Economic Considerations for Trade Agreements

The UK-India trade deal just opened a $25 billion door for Indian textile businesses. I've witnessed many trade agreements in my career managing sourcing across India, Bangladesh, and South Asia for Falabella, but this one truly stands out. What makes this Free Trade Agreement (FTA) special is that it eliminates the 8-12% tariffs on Indian textile exports to the UK immediately, which previously ranged from 12% to 16%. This means: ➡ Indian manufacturers now have the same advantage as Bangladesh in the UK market, something that seemed impossible just weeks ago ➡ Small factories that couldn't afford to compete internationally now have a fighting chance ➡ This tariff elimination could save Indian exporters up to 12% on export costs, potentially doubling exports by 2030 (B2B Marketplace) For UK retailers, this creates a perfect opportunity to diversify from China without the 8-12% price premium that previously made Indian goods less competitive. If you're an Indian textile or apparel manufacturer, here's what you should do now: ● Update your pricing models immediately, and factor in the tariff savings ● Reach out to UK buyers with revised quotes highlighting the new cost advantage ● Invest in sustainability certifications, as UK consumers increasingly demand this ● Partner with logistics experts who understand UK customs processes The playing field between India and Bangladesh is finally level. The timing couldn't be better, as global brands are seeking alternatives to China. Do you think this trade deal will boost India’s textile exports?

✋ EU ETS + CBAM Reshape Global Steel Competitiveness A Nature Communications paper examines how the revised EU Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) are transforming global steel markets. ⚙️ Key Highlights 1️⃣ The steel industry contributes 8–10% of global CO₂ emissions — deep decarbonisation is essential. 2️⃣ Hydrogen-based direct reduced iron (H₂-DRI) combined with electric arc furnaces (EAF) becomes cost-competitive in Europe from 2026, supported by EU ETS free allocations. 3️⃣ The phase-out of free emission allowances and phase-in of CBAM (2026–2034) shift competitiveness toward low-emission steel routes. 4️⃣ Locations like northern Scandinavia, Portugal, and Spain emerge as frontrunners due to access to cheap renewables. 5️⃣ Natural gas–based steelmaking is not competitive in the EU under rising carbon costs. 6️⃣ Imports of low-emission steel and relocation of ironmaking (via HBI trade) may be needed to sustain EU steel output. 7️⃣ CBAM could trigger a “global decarbonisation race” as exporters strive to stay competitive through green technologies. 8️⃣ Complementary policies and trade diplomacy are vital to prevent carbon leakage and support fair global transition. 💬 Will the EU’s carbon border rules accelerate global green steel investment — or simply shift emissions elsewhere? #GreenSteel #EUETS #CBAM #Hydrogen #Decarbonisation #ClimatePolicy #TradeAndClimate #NetZeroIndustry

The European Commission on Oct. 7 unveiled a sweeping new plan to regulate EU steel imports. It is a major change in the EU's approach to steel trade and is worth unpacking in some detail: 1. Assuming the proposal is adopted by relevant EU institutions, the proposal will cut the EU’s tariff free steel import quota by 47% to 18.3 million tons per year, while doubling the tariff on steel imports outside the quota to 50%. (A few non-EU European countries are exempt). 2. Substantively, the EU’s action is about both China and the U.S. The EU is responding to global overcapacity driven largely, though not exclusively, by China, including, as the EU’s report on the steel measures notes, by Chinese steel companies operating in third countries. The EU is also responding to Trump hike of US steel tariffs to 50%, which is driving more of that overcapacity into European markets. 3. Unlike existing EU steel tariffs, which, legally speaking, are temporary “safeguard” measures, the EU has now recognized it needs a permanent structural steel import regime if it wants to maintain substantial EU steel production. The EU is pledging a periodic tariff review, but there is no expiration date. This reflects the reality of a global steel market in which western producers are not low-cost, and, absent ongoing policy support, will keep declining. Of course, higher steel tariffs mean higher steel prices for steel consuming industries in these same western markets. 4. The EU plan isn’t consistent with the WTO! Simply hiking tariff rates and reducing quotas isn’t something the WTO rules allow. The EO plans to square this circle by invoking WTO Article 28, which allows countries to modify their WTO tariff commitments. Under Article 28, other countries are allowed to demand the EU make concessions to offset the EU’s increase in steel tariffs (e.g., cuts to some other EU tariff), or, if the EU doesn’t agree, to impose a penalty on the EU equivalent in value to the higher steel tariffs. It will be very interesting to see if the EU makes other concessions, succeeds in dissuading other countries from retaliating, or gets into a couple of little trade wars. 5. Both the Biden Administration and now the Trump Administration have talked with the EU and other advanced industrial economies about a collective arrangement to allow steel trade among themselves in exchange for a collective tariff wall against China, Turkey, the Middle East, and other low-cost steel producers. The new EU tariff regime might facilitate those discussion—but it isn’t clear to me how interested, really, the Trump Administration is in such a deal. 6. This is a big pivot in EU trade policy and is consistent with the U.S. and other advanced industrial economies deciding, as a policy matter, that it is necessary to maintain certain strategic industries despite the price and diplomatic costs. It’ll be interesting to see how willing the EU is to take this type of approach to other sectors. 

