The European Union and India seal a historic trade agreement, what does this mean for the cosmetics sector?

The European Union and India have reached a historic trade agreement, after nearly twenty years of negotiations. This agreement serves to lay the foundation for one of the largest free trade areas in the world. The pact, which connects economies representing nearly 25% of global GDP and a third of world trade, has direct implications for strategic industrial sectors, especially the automotive sector or some very 'made in Spain' products like olive oil or wine. However, as indicated by the Spanish Government, new opportunities are opening up for the internationalization of Spanish companies in a market of "enormous potential" like India. And here, the Spanish beauty sector has a lot to say. Access to a high-potential market for European brandsIndia is consolidating itself as one of the markets with the greatest projection for the cosmetic sector in the medium and long term, driven by: A population of over 1.4 billion people. The sustained growth of the urban middle class. The increase in spending on personal care, skincare, and perfumery, especially in premium and dermocosmetic segments. According to a brief report by ICEX, the main products demanded by Indian consumers are: personal hygiene and grooming: (21%), hair care (24%), skincare (18%), and color cosmetics (9%) The turnover of the Indian personal care cosmetics industry, according to the same ICEX report, amounted to 18.16 billion US dollars in 2024, a growth of 9.3% compared to the previous year. In 2024, India bolstered its rise on the international cosmetics industry landscape and reached fourth place globally, only behind the United States, China, and Japan. In terms of exports and imports, Indian imports totaled 1,671,790 thousand dollars in cosmetic products in 2024, while exports reached 2,876,441 thousand dollars during the same period. Spain exported 53.89 million dollars to India in 2024, compared to 47.96 million USD in 2023. The progressive reduction of tariffs and trade barriers will facilitate the entry of European products, traditionally penalized by high import costs and complex regulatory processes. For EU brands, this represents a direct improvement in competitiveness against local players and other exporting markets.Some of the beauty sector brands present in India are Germaine de Capuccini, Sesderma, Skeyndor, or Natura Bissé. Market access is subject to tariff barriers, which in this case, for the cosmetic sector, is 20%, and we will have to see if this agreement changes this figure. What does the Indian consumer want?According to Mordor Intelligence, the increase in digital literacy and greater access to social networks has changed the way Indians think, and social networks have allowed Indian consumers to learn about the diversity of beauty: products, ingredients, formats...The Indian consumer, like other cosmetic product consumers, closely follows the progress of integrating artificial intelligence and virtual reality into the shopping experience. In the Mordor Intelligence report itself, they explain that Nykaa has become a leading digital innovator in the country, pioneering advancements in personalization through AI and virtual try-ons with augmented reality. On the other hand, the Indian consumer is aware of sun damage, leading to a growing interest in sun care products: L'Oréal and Neutrogena dominate this market segment. Interest in premium products: "premiumization" and accessible luxury are expanding, with global brands increasing their presence. Furthermore, there has also been an interest in men's cosmetics and grooming: according to ICEX, there is accelerated growth in men's grooming and skincare.In terms of spending, although the Indian consumer does not reach the spending of Western consumers, the annual growth rate is among the fastest in the world. All imported cosmetics entering Indian territory must be registered with the Central Drugs Standard Control Organization (CDSCO).Sustainability Penetrates the Indian Cosmetics MarketSustainability is also a desire on the part of Indian consumers: they particularly value organic and natural ingredients, and this confirms that global trends are also penetrating Indian society. Since 2020, Cosmetics Rules 2020, the regulation governing there, has prohibited cosmetic products from being tested on animalsMake-up leads the marketMordor Intelligence estimates that makeup products will register solid growth until 2030, with a CAGR of 11.74%. Lipsticks and products such as glosses or lip shines continue to dominate the market. Another segment that has managed to grow in the past year is eye makeup; products like eyeliner or mascara are now more accessible due to a wider offering. Nykaa: The Big Player in India's Cosmetic Market ShoppingNykaa appears to be the channel of choice for Indian consumers. Nykaa is the leading omnichannel beauty and cosmetics retailer in India. In fiscal year 2024-25, it generated approximately ₹7,950 crore ($935 million) in revenue and showed solid growth in margins and expansion both offline and online. Its beauty business accounts for the vast majority of sales, with strong momentum from premium and private label brands, and recent quarterly results show tripling of profits in some periods and revenue increases of ~25% driven by high-value makeup and skincareHowever, other platforms and marketplaces also operate in India, such as Amazon India, Flipkart, and Myntra, which are rapidly gaining ground, especially among young and urban consumersNykaa also owns Nykaa Luxe, which offers products from the luxury and premium segments. One of the figures supporting this trend and the preference of Indian consumers for premiumization and "affordable luxury" is that 55% of beauty sales on Nykaa belonged to the *prestige* sector.This platform has also managed to democratize consumers' access to color cosmetics, largely driven by the rise of influencer marketing focused on personal care.Who leads the cosmetics industry in India?The market share is held by a giant like L'Oréal, followed by Estée Lauder, and Unilever in third place. In fourth place, we find Nykaa, and in fifth, Vellvette, specializing in eye makeup and skincare.A medium-term strategic opportunityThe Spanish cosmetic sector, in this case, must perceive the EU-India agreement as a strategic lever for medium and long-term growth. Companies that anticipate this new commercial framework, adapting their portfolio, pricing, regulation, and positioning, will be better positioned to capture value in one of the world's most dynamic markets.

The European Union and India seal a historic trade agreement, what does this mean for the cosmetics sector?

The reduction of trade barriers between the European Union and India could boost the export potential of the Spanish cosmetics industry

Miriam Mora

Journalist and Editor