If a trade agreement is concluded between India and the European Union (EU), nearly 85% of India’s exports currently bound for the United States could potentially be redirected to Europe. A recent study highlights strong demand for Indian goods in Europe, suggesting the bloc could serve as a buffer market against U.S. tariff shocks.
In 2024, India’s exports to the EU stood at $77.50 billion, compared to $79.40 billion to the U.S. The study estimates that if a trade deal materializes, about $67.20 billion worth of exports to the U.S. could be shifted to Europe, though the extent of the increase will depend on the terms of the agreement.
Diamonds represent a significant opportunity for India. Last year, the U.S. imported $4.82 billion worth of diamonds from India, while Europe imported $1.70 billion of diamonds from India out of its total $7.30 billion imports. This points to considerable headroom for Indian diamond exports in the European market.
Beyond diamonds, smartphone exports could also benefit. Europe currently imports billions of dollars worth of smartphones from other countries, while imports from India remain relatively small.
The EU deal is progressing swiftly, whereas the agreement with the UK is still awaiting parliamentary approval. Meanwhile, the U.S. has been pressing Europe to impose tariffs on Indian goods. At the same time, early signs of a trade agreement between India and the U.S. are also emerging. President Donald Trump has recently softened his stance towards India, and Prime Minister Narendra Modi has responded positively to his remarks.