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On 27th January, 2026, India and the European Union completed negotiations on the largest trade deal ever signed by either side.
If you export to Europe, this trade deal changes everything
A textile manufacturer in Tirupur that is currently paying 12% EU tariffs? That’s gone.
A leather exporter in Kanpur who competes with Bangladesh on price? Now there’s a level playing field.
A gems supplier facing 4% duties while competitors don’t pay any? That advantage is gone.
The Numbers: What Zero Tariffs Actually Mean
Here’s the quick summary: Tariffs on almost all goods that India exports to Europe have been removed.
- 97% of EU tariff lines covered (basically, almost everything)
- 99.5% of Indian export value gets preferential access
- 70.4% of tariff lines get zero duty immediately when the deal enters into force
- 90.7% of export value clears customs duty-free from day one
- The remaining tariff lines phase to zero over 3-5 years
What this means: If you’ve been paying 10% duty to bring your goods into Germany, that will soon end. If you have been competing with suppliers from Vietnam/ Bangladesh who had duty-free access, you will now be on equal ground.
Timeline: When Does This Go Live?
- What has concluded?: The Negotiations, on January 27, 2026.
- What’s pending?: Legal review, translation and ratification.
- Scheduled to arrive into force: Late 2026 or early 2027
Awaiting approval from EU parliament, EU council and the Indian parliament, PM Modi, European commission president Ursula Van Der Leyen and president of European council Antonio Costa announced this trade deal.
Why Diversification Matters Now
The timing of this deal becomes highly relevant if you’ve been heavily dependent on the Middle East markets.
For exporters focused on the Middle East markets, the recent geopolitical developments in the region have introduced new risks: Payment uncertainty, higher shipping insurance and sanctions exposure. While these situations can stabalise in future, they’re a reminder that focusing in on a single market creates vulnerability for your business.
The free-trade agreement offers a strategic hedge: a large, stable market with transparent regulations, reliable payment systems, and, once it the agreement enters into force, exporters will see zero tariffs on most Indian goods.
This diversification is not about abandoning existing markets. It is about building resilience. The exporters who thrive in the long term are the ones who don’t depend on a single geography.
What This Means for You
The tariff benefits don’t apply yet. You cannot claim zero-duty access until the deal officially enters into force.
But you should start preparing now. The exporters who use this time to get ready, update pricing, secure compliance certifications, contact EU buyers, fix payment infrastructure – will be first in line when it goes live.
This deal opens the EU market of 450 million people with strong purchasing power and creates a combined free-trade zone of 2 billion people. The tariff barriers that made Indian goods more expensive are coming down.
Quick Reference: Which Sectors Benefit Most?
| Sector | Tariff Change | Current Exports | Opportunity | Products Covered |
| Textiles & Apparel | Up to 12% → 0% | $7.2B to EU | Potential of $30-40B (with 6-7 jobs) | Ready-made garments, fabrics, home textiles and yarns along with technical textiles |
| Leather & Footwear | Up to 17% → 0% | ₹20,900 cr ($2.4B) to EU | ₹8.71 lakh cr ($100B) EU market | Leather goods, footwear and apparel along with finished goods. |
| Gems & Jewellery | Up to 4% → 0% | $2.7B to EU | Trade between the two countries to be doubled to $10B in 3 years. | Colored gemstones, polished & cut diamonds, gold & silver jewellery, costume jewellery and precious metal articles. |
| Handicrafts & Home Décor | Labour-intensive products get tariff relief | ₹33,122 cr ($3.89B) total exports | EU is a major market (Germany, France) | Handloom textiles, wooden handicrafts, metal crafts, pottery & ceramics, stone crafts, artisanal home décor. |
| Chemicals | Up to 12.8% → 0% (97.5% of basket) | Significant EU exports | Enhanced competitiveness in vast EU chemical market | Organic chemicals, speciality chemicals, dyes & pigments, pharma intermediates, agrochemicals, petrochemicals, fine chemicals |
| Engineering Goods | Up to 22% → 0% | ₹1.44 lakh cr | ₹174 lakh cr ($2 trillion) EU market | Auto components, industrial machinery, electrical equipment, pumps, HVAC, agricultural machinery, hand tools |
| Pharmaceuticals | Tariff reduction + regulatory cooperation | 12% of pharma exports go to EU | Faster approvals, enhanced access | Generic medicines, formulations, active pharmaceutical ingredients, biosimilars, medical devices, diagnostic kits |
| Marine & Processed Foods | Select categories, tariff reductions up to 26% | ₹8,715 cr ($1B) to EU | ₹4.67 lakh cr ($53.6B) EU marine import market | Frozen shrimp & prawns, frozen fish, value-added seafood, marine extracts |
Textiles & Apparel: Up to 12% Advantage Incoming
For years, Bangladesh, Vietnam, Pakistan, and Turkey had duty-free access to Europe, where India didn’t. While an 8-12% tariff applied to India wasn’t huge, in a margin-tight business, it was enough to lose orders.
