“A market to be built”: visualize what India represents in France’s trade abroad
The agreement concluded between India and the European Union will reduce customs duties on industrial and agricultural goods. Certain French sectors could benefit from it.
A new trade agreement, but much less controversial than the one signed with the member countries of Mercosur. India and the European Union (EU) announced on Tuesday January 27 the signing of a free trade agreement. “We have concluded the agreement of all agreements,” rejoiced Ursula von der Leyen, President of the European Commission. She welcomed the creation of a “free trade zone of 2 billion people”, or “a third of world trade”, added her European Council counterpart, Antonio Costa. In the pipeline since 2007, the agreement would provide for the reduction or elimination of “more than 90% of customs duties” on goods exported by the EU to India, according to the European Commission.
Over the last 13 months, according to French customs data (New window), the trade balance between France and India was in deficit for France. In other words, France imported more Indian products, especially textile products, than exported its own goods. “The relationship remains asymmetrical and attracting more Indian investors is a priority issue for France”, sets the objective of the General Directorate of the Treasury (Ministry of the Economy).
The Indian market has until now been rather dissuasive for French producers, due to the significant tariff barriers erected by the Indian government to protect the country's economy. In 2024, India was the 13th country to which France exported the most goods, behind the top three formed by Germany, Italy and the United States, according to the Ministry of Foreign Affairs.
With the new free trade agreement signed by the EU, the Indian market should open up more to certain French goods. A key sector for France, wines and spirits will benefit from a reduction in customs duties imposed by India. Currently at 150%, they will fall to between 20 and 40%. The Federation of French Wine and Spirits Exporters (FEVS) welcomed “a considerable step forward”.
A “diversification logic to be pursued”
However, the French wine sector is still little present on the Indian market. According to French customs, drinks, which include wines and spirits, only came in 30th place among the most exported goods to India over the last 13 months. “It’s a market that will have to be built,” recognizes Gabriel Picard, president of the FEVS. Far ahead of India, the United States remains the leading export destination for French wines and spirits. The agreement between the EU and India is "important in the logic of diversification that we must pursue", underlines Gabriel Picard, while trade relations with the United States are deteriorating. Since August, wine and alcohol have been taxed at 15% across the Atlantic. On January 20, American President Donald Trump threatened to impose new customs duties of 200% on French wines and champagnes, in response to the refusal of his counterpart Emmanuel Macron to join his "Peace Council".
Another key sector for France: aeronautics, which could benefit from a reduction in Indian customs duties. These should be reduced to 0%, compared to 11% currently. This industry represents nearly 40% of French sales to India. Between 2023 and 2024, France's exports to the most populous country in the world increased by 7%, an increase driven by "the dynamic exports of the aeronautics sector, driven by the delivery of several Airbus A350s to Air India", according to the Ministry of Foreign Affairs.
The agreement between India and the EU, which aroused much less opposition than that signed with the Mercosur countries, must soon be submitted for validation by the vote of European parliamentarians.
