Mumbai, Jan 23 (NationPress) A recent report indicates that India is on track to unlock $10–11 billion in additional exports to the European Union (EU) without the need for expanding product capacity. This could be achieved by shifting existing, heavily taxed trade destined for the US under the proposed India-EU Free Trade Agreement.

Currently, India's top 15 product categories exported to the US represent nearly 52 percent of the total, valued at about $45 billion.

Among these categories, approximately $21 billion is concentrated in 12 sectors that have a minimal presence in the EU's import portfolio.

The report from Rubix Data Sciences highlights that if even 50 percent of these trade flows are gradually redirected to the EU through tariff reductions and enhanced market access, it could significantly transform the trade dynamics between India and the EU, which have been stagnant.

This potential shift in trade comes at a crucial time, particularly since the EU has recently suspended export benefits for certain labour-intensive goods from India that were previously included under the Generalised Scheme of Preferences (GSP).

As per Rubix's latest EU Country Report, trade in goods between India and the EU has remained relatively stable at $136.5 billion for three consecutive years (FY2023–FY2025), despite the EU becoming India's largest bilateral goods trading partner in FY2025, slightly surpassing the United States.

India constitutes only 2.9 percent of the EU's imports and 1.9 percent of its exports, revealing a significant gap between strategic aspirations and actual trade results.

“Trade flows are notably concentrated, with over 70 percent of India's exports to the EU directed towards just five member states, which increases the risk of exposure to economic slowdowns in key European markets,” the report states.

The EU, projected to be a $21.1 trillion economic bloc by 2025, is experiencing modest and uneven growth of 1.4 percent, with its largest economies—Germany, France, and Italy—showing subdued growth.

Additionally, the EU's trade surplus with the US has expanded to $164 billion in 2024, driven by strong exports of high-value manufactured goods including machinery, vehicles, pharmaceuticals, and chemicals.

However, renewed threats of tariffs and policy uncertainty pose risks to these trade flows, underscoring the strategic necessity of diversifying trade for the EU, as highlighted in the report.

“In this context, the proposed India–EU Free Trade Agreement gains heightened importance,” it stated.

Besides trade in goods, the EU is also a vital investment partner for India, with cumulative foreign direct investment (FDI) from the EU into India reaching $119.2 billion between April 2000 and December 2024, which accounts for 16.5 percent of India's total FDI equity inflows.