Much of the conversation around the India–EU Free Trade Agreement has focused on one headline: cheaper European luxury cars. Yes, India will lower import duties on a limited number of European-made vehicles, making brands like BMW Group slightly more accessible to a small, premium segment. But that’s not where the real impact lies. In exchange, India secures duty-free or sharply reduced access to EU markets for labour-intensive exports such as textiles, jewellery, and footwear across all 27 EU nations. These are not abstract sectors. They are livelihoods. From Surat to Tirupur to Ludhiana, millions of workers depend on these manufacturing clusters. For them, export access directly translates into jobs, income stability, and long-term growth. As founder Dheeraj Verma aptly put it: A cheaper BMW Group may help a few, but duty-free exports help millions. This FTA is a strategic trade-off opening a narrow premium door to protect and scale the mass economy. By prioritizing` export competitiveness over protectionism, India is embedding its manufacturers deeper into global value chains, diversifying markets, and reducing over-dependence on a handful of geographies. The bigger lesson? Sustainable growth isn’t about blocking imports. It’s about choosing the right trades to unlock scale, jobs, and long-term economic resilience. Follow Shanu Chandra

Winning the EU Garment Market Requires More Than Zero Tariffs Tariffs are finally falling—but exports won’t rise automatically. For years, Indian exporters highlighted the EU’s ~12% tariff disadvantage, especially against Bangladesh (GSP) and Vietnam (FTA). With the India–EU FTA eliminating tariffs from day one, the expectation is clear: exports should surge. The reality is more nuanced 👇 Lesson from Japan: Under the India–Japan FTA (2011), Japan removed 10% garment tariffs. Yet India’s exports barely grew, and its market share remained around 1%. The constraint was not tariffs—it was readiness: consistent quality, process discipline, and ability to deliver at scale. EU: A big opportunity—but a demanding one The EU already accounts for ~28% of India’s garment exports ($4.6 bn). Zero tariffs improve competitiveness, but the market rewards reliability, speed, and compliance—not just price. What must change now: • Compliance is the real entry ticket: EU buyers require adherence to REACH norms, sustainability and traceability standards, and certifications like ISO, SA8000, GOTS, OEKO-TEX. This involves upfront costs and systems—but without it, market access is limited. • Speed & scale (FFI readiness): Global sourcing is driven by fast fashion. Yet most Indian factories fall short on efficiency benchmarks (SAM), constraining large and repeat orders. • Shift to synthetics & winterwear: Nearly 70% of global demand is in synthetics, sportswear, and cold-weather clothing. India’s continued cotton focus has limited growth, even as competitors expanded aggressively. • Move up the value chain: India largely remains a contract manufacturer. Building design capability, brands, and faster response systems is essential to improve margins and reduce dependence on large buyers. What government must support: • Strengthen weaving and processing—the weakest links • Avoid incentivising raw material (yarn/fiber) exports over value-added products • Simplify schemes like Advance Authorization • Extend RoSCTL for policy stability Bottom line: The FTA removes a key disadvantage—but it does not guarantee success. Zero tariffs open the door. Only competitiveness will determine how far India can go. For details , please see my piece in Hindu Business LIne

Europe’s steel industry may be at a turning point.      As DER SPIEGEL’s latest article reports, the EU proposes to almost halve steel import quotas as of July 2026 and apply a 50 percent tariff on out of quota imports. This could lift plant utilization to profitable levels, according to BCG analysis.      The conditions that led to the introduction of EU steel safeguards have not improved. Global overcapacity continues to fuel export pressure and unsustainably low prices, while US trade restrictions keep redirecting steel flows toward Europe. On top of that, weak demand, high energy prices, and rising decarbonization costs persist.      Against this backdrop, the EU decided to tighten and make the trade defense instrument permanent. The aim is to ensure that the EU steel industry can compete on a level playing field and continue to support a strong industrial base in Europe.      It is no accident that the new 50 percent out of quota tariff matches that now imposed by the United States on steel imports. The EU will also introduce a new “melt and pour” requirement, preventing circumvention by ensuring that only steel actually produced in a given country can benefit from its import quota.      Like the existing steel safeguards, quotas will be divided among 30 product families, based on 2022 to 2024 import shares.      The goal is to ensure a more balanced market that keeps EU steel production viable and competitive, creating conditions for continued investment, including in low carbon technologies.      But the move could also raise input costs for Europe’s steel intensive industries. Those competing globally may see margins tighten. However, the medium-term price effect for steel users is unclear. The decline in imports may be offset by higher capacity utilization, a reduction in exports, and the reopening of idled plants.      In reality, both effects are likely: stronger protection for EU steel producers and rising challenges for steel using industries. The key question is how Europe manages this trade off while staying competitive and moving toward decarbonization.      Check the full Der Spiegel article “Hoffnung für Deutschlands Stahlwerke” here (German only): https://lnkd.in/e5fAcMdf       #SteelIndustry #EUTradePolicy #IndustrialStrategy #BCG 

