LIVE MARKETS-India-EU trade pact seen offering limited gains for EU exporters

ReutersJan 28, 2026 2:15 PM

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INDIA-EU TRADE PACT SEEN OFFERING LIMITED GAINS FOR EU EXPORTERS

The landmark trade deal between India and the European Union is unlikely to boost earnings at EU exporters, according to several brokerages, underscoring the sober reality beneath the rosy outlook.

Goldman Sachs highlighted automakers, chemical companies and electrical machinery exporters as possible beneficiaries, but said the agreement was unlikely to offset the drag from higher U.S. tariffs.

"These agreements signal a shared preference for trade agreements over tariffs at a time of heightened uncertainty," Goldman analysts wrote, but warned that the deal "cannot fully substitute for lost U.S. demand."

U.S. President Donald Trump threatened to impose tariffs on eight European countries until he was allowed to buy Greenland, before backing down. Washington has also levied 50% tariffs on Indian goods, including a 25% duty to punish New Delhi for purchasing Russian oil.

Bernstein strategists said the India-EU deal could be a stopgap solution devised for export sectors hit hard by U.S. tariffs.

Terms of the agreement may also tilt more favourably towards India. Citigroup said it preserves labour-intensive exports such as textiles and footwear, while allowing India to capitalize on Europe's drive for supply chain diversification away from China.

However, the impact on Indian large-cap earnings will be muted, Citi warned, adding that any benefits will mostly be felt by MSMEs.

The brokerage expects hospitals, chemicals, defense and engineering stocks to gain, while autos, auto parts and select consumer categories like chocolates and pet food could face competitive pressures.

(Kanishka Ajmera)

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