EU firms must look for trusted partner countries as manufacturing costs surge: Piyush Goyal

New Delhi: European manufacturing will have to seek trusted partner countries to produce goods that are becoming “very expensive” at home, India’ commerce and industry minister Piyush Goyal said in a briefing late on Thursday night (India time).

His remarks come against the backdrop of strained global supply chains, weighed down by ongoing wars in West Asia and Ukraine alongside a broader economic slowdown. The International Monetary Fund (IMF) projects 1.3% GDP growth for the European Union (EU) in 2026. By 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.

Briefing reporters after meeting Germany's Federal Minister for Economic Affairs and Energy Katherina Reiche on Thursday, Goyal noted: “European manufacturing will have to look for trusted countries or trusted partner countries where at least many of the things that are becoming very expensive in Europe can be produced.”

Goyal’s statement comes as India and the 27-member EU prepare 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 a free trade agreement is not just reducing duty rates or preferential duty rates or offering market access. It's a symbol of certainty, continuity and predictability. It's the confidence that supply chains will be open. It's the confidence that these two countries or these set of countries will have good, friendly relations,” said Goyal, who is on an official visit to Germany and Netherlands.

Goyal added that around $200 billion will be invested in data centres in India, noting that such infrastructure is set up exclusively in trusted nations. He also highlighted that numerous companies in the electronics and semiconductor sectors, which invest strictly in trusted jurisdictions, are expanding into India.

Decarbonization edge

In response to a Mint query, Goyal said that because India is rapidly decarbonizing its economy, it will gain an advantage under the EU carbon border adjustment mechanism (CBAM), a tax on carbon-intensive imports. He added that India’s competitors would be the ones to bear the financial burden of CBAM. His comments follow his statement on Thursday, in which he said the CBAM tax was "inviting disaster”.

For its part, New Delhi has secured commitments from the EU, including a forward-looking most-favoured nation (MFN) assurance. Under this clause, any flexibilities or exemptions granted to any third country under CBAM regulations will automatically extend to India.

Goyal said, ”See, as far as the European-Indian relation is concerned, we have a very amicable good settlement with them on CBAM.”

“The question was not about India or the impact of CBAM on India. We will be okay. We ourselves are decarbonizing our economy so fast that we will in fact have an advantage. Because our competition will suffer the cost of CBAM. We are going to support industries which are exporters to Europe to decarbonize faster. And Europe is going to also participate in supporting our industry to decarbonize quickly,” Goyal said.

India’s exports to the EU consist primarily of chemicals, machinery and appliances, mineral products, textiles, and base metals, while its imports from the bloc are dominated by machinery and appliances, transport equipment, optical and medical instruments, and chemicals.

Highlighting institutional support for global trade, Goyal added, “Under the export promotion mission, we are willing to support everybody who wants to export to anywhere in the world.”

The Directorate General of Foreign Trade (DGFT) serves as the nodal agency implementing India’s ₹25,060 crore Export Promotion Mission. “Under the export promotion mission, we will give support to micro and small enterprises. We are willing to literally take care of the entire cost of certification. And others also, if there is some very expensive certification or process, we are happy to support them through the export promotion mission. I urge both existing and new exporters for whatever product in whichever area and whatever certification they require, please approach DGFT and under the export promotion mission, we will take care of the entire cost,” Goyal said.

“So trust truly is the most important factor in today’s world. Because they trust India, India’s leadership, Indian business and the industries in India, and the people of India. India is considered a trusted partner not by Germany alone, but the world,” he added.

Germany is India’s largest trading partner in the EU. Total bilateral trade reached $31 billion in FY26, rising 4.83% from $29.57 billion in FY25, according to data from the ministry of commerce and industry.

“I had very good discussions with my counterpart, Ms. Katharina Reich. We have reaffirmed our shared vision for a trusted, innovation-driven and future-ready growth partnership. You're all aware that the EU-India FTA is a landmark FTA, it will give us huge market access to one of the largest groups of countries, 27 countries, collective GDP of nearly $20 trillion, and a high per-capita income,” Goyal said.

Speaking at the inauguration of the India Centre at the German Council on Foreign Relations (DGAP) on Thursday, Reiche said, “ With India's growth in the global supply chains, the upside is enormous. India already has talent and it works. India is one of the places where modern technology is being built and implemented.”

Ramita Mishra contributed to the story.

The writer is in Berlin as the guest of Confederation of Indian Industry.