That changes once the deal enters into force. Your Indian textiles and apparel will clear EU customs duty-free, the same as Bangladesh and Vietnam.
The Opportunity
- India currently exports about $7.6 billion in textiles to the EU (FY25)
- The government projects that the number could grow to $30-40 billion
- That kind of growth could create 6-7 million new jobs (according to Commerce Minister Piyush Goyal)
- The textile and apparel import market of EU is worth over $250 billion annually
The EU’s largest textile importing markets are Germany, France, Spain, the Netherlands, Italy, and Poland, collectively accounting for the majority of EU textile imports. These
Whether those projections pan out depends on how many exporters actually move on this. But the math is simple: you’ll be up to 12% more competitive once the deal enters into force.
Here’s what you should do before the deal enters into force. Download a 30-60-90-Day Checklist
Leather & Footwear: The 17% Advantage
EU tariffs on Indian leather and footwear were as high as 17%, which will be gone once the deal comes into effect.
The Opportunity
- India currently exports about ₹20,900 crore ($2.4 billion) in leather goods to Europe
- The EU’s leather and footwear import market is valued at approximately ₹8.71 lakh crore ($100 billion)
- The tariff elimination places Indian products on par with exporters such as Bangladesh, Turkey and Vietnam, while China continues to face duties of 16-17%
The EU’s largest leather footwear importing markets are Germany ($5.7 billion), France ($3.9 billion), and the Netherlands ($3.2 billion), collectively accounting for nearly half of EU leather footwear imports. The removal of duties is expected to drive significant demand growth, particularly from major European fashion houses in Italy, France and Germany.
Currently, Europe accounts for almost half of India’s leather footwear exports. How should you prepare to capture the tariff advantage? Download a 30-60-90-Day Checklist
Gems & Jewellery: The 4% Edge
EU tariffs on Indian gems and jewellery were 2-4%, which will be gone once the dealcomes into effect.
The Opportunity
- Currently, India exports ₹23,500 crore ($2.7 billion) in gems and jewellery to the EU
- About 90% of the world’s cut and polished diamonds are processed by India
- The EU imports $11.37 billion worth of gold jewellery annually and India supplies just 4%
- 100% of Indian gems and jewellery exports to the EU will face zero duty from day one
As of today, Belgium dominates the global diamond trade with $54 billion in annual turnover, with 84% of the world’s rough diamonds passing through this square mile. Italy leads the European luxury with €7.7 billion in gold jewellery exports, driven by design excellence and century-old craftsmanship.
Major markets are rounded out by Germany and France: Germany prioritses quality and certification, and France drives the demand for colored gemstones with it’s high-end fashion houses.
China and Thailand have had zero-tariff access for years. This deal finally puts Indian exporters on equal footing.
Here’s everything you should do to grab this opportunity: Download a 30-60-90-Day Checklist
Handicrafts: 7 Million Artisans Get Market Access
Craftsmanship, sustainability and the story behind products are driving increased value among European consumers, exactly what Indian artisans offer.
