India – Europe Trade Agreements (FTA): Why European OEMs Are Starting to Manufacture in India
For many years, European companies evaluated Asia mainly through a single lens – China manufacturing.
Today, a different factor is influencing sourcing decisions: trade access to Europe.
India’s ongoing and newly signed trade agreements with European regions are changing how products enter the European market. For electronics and medical OEMs, this directly affects import duties, landed costs, and long-term supply stability.
This is why several European manufacturers are not only sourcing from India – they are planning export manufacturing programs from India into Europe.
The Key Agreement: India – EFTA Trade & Economic Partnership Agreement (TEPA)
India recently signed a major agreement with the EFTA bloc (Switzerland, Norway, Iceland, Liechtenstein).
This is especially important because these countries import a large amount of:
- Medical devices
- Precision electronics
- Industrial control equipment
- Embedded electronic assemblies
Once implemented, qualifying products manufactured in India can enter these markets with significantly reduced or zero customs duty, subject to Rules of Origin compliance.
For medical and industrial OEMs, this is a major shift – duty reduction often has a larger financial impact than assembly labour savings.
The Next Big Step: India – European Union FTA
India and the European Union are actively negotiating a comprehensive FTA.
If concluded, it will affect one of the world’s largest import markets for electronics and electromechanical equipment.
Today, many electronic products entering Europe face duties of typically 4%-12%, depending on product classification.
An FTA reduces or removes this burden for qualifying Indian-manufactured products.
This changes one key calculation for European companies:
The manufacturing location now affects the selling price in Europe.
Why This Matters More Than Labour Cost
Many sourcing decisions still compare only hourly wages between countries.
However, European OEMs increasingly look at Total Landed Cost, which includes:
- Import duty
- Freight
- Customs clearance
- Supply risk
- Inventory holding
A simplified example:
| Factor | Without Preferential Access | With India FTA Access |
|---|---|---|
| EU Import Duty | Applicable | Reduced / Eliminated |
| Customs handling | Standard | Preferential clearance |
| Product pricing | Less competitive | More competitive |
| Supply continuity | Vulnerable to disruptions | Diversified and stable |
For regular shipments, duty savings alone can exceed the entire assembly cost difference between countries.
Why Electronics Manufacturing Fits FTA Benefits Perfectly
Electronics assemblies are particularly suitable because they meet Rules of Origin requirements when sufficient value addition occurs in India.
Typical export programs include:
- PCB assemblies (PCBA)
- Control boards
- Medical electronics
- Industrial controllers
- Power and signal cable assemblies
- Wiring harnesses
- Complete box-build systems
These products are high-value, low-volume, and documentation-driven, making them ideal for preferential trade access into Europe.
From “China+1” to “Europe-Focused Manufacturing”
Previously, companies moved production only to reduce geopolitical risk.
Now European companies are moving for commercial advantage.
They gain:
- Improved pricing in European tenders
- Reduced duty exposure
- Reliable English-speaking engineering support
- Stable long-term manufacturing environment
- Predictable export documentation
In other words, India is not replacing existing supply chains – it is becoming a European export base.
How inYantra Supports European Export Programs
inYantra Technologies supports OEMs that design products in Europe and manufacture them in India for shipment back into European markets.
Our facility near Pune, India, provides:
- PCB assembly (SMD, THT, BGA and mixed technology)
- Wiring harness and cable assemblies
- Power cord manufacturing
- Complete box-build and system integration
- Prototype to volume production
- Inspection and functional testing
For European customers, we additionally support:
- Export documentation
- Traceability and batch control
- Country-of-origin compliance
- Packaging and labelling requirements
This allows companies to utilise India not simply as a vendor location, but as a structured export manufacturing hub aligned with European trade access.
What European OEMs Should Evaluate Now
The question is no longer only Where can we manufacture cheaply?
It is:
Where should we manufacture so our product enters Europe with the lowest total landed cost and lowest supply risk?
With ongoing EU negotiations and the newly signed EFTA agreement, India is becoming a practical long-term solution for European-focused production.
Conclusion
Trade agreements are quietly reshaping manufacturing decisions across Europe.
Instead of reacting to disruptions, companies can proactively optimise their supply chain by manufacturing in India and exporting back into Europe.
For many European OEMs – especially in medical, industrial, and electronics sectors – India is no longer an alternative location.
It is becoming a strategic European supply partner.
If your organisation is evaluating new manufacturing options for the European market, this is the right time to explore an India-based export manufacturing partner.