THE ASIAN INDEPENDENT UK
Bal Ram Sampla
Geopolitics
In August 2025, the United States imposed very high tariffs on Indian goods. At first, the tariff was 25%, but then it doubled to 50%. This was one of the highest tariffs America put on any country in the world. The US did this because India was buying oil from Russia.
These tariffs hurt India badly. Important Indian products like textiles, jewelry, gems, leather goods, and seafood suddenly became much more expensive for American buyers. Many Indian companies that sold their products to America were in trouble. Workers in these industries faced the risk of losing their jobs.
America was India’s biggest export partner. India sold about $87 billion worth of goods to the US every year. Suddenly, with 50% tariffs, Indian products became too expensive for Americans to buy. Many buyers started looking for cheaper options from other countries.
The sectors that got hit the hardest were:
(I)Textiles and clothing
This industry employs 45 million people in India
(II)Gems and jewelry.
About 33% of these exports went to the US
(III)Leather and footwear.
Many small businesses depended on American buyers
(IV)Seafood and marine products. Fishing communities suffered
(V)Engineering goods and auto parts. Factories faced losses
Experts predicted India could lose billions of dollars in exports. They also worried that millions of jobs would be lost, especially in labor-intensive industries where poor and working-class people work.
The EU Trade Deal as a Solution
Just when India needed help most, the European Union and India finalized a major trade deal on January 27, 2026. This deal took almost 20 years to negotiate, but both sides rushed to finish it because of the crisis with America.
The deal is being called the “mother of all deals” because it is so big and important. It creates a free trade zone of 2 billion people – combining India’s 1.4 billion people with the EU’s 450 million people.
How India Benefits
1. New Markets for Indian Exports
The EU agreed to remove or reduce tariffs on over 90% of Indian goods. This means Indian products can now be sold in European countries without paying high taxes. The same products that face 50% tariffs in America will face zero or very low tariffs in Europe.
The sectors that will benefit most are:
(I)Textiles and garments :
Can now compete in Europe’s huge market
(II)Gems and jewellery:
Gets duty-free access to wealthy European buyers
(III)Leather and shoes:
No more high tariffs
(IV)Seafood and marine products: European consumers can buy at lower prices
(V)Chemicals and plastics:
Important for Indian manufacturers
2. Millions of New Jobs
The textile sector alone could create 6 to 7 million new jobs because of this deal. This is extremely important because textiles are India’s second-biggest employer after agriculture. These are good jobs for ordinary working people.
Other labor-intensive industries will also create many jobs. This helps workers who might have lost their jobs because of American tariffs.
3. Service Industry Benefits
India’s service industries will also gain big advantages:
(I)IT workers and tech professionals can work more easily in Europe
(II)Business visitors can travel between India and EU more smoothly
(III)Professionals like engineers, consultants, and teachers get better opportunities
(IV)Indian education services can expand in Europe
4. Indian Consumers Get Cheaper Products
The deal also helps ordinary Indians by making European products cheaper:
(I)Cars like BMW, Mercedes, and Audi will become less expensive (tariffs drop from 110% to 10%)
(II)Machinery and equipment will cost less
(III)Chemicals will be cheaper (tariffs of 22% will be removed)
(IV)Medicines and pharmaceuticals will have lower prices
5. Economic Growth and Investment
This deal is expected to boost India’s overall economy. The EU sees India as a major market for the future and will invest more money in Indian businesses. India will get access to European technology and know-how.
By 2032, the EU expects to double its exports to India. This means more trade, more business connections, and more economic activity.
6. Strategic Independence
Perhaps most importantly, this deal helps India reduce its dependence on the American market. When the US imposed 50% tariffs, India was vulnerable because it relied too heavily on one country. Now India has strong trade relationships with:
The European Union (27 countries)
The United Kingdom
New Zealand
Oman
This diversification makes India’s economy stronger and more secure. If one country imposes tariffs, India has other markets to sell to.
The Bigger Picture
The timing of this deal is perfect for India. When America turned hostile with high tariffs, Europe opened its doors with open arms. This shows that India has options and doesn’t have to accept unfair treatment from any one country.
For ordinary Indian workers and businesses, this deal means:
(I)Jobs that were threatened by US tariffs can now be saved
(II)New opportunities in European markets
(III)More choices for selling products
(IV)Better prices for consumers at home
Conclusion
The 50% US tariffs were meant to punish India, but they pushed India to find better alternatives. The EU trade deal gives Indian exporters access to a huge, wealthy market of 450 million people. It creates millions of jobs in the sectors that need them most. It helps Indian consumers get better products at lower prices.
Most importantly, it shows that India doesn’t have to depend on just one country for its economic success. By building strong relationships with Europe and other partners, India can protect its workers and grow its economy no matter what America does.
In simple terms: when one door closed, a bigger and better door opened. The EU trade deal turns a crisis into an opportunity for India.
References
1.https://www.cnbc.com/2025/08/06/how-will-trumps-50percent-tariffs-on-india-impact-its-economy.html
2.https://www.cnbc.com/2026/01/27/india-eu-trade-deal-tariffs-exports.html
3.https://www.cnbc.com/2026/01/27/india-eu-trade-deal-trump-tariffs.html
4.https://www.france24.com/en/video/20260127-india-and-the-eu-agree-on-mother-of-all-trade-deals-5
5.https://www.bloomberg.com/news/articles/2026-01-27/from-wine-to-carmakers-winners-losers-in-india-s-giant-eu-deal
6.https://www.bloomberg.com/news/articles/2026-01-27/eu-and-india-conclude-trade-talks-seeking-trump-alternatives
