TRADE flows between India and the EU are expected to increase thanks to the recently concluded trade deal, but this will benefit some shipping sectors more than others.
The deal will effectively see India eliminate or reduce tariffs on 96.6% of goods imported from the EU by value. The EU will similarly reduce tariffs on 99.5% of Indian imports.
“The agreement is significant as it covers a market of over 2 billion people and a significant share of gross domestic product and global trade. For India, it offers increased exports, cheaper inputs and deeper integration into global value chains. For the EU, it ensures market access in a rapidly growing economy and strengthens strategic ties amid changing global trade alignments,” said Vinod Rai, honorary senior fellow at the Institute of Studies South Asians from the National University of Singapore.
Highlights of the deal include areas where India will reduce tariffs on goods that it has not granted to other partners. This includes reducing customs duties on European cars from 110% to 10% and removing tariffs on machinery, chemicals and pharmaceuticals, which stand at 44%, 22% and 11% respectively.
India, on the other hand, will see its agricultural and maritime exports increase as it gains preferential market access. This covers exports of textiles, leather and footwear, tea, coffee, spices, sporting goods, toys, gems and jewelry, some marine products and shrimp. These products will benefit from either immediate tariff elimination, tariff elimination in three to five years, tariff reductions or tariff rate quotas.
Imports of European agri-food products were included, reducing customs duties on wine from 150% to 20% over time, and on olive oil from 45% to 0% over five years. Customs duties on bread and confectionery, currently 50%, will be removed. India and the EU have also put in place safeguards for agricultural segments.
In the financial year 2024-25, bilateral trade in goods between India and the EU stood at $137 billion. Indian exports were worth $76 billion. The EU expects the trade deal to double exports of European products to India by 2032.
Containers and dry bulk to benefit from more immediate advantages than automobile carriers
The EU will see an increase in exports from the agri-food, chemicals, pharmaceuticals, machinery, medical devices, avionics and automotive sectors. India will witness an increase in exports from its fisheries, chemicals, textiles, footwear and pharmaceutical industries.
Most goods that have benefited from tariff reductions are shipped on bulk carriers or container ships, traveling in both directions. And as some products benefit from immediate tariff reductions or eliminations, container flows are also expected to increase once the trade deal is officially adopted.
While US tariffs on India remain high, despite a reduction from 50% to 18% this week, Dutch bank ING believes the tariff cuts will give Indian exporters an opportunity to exit the US since India’s export basket to the EU and US is similar.
Fare reductions in the automotive sector may require additional time for benefits to take effect, delaying potential benefits for auto carriers. Under the terms of the trade deal, up to 250,000 European-made cars will now be allowed to enter India at preferential rates.
But ING believes that the dominance of Japanese brands limits the impact of this situation. He says, “The Indian automobile market is dominated by well-established Japanese brands such as Suzuki and Hyundai, which together account for more than 50% of the total market. It will certainly not be easy for European automakers to enter the Indian market, given that they currently have a market share of less than 3%.”
The prospects for clean tankers on this trade route are less clear. Recent EU sanctions on petroleum products made from Russian crude oil could make Indian exports to the EU difficult.
Importing barrels of crude oil at market prices to produce clean petroleum products that will be exported long distances to Europe could eat into the margins of Indian refiners.
Additionally, the recent US tariff reduction to 18% remains higher than the initial 2-3% before US President Donald Trump’s second term. New Delhi might consider reassessing its priorities to see if importing more expensive crude oil, at market prices, is worth it.
The India-EU trade deal is also seen as more than just a trade deal, but a tool for the EU and India to diversify their trade. This is an agreement that took 20 years to come to fruition.
“The sudden momentum that pushed the deal across the finish line in early 2026 was driven less by economics than by geopolitics. New Delhi and Brussels found themselves exposed to increasingly unpredictable US trade policy,” said Shameek Godara, a counselor at the Norwegian Embassy in Australia.
He sees the deal as giving the EU a platform to reduce its “over-reliance on the US and China while expanding partnerships with like-minded economies”.
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