Trade between India and the EU is set to grow. Its environmental costs could increase more quickly

The recent conclusion of negotiations for a free trade agreement between India and the European Union, after almost two decades of negotiations, was warmly welcomed in New Delhi and Brussels. European leaders highlighted new access to India’s vast consumer market, while Indian officials emphasized export growth, job creation and restoring the preferential access to the EU market that India lost in 2023.

Much of the public comments have scale-driven: two billion people covered, almost a third of world trade, and billions of euros in tariff savings. But this celebratory framework obscures a more difficult question about the nature of the growth encouraged – and the distribution of its environmental costs.

Export growth and environmental externalities

India’s biggest export gains to the EU are concentrated in textiles and clothing, leather and leather products, chemicals, rubber and plastics, base metals, and precious stones and jewelry. Under the agreement, tariffs on most of these products will be completely eliminated over the next five to seven years.

These sectors are labor intensive, which explains the optimism around employment. They are also among the most environmentally friendly manufacturing activities in the country. Textile dyeing and finishing consuming large amounts of water and chemicals. Leather tanning product chromium-rich effluent that can contaminate soil and groundwater for decades. Chemical and plastic manufacturing generates hazardous waste that is difficult to track and treat.

The trade deal does not create these problems. But sharply increasing export incentives risks intensifying them faster than India’s regulatory capacity can handle.

Rivers bear the cost of growth

Near the Yamuna’s entry point into Delhi, the state of the river has become a stark illustration of India’s challenge in environmental governance. Long stretches of river now regularly feel significant foamtoxic contamination and dissolved oxygen levels near zero, particularly during the winter months when flows are lowest and pollution is most concentrated. Despite repeated cleanup efforts and official claims of improvement, the the river remains ecologically stressed and dangerous for most uses.

Monitoring data supports this assessment. According to the Delhi Pollution Control Board, levels of biochemical oxygen demand in key stretches of the Yamuna in Delhi stay well above the permitted limitsindicating serious organic pollution. The National Green Tribunal has repeatedly identified untreated wastewater and industrial effluents as major contributors, noting that pollution loads from upstream urban and industrial centers continue to exceed treatment capacity.

Much of the industrial pollution enters the Yamuna from upstream towns in Haryana and the National Capital Region (NCR), which is home to dense clusters producing textiles, chemicals and manufactured goods. Regulatory assessments link industrial discharges in the upper Yamuna basin to repeated violations of water quality standards, particularly during periods of low river flow.

Yamuna is not an isolated case. Similar industrial pollution patterns and regulatory failure are evident along the Ganges around Kanpur, the Jojari near Jodhpur, the Noyyal and Palar rivers in Tamil Nadu and the Tapi near Surat – each associated with clusters producing leather, textiles, chemicals or dyes.

These industries are not marginal. They are at the heart of India’s export economy – and many of them stand to benefit from the new India-EU free trade agreement.

Carbon borders and regulatory blind spots

Supporters of the trade deal emphasize that it does not weaken Europe’s climate ambitions. Indian exports of steel, aluminum, cement and fertilizers will remain subject to The EU border carbon adjustment mechanism (CBAM), which prices the carbon emissions integrated into these products.

But there is a significant asymmetry. The sectors that benefit most from tariff elimination – textiles, clothing, leather and chemicals – fall outside the scope of carbon border measures, even though their environmental damage is severe and highly localized. Meanwhile, water pollution and toxic waste remain outside CBAM’s purview and are largely unpriced under the agreement.

Growth, governance and cautious conclusion

India’s environmental challenges are well documented and subject to consistent international assessments. ranking the country among the worst performing countries on air and water quality. Yet these challenges are not due to a lack of laws. Over time, the country has built an extensive regulatory framework covering air, water and hazardous waste.

The persistent the problem lies in the implementation.

Government audits as well as independent international bodies have repeatedly documented gaps in hazardous waste monitoring, enforcement and management capacity across states, particularly in industrial hubs that drive export growth.

None of this negates the long-term economic and strategic gains of deeper EU-India integration. Rather, it is an argument against judging the deal based solely on macroeconomic headlines. So far, India’s most successful integration into global markets has occurred through services – software, business processing and digital exports – that have generated growth with relatively modest environmental costs. Export growth driven by the manufacturing sector is different: it is more resource-intensive, more polluting and much less tolerant of poor governance.

This is precisely where the nature of the European market matters. Deeper integration with the EU can act as a complementary disciplinary force – but it cannot replace national environmental governance. European consumers are increasingly sensitive to the environmental footprint of imported goods, and this sensitivity is gradually being translated into regulation – first through mechanisms such as the Carbon Border Adjustment Mechanism, and potentially in the future through broader environmental standards at product level. Even in the absence of formal legislation, European retailers and importers face reputational, legal and commercial incentives to examine supply chains.

For India, this constitutes a strategic argument for acting early: strengthening domestic enforcement and investing in cleaner production is not only about regulatory compliance, but also about ensuring sustainable access to a high-value market. In this sense, participation in the EU market can strengthen national policy choices, accelerating the adoption of cleaner technologies in export-oriented industries rather than allowing the deferral or externalization of environmental costs.

If India wants to continue on this path, tackling pollution cannot be an afterthought. Stricter monitoring, credible enforcement and sustained investment in processing infrastructure must go hand in hand with export promotion. Trade can increase welfare, but only if competitiveness does not rest quietly on unevaluated environmental damage at the national level.

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This article was originally published under Creative Commons by 360infos™.