Key Takeaways:
Western manufacturers of beauty products have a well-documented problem: US tariffs. India, one of the fastest-growing beauty markets and the largest emerging market, may be the only place big and fast enough to offset the hit to their balance sheets.
French beauty companies, the world’s largest producers of luxury and mass cosmetics with L’Oréal at the lead, are banking on a European Union free trade agreement with India to soften the blow from falling US exports under President Trump’s policies. The deal is expected to be signed at the start of 2026, said Emmanuel Guichard, General Manager of the French trade union representing perfume, cosmetics, and personal care companies (FEBEA).
“A key priority is India,” said Guichard, who has headed the FEBEA since 2021. “We are investing a lot in India in anticipation of the free trade agreement.”
The EU–India relationship stretches back to 1962, when India became one of the first countries to forge diplomatic ties with the European Economic Community, a partnership later elevated to “strategic” in 2004. Efforts to seal a broad trade and investment pact have had setbacks. They were launched in 2007, derailed in 2013, and revived in 2021 before being formally relaunched the following year.
Trade now sits at the center of the relationship. In 2023, the EU became India’s largest trading partner, with goods flows reaching €124 billion ($144.41 billion), or 12.2% of India’s total. Even as patterns shifted in 2024, the bloc remained India’s second-largest partner, accounting for €120 billion ($139.75 billion) in goods trade. On the other side, India is the EU’s ninth-largest partner, and bilateral goods trade has nearly doubled in the past decade —momentum both sides hope to channel into the long-awaited agreement.
The FEBEA is among the lead cosmetics associations advocating for the passing of the deal as it warns that US tariffs 2026 could drive a 21% decline in French cosmetics exports to the US, worth €620 million ($722 million).
In numbers, India may be a fraction of the roughly $150 billion US market, but it is moving with a speed and scale that are reshaping global expansion maps. The beauty sector is forecast to leap to $40.80 billion by 2030 from $22.77 billion in 2023, according to Grand View Research—nearly doubling in seven years. What’s driving it is a convergence few markets can match: a swelling middle class, rising discretionary income, and an e-commerce ecosystem that is spreading luxury and mass brands deep into Tier 2 and Tier 3 cities.
As Europe stalls and US tariffs compress margins, India has become one of the few markets that can still deliver real lift for companies. Its economy is expected to grow more than 6% annually, according to the International Monetary Fund, making it one of the fastest-growing emerging economies in the G20.
The opportunity is “huge, especially from an e-commerce perspective,” L’Oréal Chief Executive Nicolas Hieronimus said on the company’s latest earnings call. The French conglomerate aims to double its Indian business by 2027, and is establishing one of its largest global capability centers for global technology, innovation, and research in the city of Hyderabad, according to Indian media reports.
American players with deep European exposure such as Estée Lauder—which opened its Belgium-based manufacturing and fulfillment campus in 1965 and now produces more than 100 million prestige beauty products a year from there—are also racing for share. The New York–based group is deploying “a massive investment” in India, betting on what Chief Executive Stéphane de La Faverie recently called the market’s “tremendous momentum.” The company is prioritizing smaller pack sizes across its mass brands “because the ability for consumers to get access to luxury products is still limited,” he said, noting that India remains 90% mass and 10% prestige.
“Prestige is growing faster [in India], but it's very limited in the number of consumers, so our ability to bring the luxury product at a more affordable price point, the future innovation is going to be critical for us to win in the market,” de La Faverie said.
As another way to deepen their presence, both L’Oréal and Estée Lauder have been taking stakes in Indian beauty companies through their venture capital funds in recent months—mirroring the approach they used in China as homegrown brands gained popularity and market share.
France may be the cradle of modern beauty, but its domestic market is barely contributing to the industry’s expansion, which is expected to remain flat or rise only up to 3% this year —well below the historical 5% to 7% expansion rate.
“For the major brands, the French market is absolutely marginal in terms of revenue,” said Guichard. “It is very important in terms of image, because that’s where the company was founded, where the brand was created, and it gives legitimacy, but in terms of actual market size, France is not a very attractive market.”
For years, French companies offset their sluggish home market with booming US demand.
North America was by far France’s largest export destination in 2024, with €3 billion ($3.49 billion) in cosmetics shipped at customs value. But President Trump’s tariffs are rapidly eroding that pillar and giving an advantage to South Korean beauty brands, which compete aggressively on price and prioritize volume. Those brands are now taking share from both international and US players, Guichard said.
Early signs of the damage are already visible. Cosmetics exported from the European Union now face a 15% duty, plus heavy surcharges on aluminum and steel used in luxury packaging—pushing effective rates to 20% to 30% on many products. As a result, exports from French beauty companies have dropped about 17% over the past three quarters, despite one of those quarters still carrying no tariffs, according to FEBEA data.
The pressure is most acute in the premium and masstige segment, which represents roughly half of France’s cosmetic exports to the US, and is highly sensitive to price increases and Korean competition. The fallout: France is losing ground in its most important market, the US, just as domestic sales stall and China continues to decline.
Guichard highlighted that China, until recently the top destination for French beauty exports, has now slipped to second place, with shipments easing from roughly €3 billion ($3.49 billion) to between €2.5 ($2.90 billion) and €2.6 billion ($3.03 billion). The market has become increasingly challenging for international companies as consumers become more mindful about their spending. American and Japanese players are pulling back, and French brands are feeling the strain as high pricing in China, particularly in the premium and top-premium segments where they are heavily concentrated, continues to weigh on demand.
Beauty executives are concerned about this landscape, but are optimistic, too, Guichard said. “They see opportunities in new markets like India and Southeast Asia, and they believe French brands can remain leaders.”
