It’s Europe calling | Chennai News
Leading European countries are choosing Tamil Nadu for manufacturing plants and service-sector facilities to cater to global markets. Now, it is TN’s turn to scale up exports to Europe as the Free Trade Agreement (FTA) between India and European Union (EU) is likely to come into force early 2027.The EU has committed to eliminate duties on about 70.4% of tariff lines immediately, covering nearly 90.7% of India’s export value, while another 20.3% of products will see phased tariff elimination. In total, the EU’s tariff concessions cover almost 97% of tariff lines and more than 99% of trade value. The agreement includes zero tariffs on leather, footwear, textiles, apparel, clothing and toys. Duties on several categories of motor vehicles, seafood, tyres, pumps, including injection pumps, and elevators will be eliminated. This puts TN in a strong position given its sectoral strengths. The FTA will improve EU market access, strengthening TN’s export competitiveness and integration into European value chains. Key sectors set to benefit include engineering goods, textiles and apparel, automobiles, pharma, ICT and financial services, leather, footwear, gems, jewellery, and rubber.FTAs give TN an opportunity to attract European investment and expand exports, but the bigger prize is moving from assembly to higher-value manufacturing, engineering and design. To capture it, TN needs stronger rules-of-origin support, carbon-compliance capabilities, global certification, specialised skills and incentives linked to value addition rather than capital deployed, said P Ravichandran, chairman, CII southern region.The upcoming trade deal has already enthused manufacturers. Recently, the Southern India Chamber of Commerce and Industry (SICCI) led a Tamil Nadu delegation for roadshows in Germany and Italy, showcasing opportunities in automotive, advanced manufacturing, semiconductors, green mobility and skill development. V N Shiva Shankar, president, SICCI, said the roadshows received encouraging response from German business community. “A leading certification and standards group (second largest in Germany) came forward to establish a centre in Chennai to help SMEs leverage the FTA, especially with the carbon border adjustment mechanism (CBAM) and other documentation. A leading semiconductor firm has committed to explore investments in Chennai, starting off first with contract manufacturing and then moving on to setting up their own units,” he said. Of the total $59.3bn merchandise exports from TN in 2025–26, EU countries accounted for roughly $11.3bn (about 19%). The FTA’s services and digital-trade provisions, along with improved regulatory transparency, professional mobility and SME support, are also relevant to TN’s IT/ITeS, GCC, professional and financial-services ecosystem.“Exporters should use this to adopt demand-driven, country-specific market strategies, and strengthen EU regulatory/compliance readiness. SICCI proposes to establish an India–EU FTA Desk in Chennai as a dedicated support mechanism for TN exporters, MSMEs, investors, and industry associations. The desk will provide a single point of reference for EU market intelligence, market access data, compliance norms, investment facilitation and policy advocacy, helping businesses translate the FTA into actionable opportunities. We propose to establish this in Dec 2026 as a part of the chamber’s exports facilitation,” he added.
Ahead of the FTA between India and EU, a delegation from SICCI organised a series of roadshows in Germany and Italy
Raja M Shanmugam, former president of Tirupur Exporters Association, said Tirupur exported garments worth close to $2bn to the EU in FY26, accounting for about 37% of its total exports. Germany, France, Italy, Scandinavian countries and Poland are top destinations, with products including sweat jackets, T-shirts, polo T-shirts and sportswear.Noting that the FTA could be a game changer for Tirupur and similar clusters, he said India is at a disadvantage because Bangladesh, Vietnam, Cambodia and Sri Lanka have zero-tariff access to the EU. “Against this backdrop, the upcoming FTA will eliminate the 10% tariff on textiles for exports from India to the EU. This has the potential to double Tirupur’s exports to $4 billion in value terms and increase the volume by 1.5 times to the EU over the next four years,” he said.Israr Ahmed, former vice-president of the Federation of Indian Export Organisations (FIEO) and MD of Farida Group, said, “Once in force, we expect footwear exports from TN to the EU to grow by at least 15%-20%. This growth would also help Indian exporters reduce their reliance on the US market, particularly given the ongoing risk of further US tariff increases.” Mohamed Athif, secretary, Seafood Exporters Association of India, Tamil Nadu Region, said the EU is one of the largest markets for frozen cephalopods such as squid, octopus and cuttlefish from Tamil Nadu. The upcoming India–EU FTA is expected to significantly boost exports.
