EU firms need to look for trusted partner countries as production costs rise: Piyush Goyal | Today’s news
New Delhi: European manufacturing will have to look for credible partner countries to produce goods that are becoming “very expensive” at home, India’s Commerce and Industry Minister Piyush Goyal said at a briefing late Thursday evening (India time).
His remarks come against a backdrop of strained global supply chains, burdened by ongoing wars in West Asia and Ukraine along with a broader economic slowdown. The International Monetary Fund (IMF) projects GDP growth for the European Union (EU) at 1.3% in 2026. In contrast, the IMF raised India’s growth forecast by 60 basis points to 7% for FY27, cementing its position as the fastest growing major economy.
Press briefing after the meeting with the German Federal Minister for Economic Affairs and Energy Katherine Reiche noted Goyal on Thursday: “European manufacturing will have to look for credible countries or credible partner countries where at least many of the things that are becoming very expensive in Europe can be produced.
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Goyal’s statement comes as India and the 27-member The EU is preparing to sign a proposed free trade agreement (FTA) by the end of the calendar year, with implementation expected within four to five months.
“So remember that a free trade agreement is not just about reducing tariffs or preferential tariffs or offering market access. It’s a symbol of certainty, continuity and predictability. It’s a confidence that supply chains will be open. It’s a confidence that these two countries or this group of countries will have good, friendly relations,” said Goyal, who is on an official visit to Germany and the Netherlands.
Goyal added that around $200 billion will be invested in data centers in India, noting that such infrastructure is set up exclusively in trusted countries. He also highlighted that a number of electronics and semiconductor companies that invest strictly in trusted jurisdictions are expanding into India.
Decarbonizing edge
Responding to a Mint query, Goyal said that as India rapidly decarbonises its economy, it will benefit under the EU’s Carbon Border Adjustment Mechanism (CBAM), a tax on carbon-intensive imports. He added that the financial burden of CBAM will be borne by Indian competitors. His comments follow his statement on Thursday in which he said the CBAM tax was a “benign disaster”.
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New Delhi has secured commitments from the EU, including a forward-looking most-favoured-nation (MFN) assurance. Under this provision, any flexibility or exemptions granted to any third country under the CBAM regulations will automatically extend to India.
Goyal said, “You see, as far as the Europe-India relationship is concerned, we have a very friendly good settlement with them on CBAM.”
“The question was not about India or the impact of CBAM on India. We will be fine. We ourselves will decarbonize our economy so fast that we will actually have an advantage. Because our competition will suffer the cost of CBAM. We will support industries that are exporters to Europe to decarbonize faster. And Europe will also participate in supporting our industry to decarbonize quickly,” Goyal said.
India’s exports to the EU consist mainly of chemicals, machinery and equipment, mineral products, textiles and base metals, while its imports from the bloc are dominated by machinery and equipment, transport equipment, optical and medical devices and chemicals.
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Emphasizing institutional support for global trade, Goyal added, “As part of the export promotion mission, we are willing to support anyone who wants to export anywhere in the world.”
The Directorate General of Foreign Trade (DGFT) serves as the nodal authority conducting India’s ₹Export support mission in the amount of 25,060 million crowns. “Under the Export Promotion Mission we will provide support to micro and small businesses. We are willing to literally take care of all the certification costs. And also others, if there is any very costly certification or process, we will be happy to support them through the Export Promotion Mission. I encourage existing and new exporters, any product in any field and any certification they require, please approach DGFT and under the Export Promotion Mission, we Goyal will take care of the entire cost.
“So trust is really the most important factor in today’s world. Because they trust India, Indian leadership, Indian business and industry in India and Indian people. India is considered a trusted partner not only by Germany, but by the whole world,” he added.
Germany is India’s largest trading partner in the EU. Total bilateral trade reached $31 billion in FY26, up 4.83% from $29.57 billion in FY25, according to data from the Ministry of Trade and Industry.
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“I had very good talks with my counterpart Ms. Katharina Reich. We reaffirmed our shared vision of a trusted, innovative and future-ready growth partnership. You are all aware that the EU-India Free Trade Agreement is a landmark free trade agreement, it will give us huge market access to one of the largest group of countries, 27 countries, a combined GDP of almost 20 USD and a total income of almost 20 USD.
Speaking at the inauguration of the India Center at the German Council on Foreign Relations (DGAP) on Thursday, Reiche said, “With India’s growth in global supply chains, the upside is huge. India already has the talent and it works. India is one of the places where modern technology is being built and implemented.”
Ramita Mishra contributed to this story.
The writer is in Berlin as a guest of the Confederation of Indian Industry.
