The upcoming India-EU FTA will be a major shift in global trade realignment, says a Goldman Sachs report. Despite limited near-term macroeconomic impact, the pact will deliver benefits at the sector level, cutting tariffs on EU goods like autos.
The long-awaited India-EU Free Trade Agreement (FTA), will mark a major shift in global trade realignment amid rising protectionism, according to a Goldman Sachs report.
Macroeconomic Impact and Limitations
The report highlights the scale of the pact, and said India and the EU together account for “~2bn people, ~25% of global GDP, and around one quarter of the world’s population and trade” However, the report cautioned that the macroeconomic impact is likely to remain limited in the near term.
According to the note, even a fully-fledged set of new EU trade agreements would raise EU gross exports by
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Sector-Level Benefits and Tariff Reductions
Despite this, the agreement is expected to deliver meaningful benefits at the sector level. Goldman Sachs said India will eliminate or reduce tariffs on 96.6% of EU goods exports to India, generating estimated savings of ~EUR4bn per year for EU exporters.
It says “India will eliminate or sharply reduce tariffs on 96.6% of EU goods exports — particularly autos, machinery, chemicals and aerospace — unlocking real opportunities in the most tariff-constrained sectors.” The report added that tariffs will fall sharply across key sectors, with duties dropping to zero over time for “machinery, medical equipment, chemicals, pharmaceuticals, plastics and aerospace”, while “auto tariffs will drop from 110% to 10% under a quota of 250,000 vehicles”
Market Impact and Key Beneficiaries
On market impact, Goldman Sachs said “industrials are the main beneficiaries”, noting that “the largest short-term beneficiaries are likely to be EU autos, chemicals and electrical machinery”
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India’s Growth and Investor Outlook
The report also pointed to India’s strong structural growth outlook, stating that its economists expect “India’s real GDP growth at 6.7% in 2026 and 6.8% in 2027, above consensus” Against this backdrop, European companies with India exposure are gaining investor attention. Goldman Sachs said its basket of European firms exposed to India is the best performing basket year to date, adding that these companies “offer the same top-line growth as the market but are on a 7% discount”
Broader Strategic Shift
The agreement, the report notes, underscores a broader strategic shift, as diversification has become the dominant strategic objective in a fragmenting global trading system. (ANI)
(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)