Gujarat Inc is looking to turn India’s expanding free-trade agreement (FTA) network into a new export growth engine, with state govt identifying textiles, gems and jewellery, chemicals, pharmaceuticals, engineering, ceramics, marine products and food processing among key beneficiaries.Gujarat recorded merchandise exports of about $110 billion in FY26, giving its export-oriented clusters a strong base to tap preferential access to markets including the UK, EU, Oman, Australia and EFTA. The UK CETA provides preferential access for nearly 99% of India’s exports to the UK, while the India-EU FTA provides preferential access across 97% of tariff lines, state govt said.“The FTAs can help Gujarat not only expand exports of existing products, but also diversify into higher-value, finished and specialised products. The focus will be on converting FTA market access into actual export growth, strengthening MSMEs and connecting Gujarat’s industrial clusters more deeply with global supply chains,” said M K Das, chief secretary, Gujarat.The opportunities come amid a turbulent global trade environment marked by US tariffs, geopolitical tensions, supply-chain disruptions and currency movements. For Gujarat Inc, the test now is whether lower tariffs can translate into actual orders, higher-value exports and wider market diversification.Textile exporters prepare for a bigger European opportunityGujarat’s textile exporters see the new FTAs as an opportunity to diversify markets and move into higher-value products, particularly garments, made-ups and technical textiles. Surat’s established man-made fibre ecosystem gives the state a strong base but exporters are also upgrading technology and adapting products to meet European market requirements.While the opportunity has translated into business for some companies, others are undertaking preparatory work to meet buyer requirements. European markets can be demanding on quality, approvals, colours and designs, making product adaptation as important as tariff competitiveness.“The FTAs have created a positive sentiment, and some of it has already started translating into business. Companies are also working on product acceptability, approvals and technology upgrades for European markets. The biggest opportunity will come from garments, made-ups and technical textiles, particularly medical and automobile textiles,” said Chintan Thaker, chairperson, Assocham Gujarat State Council.The FTA guide also identifies MMF apparel, synthetic-fibre dresses and sustainable textiles as emerging opportunities for Indian exporters.Chemical clusters eye shift from commodities to specialty productsUK’s chemicals market is estimated at $35.8 billion, while India’s exports to the UK are only around $843 million, pointing to significant headroom under the new trade agreements.Gujarat’s chemical clusters have a strong manufacturing base, but exporters say lower tariffs alone will not determine their ability to win in European markets. UK is not a particularly large market for chemicals, with greater opportunities in pharma chemicals and oil-and-gas-related products, while the broader European market offers more significant opportunities, according to industry players.REACH is EU’s regulatory framework requiring chemicals placed on the European market to be registered and assessed for safety. For specialty chemical makers, REACH compliance remains a major cost and market-entry hurdle. Chemicals imported into Europe require registration, and exporters can face significant costs for accessing registrations and dossiers held by companies in the region.“REACH is a major issue. Any chemical being imported into the EU has to be approved for usage, and the cost of getting these approvals is very high,” said Anand Desai, MD, Anupam Rasayan.European chemical producers are also facing higher energy costs following the disruption of Russian gas supplies, while Chinese competition continues to pressure global prices. Indian manufacturers face another structural challenge — the cost of capital.For Gujarat, the FTA opportunity therefore lies not only in tariff access but in improving cost competitiveness and moving towards higher-value specialty chemicals, pharma chemicals and downstream products.Gems and jewellery sector gains, but US tariff hurdle remainsIndia’s recent trade agreements with key partners are beginning to benefit the gems and jewellery sector, with exports to UAE and Australia rising after preferential market access took effect.According to the Gem & Jewellery Export Promotion Council (GJEPC), India’s exports to UAE rose 24.8% under the India-UAE Comprehensive Economic Partnership Agreement (CEPA). Average exports increased from $6,135.4 million during FY20-FY22 to $7,658.3 million during FY23-FY26.The India-Australia Economic Cooperation and Trade Agreement (ECTA) has also supported export