EU–India FTA could boost bilateral trade by up to 65%, incomes to rise: Report
&imwidth=600&imheight=450&format=webp&quality=medium "EU–India FTA could boost bilateral trade by up to 65%, incomes to rise: Report")
Representational Image. Photograph: (AFP)
The study by the Institute suggests that this deeper integration would boost bilateral trade, along with the expected upsurge of the real incomes by 0.12 to 0.13 per cent of GDP on both sides, while reducing reliance on risk-prone markets.
A recent study by the Kiel Institute for World Economy finds that closer EU-India economic integration could lift bilateral trade by 41 to 65 per cent, significantly increasing ties between the two partners amid growing global trade fragmentation. Both the regions together make up 21.1 per cent of global GDP and 23.4 per cent of the world's population.
The study by the Institute suggests that this deeper integration would boost bilateral trade, along with the expected upsurge of the real incomes by 0.12 to 0.13 per cent of GDP on both sides, while reducing reliance on risk-prone markets, according to a report in the news agency ANI.
EU–India trade surges nearly 90%
EU–India trade has surged nearly 90 per cent over the past decade, with EU exports touching 48.8 billion euros in 2024. Yet, steep Indian tariffs—some as high as 150 per cent- continue to hinder European market access, even as around 6,000 EU companies already operate in India.
"India is one of the fastest-growing major markets in the world, but it remains highly protected," says Julian Hinz, Research Director at the Kiel Institute for the World Economy. "A comprehensive EU-India trade agreement would open substantial parts of the economy, strengthen supply chains, and reduce vulnerability to geopolitical shocks," Julian Hinz added.
Model simulations indicated that the Indian exports with this deal could increase by 41 per cent, with EU and EU exports to India by 65 per cent. The agreement is projected to generate annual income gains of roughly 22 billion euros ($26.3 billion) for the EU and 4.2 billion euros ($4.73 billion) for India, with the largest advantages expected in sectors such as IT services, textiles, chemicals, machinery and food processing.
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The timing is significant, as India is grappling with steep US tariffs of up to 50 per cent imposed in 2025, which have dampened trade flows. Analysts say the EU–India deal could offer much-needed stability amid escalating global trade tensions.
"Against this backdrop, the EU-India agreement would act as a stabiliser," says Vasundhara Thakur, researcher at the Kiel Institute. "It provides an insurance mechanism against global trade turmoil and sends a strong signal that rules-based trade cooperation still works," Thakur added.
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