India and the European Union have successfully concluded the India-European Union Free Trade Agreement (FTA), which is being called the “Mother of All Deals”. This agreement comes amid the unstable global environment and trade barriers caused by Washington's tariff policy. This FTA is expected to increase India's exports to the European Union by Rs 64 lakh crore.
Also, European Union markets will open for India's SMEs, makers, farmers and professionals. It proposes to eliminate 9,425 tariff lines, thereby increasing market access for labour-intensive sectors such as textiles, apparel, leather, gems and jewellery, handicrafts, tea, spices and marine products as well as high tech exports including engineering goods, electronics, pharmaceuticals and medical equipment.
Amidst all these things, one special thing is that this FTA is going to be a mega lottery for many states. There is a reason for this also. Experts estimate that apart from big states, small states can also benefit greatly from this deal. From UP to Tamil Nadu, more than a dozen small and big states of the country will be on their way to becoming export kings. Let us also tell you which states are going to benefit from this deal.
Maharashtra will see an increase in orders for both large-scale manufacturing and MSMEs due to strong demand from the European Union markets. The reduction in tariffs to zero on 99.6 per cent of exports (from 12 per cent on textiles and 14 per cent to zero on electronics) will provide an opportunity to clusters like garment manufacturers in Ichalkaranji and the engineering, electronics and pharma sectors of Pune to increase orders and strengthen integration with the EU supply chain. Pharmaceutical exports from Thane-Raigarh and gems and jewelery exports from Mumbai will also benefit, which will increase employment opportunities in labor-intensive and high-value manufacturing sectors.
Gujarat will benefit from its export-led industrial sector, where large enterprises and MSME vendors operate in the same supply chain. Production of textiles, diamonds and jewelery is likely to increase in Surat, while exports of chemicals may increase in Bharuch-Vadodara as the tariff on 97.5 per cent of chemicals exported to the European Union has been reduced from 12.8 per cent to 0 per cent. Meanwhile, Rajkot is likely to benefit from growth in exports of engineering goods and electronics, and Veraval is likely to benefit from growth in marine exports which will benefit coastal livelihoods and processing units.
There is immense potential for immediate growth for labour-intensive industry clusters in Tamil Nadu, which are already globally competitive. There is going to be a significant increase in competitiveness of garment exports from Tiruppur as the duty on garments has been reduced from 12 per cent to zero. At the same time, leather and footwear exporters of Vellore-Ambur sector will get the benefit of huge reduction in duty (from 17 percent to zero) in the European Union market. Along with this, exports from engineering goods and electronics manufacturing sectors in Chennai and Coimbatore are expected to increase, thereby strengthening the entire value chain from MSME suppliers to large manufacturers.
West Bengal is likely to directly benefit livelihoods in sectors related to tea, coastal produce and handicrafts. North Bengal can strengthen exports of Darjeeling tea by taking advantage of preferential access to European markets. Seafood from Digha and Haldia, such as prawns and frozen fish, which currently attract a duty of up to 26 per cent, will get preferential access to the European Union markets. Traditional handicrafts will benefit from improved access, which will benefit small producers and local products.
Farmers and artisans in Assam have direct access to the premium markets of the European Union, where there is immense potential for brand-based exports. Dibrugarh-Jorhat tea exports may expand, while spices from Upper Assam will benefit from better access and higher prices. There is good potential for large scale production of bamboo based furniture and handicrafts in Barpeta and Nalbari and will also boost specialty pharmaceutical exports due to more predictable market access.
Kerala will benefit from high demand categories of food and spices, which are directly linked to the income of farmers and fishermen. Shrimp and tuna exports can expand through preferential access to EU markets supporting processing units in Kochi and Alappuzha and port-related logistics. Idukki and Wayanad will benefit from spices like black pepper and cardamom, which will benefit from increased access to the wider EU market.
Karnataka is well positioned to translate preferential access into growth through advanced manufacturing and export services. The Bengaluru-Tumakuru sector is expected to witness a boost in exports of engineering goods, electronics and pharmaceuticals, supported by a strong ecosystem of components and supporting small and medium enterprises. Bengaluru's apparel exporters will also benefit, which will help in employment generation in labor-intensive manufacturing as well as high-skilled sectors.
Andhra Pradesh's coastal export economy is likely to get strong benefits due to increasing demand and value addition from the European Union. Shrimp and seafood exports are expected to boom in Visakhapatnam and Kakinada, creating jobs in fisheries, processing and cold-chain sectors. At the same time, there is a possibility of expansion in Visakhapatnam's pharma and electronics exports.
Telangana benefits from a balanced combination of textile and advanced manufacturing sectors. Hyderabad-Warangal can expand textile and apparel exports, which will boost employment in MSMEs and labour-intensive units. Hyderabad is also set to increase exports of pharmaceuticals, electronics, medical equipment and engineering goods, strengthening the state's role in high-value global supply chains.
Punjab benefits from sectors where MSMEs dominate and employment density is high. Ludhiana can expand exports of textiles and weaving, while Jalandhar is set to expand access of sports goods to the European Union markets. Light engineering units of Mandi Gobindgarh will also benefit from this, which will strengthen industrial employment and supporting supply chains.
Rajasthan will benefit from labour-intensive crafts and manufacturing clusters that are ready to export but often struggle with a lack of market access. Jaipur's jewelery exports are expected to increase, while Jodhpur can expand wooden furniture and handicrafts by establishing stronger links with the EU. Churu's sports goods, textiles like Bandhej and leather goods will also benefit, which will provide widespread benefits to small and medium enterprises and artisan communities.
Uttar Pradesh is one of the largest potential centers of employment generation due to its labour-intensive base in leather and crafts. Leather footwear exporters from Kanpur and Agra can increase exports, while Saharanpur will benefit from furniture and handicrafts exports. Electronics manufacturing of Noida and agricultural products of West UP will also benefit, which will increase the scope of exports of the state.