growth. Average annual exports rose 14.4%, from $292.9 million in FY20-FY22 to $335 million during FY23-FY26. The industry is also expecting greater market access under the India-Oman CEPA, which became operational in June 2026.However, the absence of an India-US trade deal remains a challenge for the sector’s largest export market. The US accounts for nearly 30% of India’s gems and jewellery exports. Indian exports currently face 10% tariff, compared with 12.5% for several competing markets, including China, Hong Kong, Thailand, Turkiye, UAE, Israel and Vietnam.Natural diamonds from the EU, particularly Belgium, face no additional US tariff, while Indian-origin diamonds face 10%. Jewellery exports attract an existing MFN duty of 5.5%to 6%, in addition to a 10% Section 301 tariff, taking the effective duty to about 15.5%-16%. Lab-grown diamonds and synthetic stones also face the additional 10% tariff.GJEPC has sought exemptions for natural diamonds and coloured gemstones and is engaging with the Centre for an early India-US Bilateral Trade Agreement.Zero-duty access a big door for engineering, ceramics exportsEngineering goods and auto components offer a significant opportunity for Gujarat which has manufacturing clusters across Ahmedabad, Rajkot and Vadodara. The state accounts for about 13% of India’s $122-billion engineering exports, according to Sachin Patel, member of Engineering Export Promotion Council.Rajkot’s engineering exports to the UK were worth around Rs 56 crore last year. Exporters said the West Asia conflict has sharply increased shipping and container freight costs. They expect zero-duty access under the UK trade deal to offset part of the higher logistics burden.Gujarat’s pump industry also sees scope to enter developed markets. The state accounts for more than 30% of India’s submersible pump manufacturing, with Ahmedabad and Rajkot as major centres. Companies currently focus largely on the Middle East and Africa, but lower tariffs could improve their competitiveness in Western markets.Brand acceptance, international certifications and buyer linkages remain key hurdles. The larger opportunity is to integrate Gujarat’s manufacturers into global OEM and supply chains.Morbi’s ceramics industry is also expected to benefit. The cluster exports products worth nearly Rs 800 crore annually to the UK. Zero-duty access could further improve the competitiveness of Morbi manufacturers in the market.Gujarat pharma firms look to FTAs to move up the value chainGujarat’s pharmaceutical industry enters the new FTA landscape from a position of strength, with established capabilities across formulations, APIs, intermediates and contract manufacturing. Ahmedabad, Vadodara and other pharma clusters could use greater access to the EU and UK to expand exports and move into higher-value segments.The EU pharmaceutical and medical-devices market is estimated at $572.3 billion, offering significant room for Indian exporters. The opportunity extends beyond generic medicines to specialty formulations, biosimilars, biologicals, APIs, medical devices and diagnostics.Regulatory compliance remains a key challenge in developed markets. Wider market access and a weaker rupee could support exports, but companies will need to meet stringent quality requirements while managing global pricing and supply-chain pressures.“Gujarat is considered the pharmacy of the world, and the new FTAs will bring the opportunity to cater to the high-value segment. We will see exports to Europe rise. Gujarat-based pharma companies have been investing in technology upgrades and better compliance, which will strengthen our presence in highly regulated markets,” said Shrenik Shah, national joint secretary, Indian Drug Manufacturers’ Association.Support to MSMEs: From training to export complianceujarat is aligning its MSME export-support ecosystem with compliance demands of new FTA markets. The state has conducted over 2,500 structured training sessions on export procedures, logistics, GST, customs, RBI rules and other areas, reaching more than 65,000 people. Under the World Bank-supported RAMP programme, about 28,000 MSMEs are being targeted for capacity-building, quality certification, product-testing and accreditation. The state also plans to align support with Rules of Origin, Certificates of Origin, international standards, technical regulations, packaging and labelling requirements for UK and EU.GOING FROM FTA ACCESS TO ORDERS– 20+ sector policies-Export Promotion Council– Buyer-seller meets– VGGS 2027Gujarat is using its Export Promotion Council, sector-specific policies and reverse buyer-seller meets to convert FTA access into export orders. VGGS 2027 will further focus on market diversification, MSME competitiveness, certification and global buyer linkages.
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With inputs from Nimesh Khakhariya