India’s New Trade Deal: Which Sectors Are Set to Boom?
03, February 2026. By -Kaushik
The global trade landscape is shifting, and India is positioning itself as a central pillar. With the landmark India-EU Free Trade Agreement (FTA)—often hailed as the “mother of all deals”—recently concluded in early 2026, alongside new pacts with the UK, EFTA, and a reciprocal tariff deal with the US, India’s export engine is primed for a massive overhaul.
For businesses, investors, and policymakers, the question isn’t just if India will grow, but where the explosion will happen. Here is a breakdown of the sectors set to lead this new era of Indian trade.
1. Textiles and Apparel: The Crown Jewel
Textiles have long been the backbone of Indian manufacturing, but high tariffs in Europe and the UK often made it difficult to compete with nations like Vietnam or Bangladesh.
The Shift: Under the new deals, tariffs on Indian apparel (previously around 12%) are being eliminated.
The Boom: Industry experts predict a double-digit surge in exports. This isn’t just about volume; it’s about high-end fashion and sustainable fabrics finding a home in luxury European markets.
2. Gems and Jewellery: Polishing the Future
India is a global hub for diamond cutting and polishing, particularly in Gujarat and Maharashtra.
The Shift: The EU and UK have scrapped the 4% import duty on Indian gems and jewellery.
The Boom: This allows Indian artisans and large-scale manufacturers to offer more competitive pricing. Expect a significant rise in the export of lab-grown diamonds and intricate gold jewellery.
3. Engineering Goods and Auto Components
While the deals include “calibrated safeguards” for finished automobiles to protect domestic players, the Auto Component sector is a clear winner.
The Shift: European and American manufacturers are looking for “China Plus One” strategies. Lower tariffs on engineering goods make India the primary choice for sourcing precision parts.
The Boom: Sectors like castings, forgings, and electrical machinery are expected to integrate deeper into global supply chains, specifically for the growing Electric Vehicle (EV) market in Europe.
4. Marine Products and Agriculture
India’s coastal economy is getting a high-tech boost.
The Shift: Duties on marine products (which were as high as 26%) are being slashed to zero in the EU.
The Boom: Shrimp and processed fish exports are set to skyrocket. Additionally, preferential access for tea, coffee, and spices will revitalize the rural economy and increase the participation of women in the workforce.
5. Pharmaceuticals and Chemicals
India is the “pharmacy of the world,” and the new trade deals solidify this title.
The Shift: The deals focus on “Mutual Recognition Agreements” (MRAs). This means Indian-made drugs and chemicals face fewer regulatory hurdles when entering European markets.
The Boom: Speciality chemicals and generic medicines will see faster approval times, reducing costs and increasing market share in the $17 trillion EU economy.
Summary of Impact
Sector Previous Tariff New Tariff Expected Impact
Textiles 10–12% 0% High Growth
Marine Products Up to 26% 0% High Growth
Luxury Cars 110% 10% (phased) Increased Imports
Chemicals 12.8% 0% Moderate Growth
The Bottom Line
India’s recent trade blitz is more than just a collection of signatures; it is a strategic repositioning. By securing duty-free access to over 90% of its export value in major markets, India is shielding its industries from global volatility while inviting massive foreign investment.
The focus now shifts from negotiation to execution. If Indian businesses can scale their quality to meet international standards, the “India Decade” is no longer a prediction—it’s a reality.
Disclaimer :
This blog does not provide financial, investment, or trading advice. All content is for educational and informational purposes only. Please consult a certified financial advisor before making any investment decisions. The author will not be responsible for any financial losses incurred
