India-EU FTA Day 1: Which Sectors Win Most and Which Win Least

When India-EU FTA enters force, the Day-1 tariff impact will vary enormously by sector. AJG has modelled FTA impact using expected elimination schedules, India' current EU export volumes, and EU MFN/GSP rate structures.

Largest absolute Day-1 duty savings (annual EUR value): (1) Textiles and garments: EUR 750M (from 12% MFN to 0%); (2) Engineering goods: EUR 420M (from 3.7-7.5% to 0%); (3) Chemicals: EUR 380M (from 3.5-6.5% to 0%); (4) Leather goods and footwear: EUR 290M (from 8-12% to 0%); (5) Agro-food: EUR 180M (TRQ-based, partial Day-1 benefit).

Largest percentage competitiveness improvement: Sectors with highest MFN rates see the biggest competitive swing. Garments: 12 percentage point price advantage on EU market. Footwear: 8-17 percentage points. Processed food: some categories 20%+ to 0%.

Sectors with limited Day-1 benefit: Pharmaceuticals (already at 0-6.5% with some GSP, limited incremental gain). IT services (duty-free already via Mode 1). Gems (low duty already).

The competitive paradigm shift for textiles: Garments from India at 0% duty will be competitive with Bangladesh (0% EBA) and Vietnam (0% EVFTA) for the first time. Indian garment exporters should build EU buyer relationships NOW — before FTA — so they can scale immediately on Day 1 of entry into force. The exporters who are in EU buyers' supplier lists at FTA Day 1 will capture disproportionate share of the tariff-driven volume shift.