.jpg)
2 hours ago
3
Article content
(Bloomberg) — India’s trade deal with the European Union gives businesses in the South Asian nation a reprieve from punishing US tariffs, keeping alive Prime Minister Narendra Modi’s ambition to make the country a global manufacturing hub.
THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY
Subscribe now to read the latest news in your city and across Canada.
- Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.
- Daily content from Financial Times, the world's leading global business publication.
- Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
- National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
- Daily puzzles, including the New York Times Crossword.
SUBSCRIBE TO UNLOCK MORE ARTICLES
Subscribe now to read the latest news in your city and across Canada.
- Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.
- Daily content from Financial Times, the world's leading global business publication.
- Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
- National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
- Daily puzzles, including the New York Times Crossword.
REGISTER / SIGN IN TO UNLOCK MORE ARTICLES
Create an account or sign in to continue with your reading experience.
- Access articles from across Canada with one account.
- Share your thoughts and join the conversation in the comments.
- Enjoy additional articles per month.
- Get email updates from your favourite authors.
THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.
Create an account or sign in to continue with your reading experience.
- Access articles from across Canada with one account
- Share your thoughts and join the conversation in the comments
- Enjoy additional articles per month
- Get email updates from your favourite authors
Sign In or Create an Account
or
Article content
Dubbed the “mother of all deals” by both sides, the free trade pact will open the EU market more widely to Indian exporters, especially in labor intensive industries like clothing and furniture.
Article content
Article content
Article content
The bloc will eliminate or reduce tariffs on 99.5% of imports from India, including phasing out duties on apparel and leather, sectors battered by US President Donald Trump’s 50% tariffs.
Article content
By signing up you consent to receive the above newsletter from Postmedia Network Inc.
Article content
Farida Group, one of India’s largest shoemakers, expects sales in Europe to rise 10% to 20% once the agreement is implemented, helping reduce its exposure to the US, previously its biggest market.
Article content
“The deal is a huge relief and is definitely going to help labor intensive sectors,” said Israar Ahmed, managing director, Farida Shoes Pvt Ltd. “With both the UK and EU deal, we get a big consolidated market and now we aim to increase our exports to this region to 50% to 60%.”
Article content
INDIA INSIGHT: Free-Trade Agreements Add to Manufacturing Appeal
Article content
India’s gains from the trade pact could be material over the medium term. Exports to the EU, which currently make up over 17% of India’s total overseas shipments, could rise by 5% to 7% within this decade, said Radhika Rao, a senior economist at DBS Bank. That would lift the bloc’s share of India’s exports above 20%, potentially overtaking the US, which currently accounts for over 18%.
Article content
Article content
Textile stocks rallied after the deal was announced on Tuesday, as investors priced in lower customs duties and stronger export prospects, while defense companies also gained on expectations of deeper cooperation with European partners and improved access to technology.
Article content
The EU deal could also revive appetite from foreign businesses looking to diversify their operations out of China, seeing India as a possible alternative location to set up factories for export into Europe. That offers a glimmer of hope to Modi’s faltering manufacturing push.
Article content
“With tariffs going to zero, there is interest among companies to produce in India,” said Ajay Sahai, director general of the Federation of Indian Export Organizations, a body under the Commerce Ministry. “They want to use India as one of their manufacturing bases to export to rest of the world and even to Europe.”
Article content
The prime minister’s “Make in India” campaign aimed to lift manufacturing to 25% of the economy, but the sector accounted for just 13% in 2024, down from 16% in 2015, according to World Bank data. Industry leaders said the recent flurry of dealmaking, led by the EU agreement, could help India better integrate into global supply chains.
English (US)