UniCredit Bank Austria Analysis
EU-India Agreement: Opens up new opportunities for Austrian industry
- India is a large growth market with 1.4 billion people
- In 2024, Austria exported goods worth EUR 1.3 billion to India, while imports amounted to EUR 1.5 billion
- The elimination of customs duties is expected to provide particularly strong relief for exports of motor vehicles and machinery
- The industrial strongholds of Upper Austria and Styria would benefit disproportionately from an agreement
- The agreement could lead to additional value creation in industry of EUR 650 million per year and 5,000 new industrial jobs in the coming years
The European Union and India agreed on a comprehensive trade agreement on 27 January 2026. The planned agreement is intended to remove most of the existing customs duties and trade barriers. India is one of the most dynamic growth markets in the world.
“The EU-India agreement opens up additional export opportunities for Austrian industry and strengthens its position in global value chains”, says Stefan Bruckbauer, Chief Economist at UniCredit Bank Austria.
Currently still a relatively small export market for Austria, tariff reduction as a growth stimulus
In 2024, Austria exported goods worth EUR 1.3 billion to India, accounting for 0.7 per cent of total exports. Machinery, electronics and synthetic fibres are among the most important export goods. Upper Austria was the strongest exporting province with EUR 445 million, followed by Styria (EUR 231 million) and Vorarlberg (EUR 149 million).
Average customs duties of over 12 per cent (weighted by export volume) on Austrian exports are currently weighing particularly heavily on the automotive industry, the beverage industry and parts of the mechanical engineering sector. An agreement is intended to eliminate over 90 per cent of these customs duties. In 2024, customs duties amounted to a total of approximately EUR 160 million on Austrian exports to India.
“India levies high import duties by international standards. The elimination of these burdens would be a clear boost for many domestic industrial companies, especially in technology-intensive sectors”, says Robert Schwarz, economist at UniCredit Bank Austria.
Industrial regions as winners
Based on OECD TiVA (Trade in Value Added) data, Indian final demand will generate domestic industrial value added of around EUR 650 million in 2024. This represents less than 1 per cent of Austria's total industrial value added. The industry-intensive provinces of Upper Austria and Styria will benefit most from trade with India. Upper Austria generated around EUR 220 million in industrial value added in 2024. Styria achieved EUR 120 million.
These regions also benefit most from a trade agreement, as their industrial structures – particularly in the automotive and machinery sectors – will benefit disproportionately from the expected tariff reductions. Relative to total economic output, the increase in Vorarlberg is the largest at 150 million euros.
Assuming a doubling of Austrian exports of goods to India – a scenario that appears realistic given the sector's strengths – industrial value added could increase significantly:
Upper Austria with an increase to EUR 450 million and Styria to EUR 250 million. These calculations already take into account international value chains, such as rising demand from Germany for Austrian intermediate goods.
Significant positive employment effects
There are also clear advantages for the Austrian labour market. Currently, around 5,000 industrial jobs in Austria depend directly on Indian demand. If exports double, this effect is also likely to almost double. "In Upper Austria, we expect an increase in industrial jobs of 1,800 due to higher demand from India, and in Styria of 1,000," Schwarz calculates. Around 500 new jobs are likely to be created in Vorarlberg, Lower Austria and Tyrol.
“The agreement is a strategic addition to existing European trade policy and strengthens the position of domestic industry in one of the fastest-growing markets in the world”, Bruckbauer concludes.
Enquiries:
UniCredit Bank Austria Economics & Market Analysis Austria
Robert Schwarz, Phone: +43 (0) 50505-41974;
Email: robert.schwarz@unicreditgroup.at