Ashhar Alam | New Delhi

India’s newly finalised Free Trade Agreement (FTA) with the European Union is expected to significantly expand business prospects for Micro, Small and Medium Enterprises (MSMEs), signalling a key shift in the country’s economic trajectory.

Industry leaders say the pact offers Indian businesses direct access to a vast USD 23-trillion European economy spanning 27 EU member states. Ranjeet Mehta, CEO and Secretary General of the PHD Chamber of Commerce and Industry (PHDCCI), described the agreement as a crucial economic breakthrough, particularly for smaller enterprises facing global trade pressures.

“The India-EU FTA is a landmark development. It opens a gateway for Indian industries to one of the world’s largest economic blocs,” Mehta told ANI. He noted that the agreement could act as a cushion for MSMEs, especially those affected by recent US tariff measures.

Labour-intensive sectors are expected to be the biggest beneficiaries under the new trade framework. Traditional export segments such as textiles, apparel, gems and jewellery are likely to see renewed momentum, helping revive industries that have faced international headwinds.

“These sectors stand to gain substantially, and the agreement will also support employment generation across the country,” Mehta said. He highlighted that India and the EU together account for over two billion people and nearly a quarter of the global economy, underlining the scale of opportunity.

Beyond trade expansion, the FTA places strong emphasis on deeper economic integration. According to Mehta, the deal strengthens India’s participation in global value chains, particularly in logistics and manufacturing, while encouraging technology collaboration and higher investment inflows.

Calling the agreement a “win-win” for both sides, he added that Indian industry expects greater technological integration and long-term capital investment as a result of closer ties with Europe.

Recent findings from the PHDCCI SME Index further support this optimistic outlook. Surveys conducted among manufacturing units indicate steady growth in domestic production and improved hiring sentiment for the coming quarters.

“The data reflects robust manufacturing growth and a clear intention among industries to expand their workforce,” Mehta said.

PHDCCI’s analysis also points to sustained demand for goods and services, driven by improved market access under the FTA. The industry body expects this positive trend to continue in the months ahead, with MSMEs emerging as key beneficiaries of the strengthened India-EU trade partnership.