India’s proposed Free Trade Agreement (FTA) with the European Union could open the door to a massive $875 billion market while aligning tariff structures with ASEAN nations, according to Boston Consulting Group (BCG) India head Rahul Jain. This follows last month’s landmark FTA with the United Kingdom, which is expected to increase annual bilateral trade by $34 billion and offer tariff-free access to 99% of Indian exports.
Jain noted that the global trade landscape is being reshaped by shifting geopolitical dynamics and rising economic nationalism, with preferential market access and supply chain realignment becoming as crucial as cost efficiency. These changes, he said, create a strategic opening for India to capture market share, particularly from China.
With its advantageous geographic position, robust domestic demand, youthful workforce, and a manufacturing push, India is well-placed to benefit from the global “China+1” diversification strategy. Sectors such as semiconductors, electronics, and rare earth minerals stand to gain. Jain emphasized the importance of securing vital raw materials, developing domestic capabilities through international partnerships and localized R&D, fast-tracking FTAs with priority markets, and enhancing state-level infrastructure to support industrial growth.
However, he also warned that compliance with the European Union’s Carbon Border Adjustment Mechanism (CBAM) will be critical. Without significant investment in green technology, India’s carbon-intensive exports like steel and aluminum could face steep cost penalties in Europe.
Highlighting the role of the Production Linked Incentive (PLI) schemes, Jain pointed out that since their launch in 2020, they have attracted $20.3 billion in investment, generated $191 billion in domestic production, and created close to one million jobs. These initiatives have already positioned India as a key electronics hub, with the country producing 20% of global iPhones in FY25 and aiming to increase that share to 32% by FY27.
Jain concluded that with a mix of well-negotiated FTAs, strong sustainability practices, and strategic capability-building, India could emerge as a leading player in global manufacturing and technology supply chains, securing a significant slice of the trade currently dominated by China.
