Denmark Set to Cash In on India Trade Deal

Femi A.

Writer

January 27, 2026
10:58 pm

The European Union and India have signed a historic trade agreement that will eliminate or reduce tariffs on 97 percent of goods traded between the two economic giants. The deal, representing a quarter of the global economy, is expected to significantly boost Danish exports, particularly in consumer goods, design products, and toys.

Historic Agreement Opens Massive Market for Danish Exporters

The EU and India finalized their trade agreement earlier today in New Delhi, marking the culmination of negotiations that spanned nearly two decades. Indian Prime Minister Narendra Modi called it “the mother of all deals,” while EU Commission President Ursula von der Leyen described the agreement as historic, creating a free trade zone for two billion people.

Von der Leyen expressed confidence that the agreement would double EU exports to India. The deal comes at a time when global trade tensions are rising, particularly with the United States ramping up tariffs on both India and the EU.

Sweeping Tariff Reductions Across Multiple Sectors

The agreement will reduce or eliminate tariffs on 97 percent of goods exported from Europe to India. Products benefiting from reduced duties include beer, wine, processed foods, pharmaceuticals, and medical equipment. Additionally, a significant portion of the tariff on approximately 200,000 European cars priced over 15,000 euros will be removed, with gasoline vehicles seeing immediate benefits and electric vehicles following after five years.

For India, the tariff cap on EU pharmaceuticals and cars will be set at a maximum of 15 percent, with plans for further reductions. This represents a major opening for European manufacturers who have long faced high barriers to entry in the Indian market.

Strategic Timing Amid Global Trade Tensions

The agreement takes on added significance given current global trade dynamics. Meanwhile, the United States under Trump has imposed 50 percent tariffs on Indian goods as of August 2025 and continues to threaten additional duties on EU products. In this context, the EU-India deal provides both parties with greater economic stability and diversification.

Major Opportunities for Danish Industry

Jesper Bollerup Gade from Dansk Industri emphasizes the enormous potential of the agreement for Danish companies. He describes it as a gigantic deal that will create much greater stability in global trade, especially given recent developments with the United States.

According to Gade, export companies will immediately feel the benefits as tariff rates drop to nearly zero from previously high levels. He characterizes the agreement as the world’s largest free trade deal, though he notes that final approval is not expected until 2027.

New Markets for Danish Consumer Goods

The agreement is expected to open significant new opportunities for Danish consumer goods that have previously faced prohibitively high tariffs. Gade specifically mentions design furniture, jewelry, and toys as products that could find substantial new markets in India.

For example, toy manufacturers like Lego could benefit considerably from the reduced barriers to entry in the Indian market. These consumer products have historically been subject to very high tariff rates, making it economically unfeasible to establish a meaningful presence in India.

Trade between the EU and India reached 861 billion kroner in the fiscal year ending in March 2025. With the new agreement in place, this figure is expected to grow substantially in coming years.

Impact on Danish Consumers

Michael Bremerskov Jensen, head of global market development at Dansk Erhverv, believes Danish consumers will primarily notice the agreement’s effects in clothing and textiles. India was previously part of a special EU program giving poorer countries easier access to European markets, but recently lost that advantage.

Jensen expects the Danish clothing industry to import even more of its production from India. As a result, this could mean either larger profit margins for clothing producers or lower prices for consumers. Beyond textiles, the agreement may open doors for other product categories not traditionally sourced from India, such as furniture and certain food items.

He notes that more Indian producers may appear on the Danish market as the agreement brings them onto the radar of Danish importers. However, he stresses that implementation will take time.

Approval Process and Timeline

Despite the signing ceremony, considerable time will pass before the agreement takes effect. The deal must still be approved by the European Parliament, which recently blocked the Mercosur agreement with several South American countries. A legal review period of five to six months is expected before formal approval processes can begin.

In addition to the trade agreement, the EU and India signed several other deals covering security and defense partnerships as well as labor mobility. Interestingly, India has pursued multiple trade agreements since 2016, signing deals with Australia, UAE, South Korea, Japan, and ASEAN countries while negotiating with the UK and Canada, signaling a broader shift toward free trade policies.

Strategic Importance Beyond Economics

The agreement represents more than just an economic arrangement. Von der Leyen’s attendance at India’s Republic Day celebrations in New Delhi underscored the strategic importance both parties place on deepening their relationship. With India experiencing solid economic growth and emerging as a major player in sectors like green energy, water management, biosolutions, agriculture, life sciences, medical technology, maritime solutions, and advanced manufacturing, the partnership offers long-term strategic benefits.

The establishment of an EU-India Trade and Technology Council in 2023 has supported ongoing dialogue between the two partners. This institutional framework will likely facilitate implementation of the trade agreement and provide mechanisms for addressing future challenges.