India-EU Trade Deal: Can Assam move from margins to mainstream?

Dr. Samir Sarkar

The signing of the India-European Union Free Trade Agreement (FTA) on 27 January 2026 in New Delhi may appear, at first glance, to be a distant diplomatic event. But for Assam and the wider Northeast, this agreement carries consequences that are both immediate and structural touching exports, connectivity, industrial policy and the region’s long-term economic positioning.

At a time when global trade is being reshaped by tariff wars, geopolitical rivalry and supply-chain disruptions, this deal places India and by extension the Northeast more firmly within the architecture of global commerce.

The timing of the India-EU FTA is no coincidence. With the United States reimposing steep tariffs on a wide range of imports since 2025, Indian exporters have faced rising barriers in traditional markets. European firms, too, have encountered increasing uncertainty in transatlantic trade. This shared pressure created the political momentum needed to close negotiations that had stalled for nearly two decades. The result is not merely a commercial agreement, but a strategic hedge against instability in the global trading system.

For India, the outcome marks a decisive turn toward diversified trade partnerships. For the Northeast, it opens a window to integrate more deeply into global value chains if the right policy choices follow.

What the Agreement Delivers

The FTA removes or sharply reduces tariffs on nearly 90 per cent of traded goods between India and the EU over phased timelines. For Indian exporters, this restores competitiveness in labour-intensive sectors such as textiles, garments, leather goods, pharmaceuticals, processed foods and engineering products.

European tariffs of 8 to 12 per cent on many Indian exports will be eliminated. This is significant for export-orientated regions, but it is equally important for emerging production centres, like the Northeast, which have long suffered from distance from ports, limited industrial clustering, and weaker integration into national export networks. The agreement also strengthens access to services in IT, professional services, research and mobility, areas where India holds a structural advantage. Over time, this could encourage higher-value economic activity beyond traditional manufacturing.

What This Means for Assam

and the Northeast

For Assam and the Northeast, the relevance of the India–EU FTA lies in three strategic channels: agro-based exports, manufacturing diversification, and connectivity-led trade integration.

1. Agro-based and Natural Resource Exports

The Northeast has a comparative advantage in tea, spices, bamboo-based products, horticulture, organic produce, essential oils and medicinal plants. While agriculture as a sector is excluded from tariff liberalisation, many processed and value-added agro-products fall within industrial categories that will benefit from improved market access.

Assam’s tea industry, already heavily export-orientated, could indirectly benefit from lower logistics and processing barriers if certification, traceability, and sustainability standards are aligned with EU norms. Similarly, processed spices, packaged foods, and herbal products from the region could find greater acceptance in European niche markets if export ecosystems are strengthened.

2. Manufacturing and

MSME Integration

The FTA’s emphasis on labour-intensive manufacturing textiles, leather goods, light engineering and handicraft-linked value chains creates space for the Northeast to position itself as a supplementary manufacturing and sourcing hub, particularly for MSMEs.

Industrial estates in Assam and neighbouring states could attract new investment if infrastructure, power reliability and logistics improve. The region’s relatively lower labour costs, combined with export access to Europe, could make it viable for decentralized production models, especially in apparel, packaging, bamboo composites, and eco-friendly consumer goods. However, this will not happen automatically. Without targeted industrial policy, the benefits will continue to concentrate in traditional export clusters in western and southern India.

3. Connectivity and the

Act East Link

Perhaps the most strategic implication lies in connectivity. The Northeast is central to India’s Act East Policy, linking India to Southeast Asia. As India signs major trade agreements with Europe, Australia, ASEAN and the Gulf, the Northeast becomes more not less relevant as a logistics and transit region.

If road, rail, riverine and border trade infrastructure are upgraded, Assam could emerge as a regional trade and processing hub connecting South Asia, Southeast Asia, and, indirectly, European markets via Indian ports and global shipping routes. This requires sustained investment in multimodal logistics, inland waterways, cold chains and customs facilitation.

Importantly, this moment coincides with Assam’s own economic repositioning: the state has been among the fastest-growing large states in India in recent years, and the recent participation of Assam’s Chief Minister, Himanta Biswa Sarma, at the World Economic Forum in Davos, Switzerland, signals a clear intent by the state government to project Assam not merely as a peripheral economy, but as an emerging investment destination integrated with national and global value chains.

The India-EU FTA was signed alongside agreements on security cooperation, mobility and digital governance. This matters for the Northeast in less obvious ways. A more deeply embedded India-EU partnership strengthens India’s geopolitical standing in the Indo-Pacific, reinforcing stability in regions where the Northeast sits at the frontier of multiple strategic interests. Economic integration and strategic alignment are increasingly two sides of the same coin.

For a region long viewed primarily through a security lens, deeper integration into global trade networks offers a pathway to normalization through economic opportunity. There is, however, a clear danger. Large trade agreements often benefit regions with existing export infrastructure and strong industrial ecosystems. Without deliberate policy intervention, the Northeast risks once again being a peripheral beneficiary.

If Assam and the neighbouring states are to gain meaningfully from the India-EU Free Trade Agreement, it must be backed by concrete domestic action, including the establishment of export facilitation centres across the Northeast, the creation of EU-standard certification and testing facilities, improved access to export financing and structured market-linkage programmes for MSMEs, the development of dedicated logistics corridors connecting the region to major ports, and focused skill-development initiatives aligned with export-oriented manufacturing and processing; without these enabling measures, the Northeast risks remaining largely a supplier of raw materials rather than emerging as an active participant in higher-value, globally integrated export chains.

A Window of Opportunity

The India-EU Free Trade Agreement is not a silver bullet. But it is a structural opportunity. For Assam and the Northeast, the question is not whether the deal matters but whether the region is prepared to position itself within its opportunities. In a world where trade is increasingly shaped by geopolitics, the Northeast can no longer be viewed as a peripheral economy. With the right policy alignment, it can become a bridge between India’s global ambitions and its eastern frontier. The signing of this agreement should therefore be seen not just as a New Delhi success but as a call for Guwahati, Dispur and the state capitals of the Northeast to rethink how the region plugs into India’s global trade future.

In this sense, the India–EU Free Trade Agreement is not a silver bullet but a structural opportunity, and the real question for Assam and the Northeast is not whether the deal matters, but whether the region is prepared to position itself within its possibilities, because in a world where trade is increasingly shaped by geopolitics, the Northeast can no longer afford to remain at the margins of India’s global economic strategy.

(The writer is an associate professor, Department of Business Administration, Gauhati University.) You can contact him at ssarkar@gauhati.ac.in.)