India-E.U. FTA: The “Mother of All Deals”: High-Potential Sectors & Stocks for India

After twenty years of long negotiations, the E.U. and India finally concluded the Free Trade Agreement (FTA) in principle on January 27, 2026, during the bilateral summit in New Delhi. The FTA is expected to be effective from January 27, upon the finalisation of the legal texts, formal signing, and subsequent ratifications & approvals by the respective Parliamentary systems/Union Cabinets.  

Dubbed as ‘mother of all trade deals’ after ‘mother of all trade negotiations’ involving nearly two decades of intermittent talks (relaunched in 2022), the IN-E.U. FTA is a comprehensive trade & geopolitical pact between India and 27 member states. Of the European Union. It’s a cornerstone of the global trade & geopolitics, especially amid the current environment of U.S./Trump hegemony and 50% U.S. tariffs on India.  The E.U.-IN FTA is a landmark achievement in rule-based bilateral economic relations, representing approximately 25% of global GDP, a third of global trade, and a combined market of nearly 2 billion consumers. This vital FTA between the two largest democracies' blocs in the world is an example of normal trade & diplomatic relations rather than ‘Trump’ Truth’ led global trade disruptions and geopolitical fragmentations.

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The latest FTA between the E.U. and India delivers preferential market access for each other through the elimination or substantial reduction of both tariffs & non-tariffs barriers (NTBs) on the vast majority of goods, alongside liberalisation in services, enhanced mobility provisions (for Indian skilled workers to the E.U.)-safeguarding certain vulnerable sectors (economically & politically sensitive, especially for India). The aim for Indian policymakers is now to prepare the economy to face the global competition on an equal footing after decades of protectionism since 1947 independence.  

By securing almost 0% tariffs on almost all (~99.5%) Indian goods exports to the E.U., covering ~$33 billion in labour-intensive MSMEs goods, previously facing 4-26% tariffs-India can offset U.S./Trump pressure of trade negotiation at gunpoint. India is also eyeing to boost export diversifications & resilience, create millions of job opportunities, especially in textiles, gems & jewelleries, pharmaceuticals, and iron & steel. For the E.U., phased access to India’s growing market of almost 1.5 billion is a golden opportunity-reduced tariffs (from 25-110% to 10/15-40%) on machinery, chemicals, and autos/EVs with quotas—provides competitive advantages and savings of €4 billion+ annually in import duties. Later, India may also fully open and recalibrate/cut tariffs on E.U. spirits and farm products into India, along with the rationalisation of NTBs.

Sector Outlook: Key Beneficiaries, Protected Areas, and Risks

Overall goods + services trade between India and the E.U. is now over $200 billion. The E.U. is India’s 2nd largest trade surplus, with around $36 billion after the U.S. at ~$56 billion. India is now aiming to more than double the overall trade to around $500 billion each with both the E.U. and the U.S. by 2030, taking advantage of the global supply chain diversification strategy under the China+1 plan. Trump’s policy shocks have accelerated the FTA negotiations between the E.U. and India-world’s two largest democracies. These also aligned with India’s multi-trade alignment strategy, including diversification of U.S. exports to other countries and reducing U.S. dependencies on trade, remittances, techs and also defences.   

India is a major exporter of textiles, gems & jewellery, pharmaceuticals, chemicals, engineering goods, and marine products to the E.U.. India’s labour-intensive and manufacturing segments, MSMEs, gain most, with zero-duty access, levelling competition against Bangladesh, Vietnam, and others, potentially adding billions in exports and millions of jobs.

Positively Impacted Sectors for India after the FTA

• Textiles, Apparel, and Garments: Previous tariffs of 10–12% eliminated; exports (~$7 billion) may surge to $35 billion, generating 6.5 million jobs in this labour-intensive sector.
• Leather, Footwear, and Handicrafts: Previous tariffs up to 17% removed; boosts MSMEs.
• Gems and Jewellery: Previous 4% tariffs cut to zero; boost for diamonds and jewellery.
• Marine Products / Seafood: Previous tariffs up to 26% slashed; immediate gains for shrimp/processors.
• Chemicals, Plastics, Rubber: Tariffs reduced from 6.5–12.8%; enhanced viability.
• Engineering Goods, Auto Components, and Electronics: Better access supports manufacturing.
• Pharmaceuticals: Generics/APIs strengthened via regulatory alignment.
• Sports Goods, Toys, and Niche Manufacturers: Zero tariffs unlock opportunities.
• Services (IT, professional, and education) benefit from liberalisation and mobility, aiding digitally delivered service exports and talent flows.

