EU-India Trade Agreement Set to Boost Austrian Industry by EUR650 Million

The recent trade agreement between the European Union and India is anticipated to deliver significant economic advantages to Austria's industrial sector. According to a comprehensive analysis conducted by UniCredit Bank Austria, the removal of tariffs and trade barriers as outlined in the new agreement could potentially double Austria's value-added from business with India over the medium term.

Economic Projections for Austria

Current estimates suggest that the agreement could generate an additional EUR650 million in annual value-added for Austrian industries, alongside the creation of approximately 5,000 new industrial jobs. India, with its population of 1.4 billion, represents a key growth market for Austrian exporters, offering considerable opportunities for future expansion.

Understanding Value-Added Versus Export Volume

The analysis conducted by UniCredit Bank Austria differentiates between total export volume and the value that remains within Austria. In 2024, Austrian exports to India reached EUR1.3 billion. Of this, approximately EUR650 million contributed to the domestic value-added according to OECD data. Bank Austria believes that, given Austria's industrial strengths, a doubling of exports is achievable, which would add a further EUR650 million in value to the domestic economy.

Regional Impact Across Austria

The economic benefits of the agreement are expected to vary across Austria's regions. Upper Austria currently leads in export volume to India at EUR445 million, generating EUR220 million in value-added. With the new agreement, this figure could increase to EUR450 million. Styria is also poised for significant gains, with value-added projected to more than double from EUR120 million to EUR250 million. Vorarlberg anticipates an increase from EUR70 million to EUR150 million in value-added, reflecting notable regional growth.

Reduction of Tariff Costs

Previously, high import tariffs have constrained trade between Austria and India. In 2024, the average tariff rate on Austrian goods exceeded 12%, resulting in additional costs of around EUR160 million for the Austrian economy. The elimination of these tariffs, as provided by the new agreement, is expected to offer a strong incentive for Austrian industrial companies, especially those in technology-intensive sectors such as machinery, electronics, and automotive manufacturing.

Job Creation and Labor Market Effects

The anticipated growth in exports is likely to have a direct effect on employment. At present, approximately 5,000 Austrian industrial jobs depend on demand from the Indian market. With the projected doubling of exports, a similar increase in industrial employment is expected. Upper Austria is forecasted to benefit the most, with an estimated 1,800 new jobs, followed by Styria with 1,000 new positions. Other regions such as Vorarlberg, Lower Austria, and Tyrol could each see around 500 new jobs created as a result of the trade expansion.

Outlook for Austria's Export Industries

The EU-India trade agreement is positioned to significantly enhance Austria's industrial output and labor market by facilitating easier access to one of the world's largest and fastest-growing markets. While the full benefits are expected to materialize over the coming years, the removal of tariffs and trade barriers marks a pivotal step for Austrian exporters in sectors poised for international growth.