With the recently concluded India-EU Free Trade Agreement, the Indo-UK deal, now the Indo-US deal, a major window has opened for Indian businesses – not just to export more, but to export differently. The dominant narrative is still the familiar one: India as a competitive supplier of basic, low-cost products and services, while European/US companies add the value through branding, design, customer insight and market access. With the trade deals, the competitiveness goes up and should lift export volumes, but, crucially, it leaves most of the value on the table.
The real opportunity lies beyond. Indian companies must increasingly aim to go deeper into European/ US markets: understanding end-customers, partnering with value-chain players and delivering complete, branded propositions. Doing so allows them to capture a far larger share of value creation – and move decisively away from the commodity trap.
This shift is not optional. Competing only on low cost is a slippery slope. Price pressure from countries, such as China, Vietnam and Bangladesh, will remain relentless. In contrast, value-added, branded players enjoy greater pricing power, more stable demand and higher customer loyalty. They are less exposed to short-term supply-demand swings and far better positioned for profitable growth.
To make this transition, Indian businesses need to move with both greater strategic clarity and greater confidence. The old mindset – that India’s strength lies only in low-cost manufacturing and services – needs to be retired. In fact, the experience of an Indian business in marketing to one of the world’s most complex domestic markets – India itself – gives it a distinct and under-appreciated advantage.
Take Europe, for instance. It’s a large and underestimated opportunity. First, at roughly $23 trillion in GDP, the EU+UK accounts for nearly a quarter of global GDP and is about six times the size of India’s economy. Growth rates may be modest, but sheer market size matters.
For example, an average UK consumer spends close to Rs90,000 a year on apparel, compared to about Rs4,000 in India. Even a small market share in Europe can translate into disproportionately greater value, relative to a similar share at home.
Second, Europe is complex – and that is precisely why Indian companies should feel at home. As many as 27 official languages, many cultures, diverse consumption habits and regional identities co-exist within a unified but complicated, often regulated, market framework. This is not unlike India. Indian businesses have successfully built brands across states, languages and cultures, navigating regulatory complexity at national, state and local levels. Many exporters from other countries have never had to build such muscle. In Europe, these skills become a real competitive advantage.
Third, more than half of Europe’s value-addition still comes from small and medium enterprises, a far higher share than in markets like the US. While global brands such as H&M, Zara, and Adidas dominate visibility, thousands of smaller brands and retailers present profitable niche opportunities. This matters because, while large buyers often use scale to squeeze prices, smaller players value reliability, customisation, quality and service – and are willing to pay for it. Once trust is established, supplier loyalty tends to be significantly higher.
Again, Indian businesses that have marketed in India are highly experienced in dealing with small businesses as intermediaries and customers. This is another muscle they have built. Despite this, many Indian businesses hesitate to pursue value-added opportunities in these markets. The perceived costs of entry are high. The risks of failure seem daunting. Sometimes, they feel they don’t even know how to start. By comparison, the growing Indian domestic market feels safer and more comfortable.
That assessment may have been acceptable earlier. It is far less so today. New GenAI-based marketing and strategy tools are dramatically changing the economics of market entry. Tasks that once required expensive consultants, long lead times and large on-ground teams – market discovery, customer insight generation, value-chain mapping, concept testing and marketing-mix design – can now be done faster, better and at a fraction of earlier costs. In effect, it reduces both the cost and the risk of entry. And these capabilities will only improve further.
The biggest barrier today is not the capability – it is the mindset. Indian businesses must move beyond the belief that these trade agreements only make them better low-cost suppliers. With sound strategic thinking, they should actively pursue higher value-added roles in Western markets.
They know they have strengths others lack: experience in complexity, agility, frugal innovation and an ability to collaborate across fragmented value chains. Used well, these can be powerful advantages. This is why we need to get over the barrier of self-doubt and assertively pursue markets to add value, not just to be a lowest cost player.