Protected or Limited-Impact Sectors:  India safeguarded economically & politically sensitivities.

• Agriculture/dairy (milk, cheese, poultry, cereals, sugar, rice) is excluded or highly protected. 
• Full vehicles face phased reductions with quotas (~250,000/year initially), limiting mass-market disruption.

Negatively Impacted or Pressured Sectors: Phased tariff cuts/concessions also create calibrated competition.

• Automobiles (Premium/Luxury Segments): Tariffs from 70–110% phased to 10% (initially 30–35%); potential pressure on domestic premium players from E.U. brands (Volkswagen, Mercedes-Benz, BMW), but quotas and slower EV phasing mitigate the risk to some extent.
• Alcoholic Beverages (Liquor, Wine, Spirits, Beer): Duties from 110–150% cut to 20–50% phased; premium E.U. imports are cheaper, impacting domestic players in urban markets in premium segments. 
• Processed Foods / Select Agri: Tariff cuts on olive oil, chocolate, pasta; localised may feel pressure in premium brands.

Overall, the U.S.-IN FTA is balanced—prioritising export-led growth while minimising domestic disruption through phasing, quotas, and exclusions. The market reaction was positive for EOUs (export-oriented units/sectors)-like textiles, while muted/negative for automobiles and liquors. 

Overview of Selected Stocks: Potential Beneficiaries with High European/E.U. Exposure

• Marine Products / Seafood  

  • Apex Frozen Foods (~30% E.U. exposure): Leading shrimp exporter; zero-duty drives volumes.
  • Avanti Feeds Ltd (~17% E.U. exposure): Feed/processing and diversification gains.

• Auto Components and Engineering  

  • Bharat Forge Ltd (~35% E.U. exposure): Forgings.
  • Tata Motors Ltd (~40% E.U. exposure, via JLR): Vehicles/parts.
  • Precision Camshafts Ltd (~23% E.U. exposure): Engine parts
  • Sona BLW Precision Forgings Ltd (~22% E.U. exposure): Driveline.
  • Samvardhana Motherson International Ltd (~31% E.U. exposure): Auto components supplier.
  • Endurance Technologies Ltd (~23% E.U. exposure): Suspension.

• Pharmaceuticals and Chemicals  

  • Rain Industries Ltd (~40% E.U. exposure): Carbon/chemicals.
  • Hikal Ltd (~28% E.U. exposure): Intermediates/APIs
  • Indoco Remedies Ltd (~49% E.U. exposure): Formulations.
  • Divis Laboratories Ltd (~33% E.U. exposure): Synthesis molecules/drugs.
  • Gland Pharma Ltd (~20% E.U. exposure): Injectables.
  • Aurobindo Pharma Ltd (~30% E.U. exposure): Branded generics

• Textiles and Apparel  

  • K P R Mill Ltd (~24% E.U. exposure): Integrated value chain
  • PDS Ltd (~71% E.U. exposure): Sourcing/raw materials
  • Trident (~19% E.U. exposure): Home textiles.
  • Gokaldas Exports Ltd (~33% E.U. exposure): Garments.
  • Welspun Living Ltd (~21% E.U. exposure): Home textiles.
  • Vardhman Textiles Ltd (~23% E.U. exposure): Cotton Yarn/fabrics.

Conclusion

The India-E.U. FTA is transformative, offering export-led growth, job creation, and resilience against protectionism. India’s labour-intensive sectors emerge as clear winners, with strategic pacts adding geopolitical depth. The real benefit may come from FY: 2027-28 onwards, after the actual implementation of the deal from January’27 by both countries. In reality, India’s key exports sectors-such as textiles, gems & jewelries and marine products may get immediate tariff cuts soon after the actual implementation of the FTA, while E.U. exports of autos/EVs under reduced tariffs (110% to 40% and then 10%) may be phased out over 3-10 years (2030-2037), while E.U. tariffs reductions on certain petchem products may also take 7-10 years. 

As the stock market is a forward-looking ecosystem, India’s ‘Wall Street’ reacted positively after the marathon FTA negotiations between the E.U. and India concluded formally on January 27, 2025, amid Trump/U.S. BTA uncertainty. The market is now also expecting that Trump/U.S. will now accelerate trade negotiation talks with India after the E.U. FTA success, and the U.S.-IN BTA may also be concluded by March’26.