India-EU Free Trade Agreement Poised to Transform Gujarat's Export Landscape
The signing of the landmark India-EU Free Trade Agreement (FTA) is expected to provide a substantial boost to Gujarat's export sector, with industry leaders anticipating trade growth that could surpass the $136 billion recorded in 2024-25. This strategic pact is set to catalyze economic activity across multiple industries, positioning Gujarat as a primary beneficiary due to its robust manufacturing infrastructure and superior port connectivity.
Industry Optimism for Doubled Exports in Key Sectors
Industry players across Gujarat are expressing strong optimism that the FTA could help double Indian exports within three years in critical sectors including textiles, pharmaceuticals, chemicals, and engineering. The elimination of tariff barriers is seen as a game-changer that will enhance competitiveness and open new market opportunities.
Pathik Patwari, chairman of the ICC Gujarat State Council, emphasized the significance of this development for Indian industry. "The India-EU FTA represents a promising advancement that aligns with shifting geopolitical realities, creating opportunities that were previously underutilized," he stated. "This agreement enables Indian exporters to diversify their client base across global markets rather than relying on a single geography. Sectors such as pharmaceuticals, chemicals, textiles, engineering, and both natural and lab-grown diamonds have substantial demand in European markets."
Textile Sector Transformation Through Enhanced Market Access
The FTA is anticipated to serve as a turning point for India's textile industry, improving price competitiveness and market access during a period of global sourcing realignment. With reduced duties and clearer regulatory alignment, exporters envision opportunities for higher-value and sustainable manufacturing rather than volume-driven growth.
Ronak Chiripal, promoter of Chiripal Group, highlighted how the agreement addresses long-standing disadvantages for Indian exporters in Europe. "The FTA opens access to a unified market of nearly 2 billion consumers and creates a level playing field for Indian textiles," he explained. "Predictable market access and alignment with European sustainability standards will encourage investments in value-added manufacturing, man-made fibres, processing, and finishing areas where India has traditionally faced challenges."
Supporting this positive outlook, Bharat Chhajer, former chairman of the Powerloom Development and Export Promotion Council (PDExcil), noted that India's textiles and apparel exports to the EU have grown at a 6.6% compound annual growth rate since 2020-21, reaching $7.6 billion in 2024–25. "Readymade garments constitute nearly 60% of these exports. The FTA will accelerate growth opportunities across the industry," he affirmed.
Chemical Industry Eyes Market Share Shift from China
Gujarat-based chemical manufacturers are particularly optimistic about the FTA's potential to dramatically improve their competitiveness in European markets, where Indian products have historically faced steep duties. Ankit Patel, vice-chairman of Chemexcil, revealed that import duties of up to 18% on Indian chemical products will now be largely eliminated.
"Most of our chemical exports to the EU will transition to a duty-free regime," Patel stated. "This development will significantly benefit Gujarat's chemical industry and provide Indian players with a genuine opportunity to capture market share that has been dominated by China until now."
He further noted that India's chemical exports to the EU declined from $5.34 billion in 2022-23 to $4.43 billion in 2024-25 due to geopolitical disruptions, making the timing of this agreement particularly crucial for recovery and growth.
Pharmaceutical Sector to Benefit from Intermediate Exports
While the pharmaceutical industry expects limited direct gains for finished formulations from the India-EU FTA—since medicines already enter European markets largely duty-free—exporters anticipate clear advantages in intermediates and key raw materials. Viranchi Shah, former president of the Indian Drug Manufacturers' Association, emphasized that the agreement would support higher exports of pharma intermediates and key starting materials (KSMs) through duty elimination.
"Although formulations may not experience direct benefits, the removal of duties on intermediates and select KSMs will drive substantial export growth," Shah explained. He added that the trade pact would also facilitate smoother and more predictable market access for Indian pharmaceutical products.
The comprehensive nature of the India-EU Free Trade Agreement, combined with Gujarat's strategic advantages in manufacturing and logistics, positions the state for unprecedented export growth across multiple sectors, potentially reshaping India's trade dynamics with European markets in the coming years.
