Onmanorama Explains | Marine products, coir, professional mobility: 'Mother of all deals’ could boost Kerala, but caveats remain

India and the European Union have concluded negotiations for a long-pending free trade agreement (FTA), hailed by leaders on both sides as the “mother of all deals”. Once implemented, the pact will eliminate tariffs on 99 per cent of Indian exports to the EU and over 97 per cent of EU exports to India, spanning goods, services and professional mobility.

For Kerala, the agreement opens up significant opportunities in marine products, spices, plantation crops, processed food and services, even as sensitive agricultural sectors remain protected.

Marine products
Marine exports are among the clearest beneficiaries for Kerala. Under the agreement, duties on certain marine products, which currently range up to about 26 per cent, will be reduced to zero, allowing duty-free entry into the EU for products such as shrimp, frozen fish and value-added seafood. India’s marine exports to the EU were valued at around ₹8,715 crore (about $1 billion) before the agreement. The EU’s seafood import market is estimated at ₹4.67 lakh crore ($53.6 billion), offering significant room for expansion.

“Given the issues we are facing in the US market after the Trump tariffs, the opening up of EU markets is a welcome development,” said Alex K Ninan, owner of the Baby Marine Group. However, he cautioned that the EU may not be able to absorb all exports diverted from the US. “Though the species are the same, the form and type of products demanded are different for both markets. For example, while the EU takes more head-on shrimp, the demand for marinated shrimp is higher in the US,” he said.

Former IRS officer and Seafood Exporters Association of India secretary general Dr K N Raghavan pointed out that the EU market is more diversified. “The US market is almost entirely shrimp, with more than 90 per cent of exports. In the EU, it is shrimp plus other fish. We export squid and other varieties as well. Last year, the EU ratio would have been around 70–30 or 75–25 between shrimp and other fish,” he said.

Raghavan also highlighted stricter compliance requirements. “Sustainability norms, governance, auditing and quality checks are all tougher in the EU. Regulatory compliance is higher, and that remains a challenge,” he said.

He noted that after the US imposed a 50 per cent duty on Indian seafood, exports to that market declined. “Compared to last year, both quantity and value have fallen by around 10 per cent. In contrast, exports to the EU have increased. From April to November, seafood exports to the EU rose by 38 per cent in value terms and 28 per cent in quantity terms. One reason is that exporters have started looking more at the EU. Second, the EU listed 102 new units, including 50 new units approved for export to the EU,” he said.

According to the latest Economic Review, India’s marine exports declined from 17,81,602 MT in 2023–24 to 16,98,170 MT in 2024–25. Kerala’s marine export volume fell from 1,96,807 MT to 1,79,660 MT, while export value declined from ₹7,231.8 crore to ₹6,941.36 crore, reflecting a contraction of 9.5 per cent in volume and 4.18 per cent in value.

With the FTA bringing most duties down to zero, Indian exporters are expected to gain a level playing field against competitors such as Vietnam, Thailand and the Dominican Republic, which already enjoy lower duties.

Spices, tea, coffee and other agricultural exports
Beyond seafood, the agreement improves access for spices, tea, coffee, rice, cashew and processed agricultural products from India. The EU is already among the top destinations for Indian agricultural exports, accounting for roughly one-fifth of India’s agri exports to developed markets.

Kerala’s spice exports recorded strong growth in 2024–25, with quantities rising by 13.2 per cent and value by 22.47 per cent over the previous year. The state exported 1,35,193.37 tonnes of spices, valued at ₹7,85,153.72 lakh. At the national level, spice export growth accelerated from 9.64 per cent to 16.86 per cent.

The FTA also offers limited but targeted access for processed food and beverage exports, a segment that accounts for about 10–12 per cent of India’s agricultural exports but has struggled to penetrate EU markets due to stringent standards and tariffs.

Products such as chocolates, bakery items and beverages will benefit from selective tariff reductions. These concessions are expected to improve price competitiveness for Indian manufacturers, especially in value-added and niche food products aimed at ethnic and speciality markets.

To address food security and livelihood concerns, India has kept key farm sectors outside tariff liberalisation. Dairy products are fully excluded, with no duty reductions, while poultry, cereals and other sensitive farm items receive no meaningful concessions.

Coir: Opportunity tempered by market realities
Coir products, classified as traditional and natural fibre goods, are currently exported to Europe but face tariffs that affect competitiveness. With duty elimination on a wide range of Indian exports, coir and coir-based products such as mats, ropes, geotextiles and handicrafts could gain better price parity. Kerala, which accounts for 61 per cent of India’s coconut production and over 85 per cent of coir products, saw coir exports rise from ₹1,005.32 lakh in 2023–24 to ₹1,287.79 lakh in 2024–25.

However, Pratheesh G Panicker, managing director of Kerala State Coir Corporation, struck a cautious note. “Nearly 60 per cent of India’s coir exports go to the US, while only 30 to 40 per cent are directed to Europe, largely due to limited distribution pipeline capacity,” he said.

Unlike the US, which has large retail chains like Walmart with fast-moving cycles, Europe has fewer mega retail outlets and slower product refresh rates. “Coir products are positioned as premium lifestyle items rather than everyday utilities, and European retailers tend to retain products across multiple seasons due to consumer behaviour. In US, large retailers typically refresh products every six months or seasonally, replacing designs and inventory based on trends,” Panicker said.

Easier movement for professionals
One of the most significant non-trade gains lies in professional mobility. The agreement covers independent professionals, contractual service suppliers, intra-corporate transferees and short-term business visitors.

It promises faster and more predictable short-term visa processing, along with transparent rules for entry, stay and temporary work, while making it clear that these provisions do not grant any automatic right to permanent residence.

This is expected to benefit Indian professionals in IT, consulting, engineering, healthcare and education, where short-term assignments and project-based work are critical.

Wider sectoral gains
The FTA’s impact extends well beyond Kerala’s core sectors. Premium European cars such as BMW, Mercedes-Benz, Audi, Porsche and Lamborghini are expected to become cheaper in India, with prices potentially falling by 10 to 30 per cent as import duties on luxury cars above ₹25 lakh are cut in phases. Select electric vehicles, batteries and components will also see tariff reductions.

Indian exports of textiles, leather goods, gems and jewellery, handicrafts, toys and sports goods will receive immediate zero-duty access to the EU. High-value sectors such as chemicals, pharmaceuticals, electronics, machinery and capital goods are set to benefit from tariff cuts, regulatory cooperation and lower input costs. In services, improved access is expected for IT, financial, professional, logistics, education and AYUSH-related services.