India–Europe FTA to Significantly Boost Manufacturing, Exports, and Punjab Industry: CICU

Ludhiana, January 28, 2026: The proposed Free Trade Agreement (FTA) between India and the European Union is expected to be a major game-changer for Indian industry, with nearly 90% of Indian shipments becoming duty-free, providing a strong competitive advantage to exporters across sectors.
CICU President Upkar Singh Ahuja stated that FTAs with high per capita income countries have historically benefitted India, as European economies face significantly higher labour and production costs. “The average labour cost in Europe is around 33 euros per hour (approximately ₹3,300), whereas in India it is well below ₹100 per hour. This wide cost differential will always remain a natural advantage for Indian manufacturing and labour-intensive industries, without posing any threat to domestic production,” he said.
He further added that the services sector and labour-intensive exports will receive a major boost under the agreement, helping India strengthen its global presence while generating employment.
Major Benefits for Punjab Industry
The India–Europe FTA is expected to deliver substantial benefits to Punjab’s manufacturing and export-oriented industries by providing easier access to European markets through reduced tariffs. Key sectors such as apparel, sports goods, textiles—particularly knitwear, hosiery, and garments from Ludhiana—will gain enhanced competitiveness, leading to higher exports and employment generation. Punjab’s strong industrial base in tractor parts, farm equipment, auto components, engineering goods, hand tools, bicycles, sports goods, and food processing is also set to benefit through increased demand, new supply-chain opportunities, and faster machine turnaround, enabling MSMEs to pursue technology upgradation and productivity improvements.
Auto Components to Emerge as Key Winners
Upkar Singh Ahuja pointed out that auto components are expected to be among the biggest beneficiaries of the FTA. The European Union is already India’s largest export destination for auto components, accounting for nearly 30% of total shipments. As per available data, India exported USD 3.73 billion worth of auto components to Europe in the first half of FY26, registering an 11% year-on-year growth.
“The FTA will further enhance export competitiveness, deepen technology collaboration with European manufacturers, and attract long-term investments into India’s auto component ecosystem,” he added.
While public attention may focus on potential reductions in luxury car prices, CICU emphasized that the real strength of the India–Europe FTA lies in manufacturing growth, export expansion, and deeper supply-chain integration, rather than immediate showroom-level benefits.
CICU welcomed the agreement as a strategic step that will reinforce Make in India, strengthen India–EU trade relations, and position Punjab as a key contributor to India’s global manufacturing and export growth.