India–EU FTA: A Strategic Opportunity for Indian States One agreement. 27 European markets. A potential ₹6.4 lakh crore export boost for India. The proposed India–EU Free Trade Agreement is not just a diplomatic milestone: it’s a structural opportunity for Indian manufacturing, MSMEs, and export-driven states. From textiles, engineering goods, pharmaceuticals, electronics, chemicals, agri-products, leather, marine products, to handicrafts, states across India stand to gain deeper access to high-value European markets. If executed well, this FTA can: • Improve global competitiveness of Indian industries • Strengthen state-level export ecosystems • Create jobs through manufacturing and value addition • Push Indian businesses up the global value chain Trade agreements don’t deliver results on paper alone execution, quality standards, compliance, and ease of doing business will decide the real outcome. This is a moment for industry, policymakers, and exporters to align and prepare. #IndiaEU #IndiaEUFTA #FreeTradeAgreement #IndianExports #MakeInIndia #Manufacturing #MSME #GlobalTrade #ExportGrowth #AtmanirbharBharat #Textiles #Pharmaceuticals #EngineeringGoods #Electronics #AgriExports

If you tuned into Prime Minister Carney’s meeting with President Trump on Tuesday, you might have thought Canada and the U.S. were on the verge of ending the trade war. Between the volley of compliments, smiles and backslaps, Trump told reporters that Canada was going to walk away “very happy.” Just 24 hours later, that optimism crashed. U.S. Commerce Secretary Howard Lutnick warned that “car assembly is going to be in America and there is nothing Canada can do about it.” After the Carney-Trump meeting in Washington on Wednesday, the Canadian trade team was told to chase sectoral deals with the Americans—on steel, aluminum, energy and autos—a hallmark of what Washington now calls “managed trade.” So what the heck is that? Let's look at the situation with steel. In June, Trump doubled tariffs on Canadian steel and aluminum to 50%, up from the 25% rate announced in February. The impact was immediate. Canada produces roughly 13 million tonnes of primary steel annually, exporting half—and nine out of every ten tonnes goes to the U.S. Those flows are now drying up. Steel prices tell the story. The chart shows the value of Canadian steel exports to the U.S. and U.S. steel prices, both indexed to 100 in January 2025 to simplify the comparison. In the 12 months leading up to Trump’s tariffs, Canada’s steel exports to the U.S. and American steel prices both trended downward. Then came the trade war and the two series diverged—Canadian steel exports fell off a cliff while American steel prices marched north. The new tariffs have reignited steel price inflation. With Canadian imports throttled, American producers are facing less competition and are quietly raising prices. U.S. steel imports from Canada are down 49% while steel prices are up 17% since January. This is the face of managed trade. Under the free-trade order, governments agreed to minimal barriers and let consumer preferences, technology, and competition sort out winners and losers. Managed trade flips that logic. Governments pick strategic sectors, shield them from global competition, and steer investment through tariffs, quotas, and subsidies. For Canada, the question isn’t whether we like it—it’s how we adapt to it. We need to learn to play by the new set of rules: identify national priorities, deploy capital strategically, and make reciprocity work in our favour. Read more in RBC Thought Leadership's issue of Trade Zone: https://lnkd.in/eqW-yW3Q #RBC #trade #tariffs #managedtrade

