India-EU sign ‘mother of all deals’: Stocks to buy, winners and losers
Textiles, pharmaceuticals, and specialty chemicals have emerged as the primary beneficiaries, with export-oriented manufacturers rallying as much as 12% on Tuesday on expectations that duty cuts and streamlined approvals will unlock billions of dollars in new trade flows. Beneath the surface, however, a broader opportunity set is taking shape, from shrimp exporters and auto component makers to jewellery retailers—as analysts sift through India’s biggest trade reset in years.
“We see this as a structural recalibration of exports rather than an ‘event’ to play any positive turnaround for equities. While the India-EU deal could be taken well by the markets, a fruitful US-India deal, stability in the rupee, and reduced global noise remain crucial. Sector-wise, textiles and select pharma and chemicals are the major beneficiaries,” Emkay Global said.
Textiles: The Most Direct Winners
The EU will cut tariffs on 99.5% goods traded over seven years, with tariffs to be cut to zero on Indian marine goods, leather and textile products, chemicals, rubber, base metals and gems and jewellery, India’s trade ministry said in a statement.The EU currently imposes duties of around 10-12% on many Indian garment categories, putting Indian exporters at a pricing disadvantage compared with zero-tariff competitors such as Bangladesh and Vietnam.
“If tariffs fall from 10-12% to zero, India would see a massive boost in price competitiveness, bringing it on par with Vietnam and Bangladesh,” Emkay said, flagging knitwear, outerwear, and trousers as key segments where Indian exporters could gain market share.
KPR Mills stands out, with an estimated 58–60% of its FY25 revenues linked to the EU, making it the most exposed listed beneficiary. The stock rose 3% to hit an intraday high of Rs 875 on Tuesday.
Other key textile beneficiaries include Pearl Global, Welspun Living, Gokaldas Exports, Nitin Spinners, Vardhman Textiles, Trident and Indo Count, all with meaningful exposure to Europe. Gokaldas Exports jumped 5% to Rs 585, Welspun Living gained 3.5% to Rs 125.25, Vardhman Textiles climbed 5% to Rs 422, and Trident rose 4% to Rs 26.42.
Emkay says a twin benefit of lower EU import tariffs and reduced duties on fibres and fabrics sourced from Europe could lift both revenues and margins. India’s textile exports to the EU, estimated at about $7.5 billion, are already tilted towards higher value-added products, giving domestic players a strong base to scale up once tariffs are removed.
Shrimp exporters also rallied, with Avanti Feeds rising 3% to Rs 780 per share, while Apex Frozen Foods jumped 12% to Rs 296.
Pharma: Regulatory Gains Trump Tariff Cuts
Pharmaceutical exporters are another key pocket, though the bigger upside is expected to come from regulatory cooperation rather than tariff cuts. Emkay points to faster marketing approvals, harmonised and predictable variation procedures, lower approval-related costs, and smoother acceptance of manufacturing changes as potential game changers.
India’s formulations exports to the EU are about $2.95 billion—nearly 12% of total pharma formulations exports, but Indian companies still account for just around 2.2% of the bloc’s overall pharma imports, highlighting the scale of the opportunity a simpler regime could unlock.
EU drug approvals are currently expensive and slow, with timelines of two to three years and fees of up to EUR 300,000. Any FTA-led move towards quicker approvals and lower application costs could help Indian generics scale up dossiers, win more tenders, and reduce dependence on the US market.
Key beneficiaries on the formulations and generics side include Dr Reddy’s Laboratories, Lupin, and Sun Pharma.
Also poised to gain from easier EU access, especially in biosimilars and contract development and manufacturing opportunities: Biocon, Aurobindo Pharma, Torrent Pharma, and Ipca Labs.
Chemicals: Riding EU’s Cost Crisis
India exported about $8.9 billion worth of chemicals to the EU in 2024, compared with imports of roughly $7.7
billion. European producers are grappling with elevated energy costs in the aftermath of the Russia–Ukraine war, along with tighter environmental regulations, triggering plant closures, asset sales, and a growing push to outsource production to lower-cost geographies.
Emkay believes the FTA will be sentimentally positive, helping deepen existing trade ties and open new ones for Indian chemical manufacturers. It should also lift overall export volumes to the EU, improving India’s competitiveness amid persistent pricing pressure from China.
Emkay’s key EU-facing chemical beneficiaries include SRF, Navin Fluorine, Gujarat Fluorochemicals, Aarti Industries, PCBL, Jubilant Ingrevia, Privi Specialty, and Tatva Chintan. Other likely gainers cited are Vishnu Chemicals, Clean Science, Vinati Organics, and Aether Industries.
The brokerage estimates that higher export volumes, improved asset utilisation, and potential subcontracting or tolling mandates from European innovators—particularly in agrochemicals and pharma CDMO, could lift sector EBITDA margins by around 100-400 basis points over time.
Second-Line Plays: Retail, Metals, Auto Ancillaries
Retail: Titan Company and Senco Gold have “option value” if tariff barriers on gems and jewellery exports to Europe, currently 15-25%, are phased down, allowing them to scale up in a $45 billion EU market where India’s share is only about 6%. Ethos could see marginal gains from possible tariff rationalisation on imported clocks and watches.
Metals: Tata Steel, JSW Steel, HEG and Graphite India are flagged as incremental beneficiaries, though steel exports to the EU are only around $3 billion and face a 25% tariff above a quota of roughly 2 million tonnes, limiting immediate earnings impact.
Auto ancillaries: Casting and forging specialists Bharat Forge, Craftsman Automation, Happy Forgings, Nelcast and MM Forgings are seeing higher engagement from European OEMs as part of a “Euro-plus-one” shift. Two-wheeler exporters Bajaj Auto and TVS Motor stand to gain from any reduction in the EU’s roughly 8% duty on motorcycles.
Who loses: Automakers and Sula
Not all stocks benefited. India’s top carmakers, including Mahindra & Mahindra, Maruti Suzuki India, Tata Motors and Hyundai Motor India, fell up to 5% on Tuesday as tariffs on cars imported from Europe were slashed from 110% to 10% for a limited quota of 250,000 vehicles.
Mahindra & Mahindra dropped as much as 5.1% to its lowest level since August 2025, leading losses on the Nifty Auto index, which was down 2.2%.
Hyundai Motor India shares fell 4.5%, while Maruti Suzuki India declined up to 3% and Tata Motors Passenger Vehicles slid 2%.
In alcoholic beverages, the deal is expected to reduce the roughly 150% basic customs duty on imports from key EU producers such as France, Italy and Spain. While cheaper imported labels could be “initially negative for Sula,” Emkay believes rising penetration and ongoing premiumisation may strengthen Sula Vineyards’ long-term positioning as it refocuses on imported wine distribution.
The macro picture
With the EU already accounting for about 17% of India’s goods exports and around one-third of IT services exports, Emkay estimates that a “high FTA” scenario could lift India’s goods exports to the bloc by roughly $50 billion by FY31 and push the EU share of overall exports to around 22–23%.
“We see pharma, textiles and chemicals as the key beneficiaries to play this theme, aligned with India’s broader structural recalibration of exports,” the report concludes, while emphasising that a favourable US-India trade outcome, currency stability and a calmer global backdrop will be crucial in determining how much of the FTA’s potential ultimately gets priced into equities.
