India’s newly concluded free trade agreement with the European Union is set to provide a significant boost to Prime Minister Narendra Modi’s flagship Make in India initiative, offering exporters relief from steep US tariffs and expanding access to one of the world’s largest markets.
Touted by negotiators on both sides as the “mother of all deals,” the pact will sharply lower trade barriers for Indian goods entering the EU. Under the agreement, the bloc will eliminate or reduce tariffs on 99.5% of imports from India, with major benefits for labour-intensive sectors such as apparel, footwear, leather goods and furniture.
The timing is crucial for Indian manufacturers, many of whom have been hit hard by the United States’ decision to impose tariffs of up to 50% on certain imports under President Donald Trump. By contrast, the EU deal will gradually phase out duties on key Indian exports, helping firms diversify away from an overreliance on the US market.
Farida Group, one of India’s largest footwear manufacturers, expects the agreement to translate into a 10% to 20% increase in European sales once it comes into force. The company has been actively reducing its dependence on the US, which was previously its biggest export destination.
“This deal is a huge relief and will clearly benefit labour-intensive industries,” said Israar Ahmed, managing director of Farida Shoes Pvt Ltd. “With access to both the UK and EU markets, we now have a large, consolidated export base. Our goal is to raise exports to this region to 50%–60% of our total.”
Analysts say the agreement could play a pivotal role in positioning India as a global manufacturing hub, aligning with the government’s long-term strategy to attract investment, create jobs and integrate more deeply into global supply chains.