Good News for👞🇮🇳🇪🇺🌍 Indian Footwear Industry From Indian Clusters to European Markets — the journey begins.👞🇮🇳🇪🇺 👞🇮🇳🇪🇺🌍 India–EU FTA: A Game Changer for Indian Footwear & Leather Industry 👞✨India and the European Union have concluded a historic Free Trade Agreement (FTA) — a milestone that could redefine India’s manufacturing, export and MSME landscape amid global uncertainty. 👞🇮🇳🇪🇺One of the biggest winners? The Indian leather & footwear sector. 👞 Why this FTA matters for Footwear & Leather 🔻 Tariffs slashed from 17% to ZERO on leather and footwear exports 💶 Direct access to the $100 billion EU footwear & leather market 🌍 Entry into 27 EU countries under a single trade framework This move breathes new life into India’s iconic footwear and leather clusters: 📍 Agra & Kanpur – leather footwear & finished goods 📍 Kolhapur – artisanal and heritage footwear 📍 Ranipet & Ambur – export-oriented leather hubs 📍 Bahadurgarh – MSME-driven manufacturing cluster 📍Jaipur Rajasthan gaining maturity for masses. 🏭 Massive Boost for MSMEs As highlighted by Commerce & Industry Minister Piyush Goyal, exports worth ₹6.4 lakh crore from Indian states are set to benefit. For MSMEs, this means: ✅ Easier access to EU buyers ✅ Integration into global value chains ✅ Better pricing due to duty elimination ✅ Increased orders, capacity utilisation & job creation Women artisans, weavers, youth and skilled professionals stand to gain significantly — making this not just an economic agreement, but a social multiplier too 🤝 🎓 Role of FDDI: Talent for a Global Market Institutions like FDDI (Footwear Design & Development Institute) will play a critical role in: 🎨 Design innovation aligned with EU aesthetics 🌱 Sustainable materials & compliance standards 📦 Export readiness, testing & quality assurance 👨🎓 Industry-ready professionals for global brands As EU demand increasingly focuses on sustainability, traceability and design excellence, India’s footwear ecosystem — backed by FDDI — is well positioned to deliver. 🇮🇳 More than a Trade Deal This FTA supports: 🛠 Make in India 📈 Export-led growth 🌐 Trusted global partnerships 👞 India’s rise as a footwear manufacturing powerhouse The India–EU FTA is not just about duty reduction — it’s about confidence, competitiveness and global relevance for Indian footwear. India is ready to walk confidently onto the world stage. 👞🌍 #IndiaEUFTA #IndianFootwear #LeatherIndustry #MSME #MakeInIndia #FDDI #FootwearExports #EUTrade #IndianManufacturing #AtmanirbharBharat #GlobalValueChains

The *India–EU Free Trade Agreement* marks a meaningful reset in how Indian exporters engage with Europe. For several years, higher tariff incidence and regulatory friction have quietly eroded India’s competitiveness in EU markets. This agreement directly corrects those distortion by restoring tariff parity across key sectors such as engineering goods, textiles, chemicals, auto components, and agri-processing. Beyond tariffs, the real shift lies in clearer rules of origin, smoother customs processes, and greater regulatory coordination. These are the levers that influence pricing, contract duration, capacity planning, and working-capital decisions for manufacturers on both sides. Consequently, once this deal comes into force, Indian firms can compete for EU orders on execution and compliance, not price handicaps embedded in the trade regime. 📄 Please read this detailed analysis by Rubix Data Sciences and Vayana to understand what the India-EU Free Trade Agreement means for manufacturers, lenders, and supply-chain partners. Some key highlights for #India: - The FTA provides for the reduction or elimination of #tariffs on approx. USD 33 billion of Indian exports to EU, with tariffs as low as 10% on sectors such as textiles, apparel, leather, footwear, marine products, gems & jewellery, handicrafts, engineering goods, and automobiles. - Indian agricultural and processed food products, including tea, coffee, spices, fresh fruits and vegetables, and processed foods, will gain enhanced competitiveness - The FTA provides predictable market access for Indian service providers across 144 EU subsectors, including IT and IT-enabled services, professional services, education, financial services, tourism, and construction. Advantages for #EuropeanUnion: - EU will gain access to 102 Indian subsectors, which will facilitate high-tech service exports and investments into India. - The FTA provides European companies with greater access to India’s rapidly growing market and young workforce, particularly in services, advanced manufacturing, and technology sectors. - Tariff reductions and streamlined regulatory regimes will enable European exporters to sell machinery, vehicles, pharmaceuticals, chemicals, aerospace components, and high‑technology products more competitively in India. - Enhanced investment protections and market access also make India a more attractive destination for EU capital, diversifying investment portfolios and deepening economic ties. #IndiaEUFTA #FTA #Exports #Imports #BilateralTrade #SCF #Factoring #InternationalTrade #CountryRisk #SupplyChainFinance Mohan Ramaswamy Ramaswamy Iyer Vinod Parmar Tushar Bhaskar André Casterman Ravi Valecha Swati Babel Sameer Sawhney Neha Khan Subir Das Vishal Sharma Letitia Chau Priyesh Ranjan Chirag Negandhi Bharat Mishra, CFA Sapna Kusumgar Swati V Jajodia Neeraj Goenka Naren Goenka Colin Shah Piyush Goyal Rajesh Agrawal IAS Sonal Agrawal Rajani Sinha Anurag Joshi