M&M, Maruti & Tata Motors.
We see limited impact of this lower import tariffs on Indian Auto OEM space which is steadily progressing to clock ~45 lakh units’ sales volume in FY26E and expected to grow 7% going ahead amidst GST tailwinds.
By limiting tariff cuts to ICE cars above €15,000 and capping volumes through quotas, India has signalled a cautious opening rather than a full-scale liberalisation of its auto market

India–EU FTA opens new growth avenue for Indian IT
The progress on the India–EU Free Trade Agreement, is seen as a structural positive for Indian IT services. The pact includes a proposed European Legal Gateway Office in India to ease mobility for Indian technology professionals and enhances cross-border delivery of IT services, while also creating a pathway for broader social security agreements with remaining 13 out of 27 EU member states over the next five years, which is an extension of last year’s Double Contribution Convention covering the UK.
This significantly improves cost competitiveness for Indian firms by reducing dual social security contributions and boosting take-home pay for employees on temporary assignments of upto 3 years.
Beyond immediate mobility gains, the agreement broadens access to Europe’s large services market, strengthens collaboration in AI, semiconductors and digital technologies, and is expected to attract greater EU investment and R&D partnerships into India’s tech ecosystem. At a time of tighter US visa regimes (H1B) and geopolitical uncertainties, diversifying geographic exposure toward Europe could enhance onsite delivery flexibility and deepen client engagement for Indian IT vendors.
We believe the FTA will likely benefit the players such as Mastek (66% of mix from UK) and Coforge, FSL, Newgen and more who have ~25-30% of their revenue mix from UK/EMEA, with potential for higher-value work, a more resilient demand pipeline and expanded opportunities for Indian talent deployment in the region.

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