The Opportunity
- India exported ₹33,122 crore ($3.89 billion) worth of handicrafts in FY25
- The sector employs over 7 million artisans, mostly in rural areas—over 56% are women
- 744 handicraft clusters across India produce over 35,000 different products
- Labour-intensive products will face zero tariffs under the deal rom day one
Germany takes the spot as the second-largest EU market for hand-printed textiles, imitation jewellery, embroidery and art metals. For handwoven textiles, home décor and artisanal products, France is a key market. Netherlands, Italy and Spain capture the major EU markets with growing demand for handcrafted home goods, ethnic home décor and fair-trade products.
What should you do before the deal enters into force? Download a 30-60-90-Day Checklist
Chemicals, Engineering, Pharma & Seafood: What Changed
The agreement just opened alot of doors for chemical exporters from Gujarat, machinery exporters from Pune, pharmaceutical exporters from Hyderabad or seafood from Andhra Praders.
If you export chemicals from Gujarat, machinery from Pune, pharmaceuticals from Hyderabad, or seafood from Andhra Pradesh, the deal just opened multiple doors.
What Actually Changed
- Chemicals: EU tariffs up to 12.8% eliminated on 97.5% of India’s chemical export basket
- Engineering goods: EU tariffs up to 22% eliminated (current exports: ₹1.44 lakh crore, EU market: ₹174.3 lakh crore)
- Pharmaceuticals: Tariff reductions + regulatory cooperation provisions for faster approvals (EU accounts for 12% of India’s pharma exports)
- Marine & processed foods: Tariffs up to 26% reduced on select categories
The Opportunity
The easy part is having zero-tariff. The winners stand out from the rest because of their ability to follow the EU regulatory compliance:
- Chemicals: REACH registration mandatory (6-12 months process)
- Engineering: CE marking required for machinery (3-6 months process)
- Pharma: EMA approval needed, but regulatory cooperation provisions speed this up
- Marine/Food: HACCP, FSSC 22000 certifications + farm-to-fork traceability non-negotiable
Where the Demand Is
- Germany: Largest importer of chemicals, machinery, and industrial equipment in the EU
- France, Italy, Netherlands: Strong demand for specialty chemicals, engineering goods, and pharma products
- UK: Major market for frozen seafood, ready-to-eat meals (Tesco, Sainsbury’s, Waitrose)
- France & Germany: Food retail giants (Carrefour, Auchan, Edeka, Rewe) actively sourcing processed foods
The compliance work is yours. The payment infrastructure doesn’t have to be. If you’re planning to scale EU exports, talk to an expert for collecting payments through bank transfers and get settlement in INR.
Getting Paid: The Infrastructure you Must Plan for
You’ve secured the tariff advantage. You’ve shipped the goods. Now comes the part most exporters don’t plan for: collecting payments from EU buyers without losing margin.
Here’s the reality: Between low payment success rates, hidden FX fees, and settlement delays, an inadequate payment infrastructure can eat up up to 5% of your order value.
How Cashfree Solves This
Cashfree’s International Payment Gateway and Multi-Currency Accounts are built for exporters who want to stop losing money on payments:
- Offering preferred payment modes: Including credit cards, Apple Pay, PayPal, or local bank transfers.
- Get settled in INR in 2 days: Not 5-7 days, your working capital moves faster.
- Transparent, flat pricing at 2.69%*: No hidden fee. You know exactly what you’re paying. (*Limited-time offer!)
- 85%+ success rates: More payments go through on the first try. Fewer failed transactions, fewer support headaches.
- Hold and convert with Multi-Currency Accounts: Collect EUR payments in your multi-currency account, and get settlement in INR.
- Compliance handled: FIRS reports available on demand.
Need more details? Speak to an expert → Schedule a Call
The India-EU deal is the biggest trade deal India has signed. What it means for your business depends on how you capture the opportunities it creates, including how you collect payments.
