Bloomberg Economics estimates that India's expanding trade agreements could add $140-170 billion to its GDP by 2035, with the potential to lift GDP by up to 2.1 per cent by 2035. According to the latest Bloomberg report, FTAs already in force should raise India's GDP by 1.2 per cent by 2035 relative to baseline, rising to 1.7 per cent if the EU and New Zealand agreements are implemented from 2027. The report projects that trade volumes, including imports, would rise by around 10 per cent by 2035 over 2024, with imports climbing as households and businesses gain access to new products and services. Inflation is projected to rise from 2.2 per cent in 2025 to 4.5 per cent in 2026 and 5.3 per cent in 2027, while the central bank's repo rate is forecast at 5.50 per cent for 2026 and 5.75 per cent in 2027.
EU Ambassador Jean-Eric Paquet announced that India and the European Union aim to conclude their free trade agreement by the end of 2026 and bring it into force in 2027. Addressing the Annual Session and Champion Awards 2026 of the Society of Indian Defence Manufacturers (SIDM) in New Delhi on Friday, Paquet emphasized that 'what lies ahead is the signing of the Free Trade Agreement' and described the pending framework as an 'absolute game changer' that extends far beyond standard commercial exchanges. The ambassador explained that 'together, the FTA, the mother of all these initiatives and the Investment Protection Agreement would create a single economic space spanning India and Europe' where both countries could trade more freely, strengthen supply chains through trade and investment, make them more resilient and reduce strategic dependencies.
Paquet highlighted the Security and Defence Partnership announced in January as a framework for closer engagement between India and Europe, including at the ministerial level and between defence manufacturers. As reported by ANI, European defence companies already work with Indian counterparts, while more EU member states are exploring partnerships. The ambassador noted that 'India purchases European defence equipment, and several EU member states have long-standing historical traditions of military and defence-industrial cooperation with India', with others now beginning to develop such relationships. Paquet emphasized that 'the work we undertake to facilitate and strengthen our supply chains through the FTA and the Investment Protection Agreement would also greatly benefit our respective defence industries', with the partnership providing a platform for Indian and European defence industries to strengthen their engagement.
Commerce and Industry Minister Piyush Goyal emphasized that India's calibrated tariff concessions under the EU and UK trade agreements will transform India into a global manufacturing hub for automobiles. Speaking at Dilli Dialogue, Goyal explained that 'the tariff concessions offered by India on cars under its free trade agreements with the European Union and the United Kingdom will encourage global carmakers to manufacture in India, as the quota-led imports will help manufacturers gauge the demand for high-end vehicles in India'. He noted that 'India is going to become the global hub for car manufacturing' as European manufacturers face regulatory challenges, with all European manufacturers expected to relocate to India. The minister also highlighted that 'if more electronics are imported, more people will be interested in setting up semiconductor factories here' and 'if more white goods are imported, you will find people coming to India to manufacture washing machine, dishwashers, televisions, and air conditioners'. Goyal cited the example of luxury carmakers that initially tested the Indian market before setting up manufacturing facilities in Pune, demonstrating India's potential to attract global automobile manufacturers.
India's export performance has shown strong momentum, with the ministry targeting USD one trillion worth of exports of goods and services this fiscal. During April-August this fiscal, exports jumped 17.85 per cent year-on-year to USD 215.91 billion, while imports climbed 18.21 per cent to USD 363 billion. Goyal highlighted India's demographic advantage, noting that its young population offers opportunities at a time when many economies are experiencing ageing populations. He pointed out that 'there is a demand for Indian workers in countries such as Germany and Japan', demonstrating the global appeal of Indian talent. The minister also flagged concerns over European regulations, particularly the EU's Carbon Border Adjustment Mechanism (CBAM), which imposes carbon-related costs on certain imports into the EU, potentially affecting competitiveness of Indian exports.
