India on Tuesday signed a “mother of all deals” Free Trade Agreement (FTA) with the European Union, enabling steep duty cuts on approximately 90 percent of goods and thereby making imports from wine to cars cheaper. The historic FTA between India, the world’s fourth-largest economy, and the European Union, the second-largest, is set to scale up bilateral trade to new highs, with European countries gaining deeper access to India’s 1.4-billion population, expanding gross domestic product (GDP), and growing consumption market. With this agreement, the EU becomes India’s 22nd FTA partner.
The India–EU FTA was signed at the 16th India–EU Summit, held during the visit of European leaders, including European Commission President H.E. Ms. Ursula von der Leyen and European Council President Antonio Costa, to New Delhi. Both leaders were chief guests at India’s 77th Republic Day parade, held on January 26, 2026. The FTA marks a historic milestone in India–EU economic relations and trade engagement with key global partners. Its conclusion positions India and the European Union as trusted partners committed to open markets, predictability, and inclusive growth.
The India–EU FTA marks a new chapter in bilateral economic engagement, strengthening trade and strategic cooperation between India and the 27-member EU bloc. Recognising the multifarious objectives of modern trade, its dynamic nature, fast-evolving technologies, and increasing regulatory complexities, the agreement embeds multiple review, consultation, and response mechanisms to address new and unforeseen challenges that may emerge in the future. The agreement relies on strong stewardship and mutual trust to deliver gains for both sides.
To boost manufacturingIndia’s Prime Minister Narendra Modi said the India–European Union trade deal will boost manufacturing in India and expand services-related sectors in the country. The free trade agreement is expected to further strengthen the confidence of global businesses and investors in India, he said.
The Prime Minister added that the deal complements trade agreements with the UK and Australia and will strengthen both trade flows and global supply chains. He noted that several sectors in India—including textiles, gems and jewellery, leather, and jute—are set to benefit from the agreement.
“This agreement has created massive opportunities for 1.4 billion Indians and millions of people in European countries. It is a wonderful example of synergy between two of the world’s major economies. Together, this agreement represents approximately 25 percent of global GDP and about one-third of global trade. Beyond trade, the India–EU agreement also strengthens the shared commitment of India and the EU to democracy and the rule of law,” Modi said.
Bilateral tradeThe European Union is one of India’s largest trading partners, with bilateral trade in goods and services growing steadily over the years. In 2024–25, India’s bilateral trade in goods with the EU stood at Rs 11.5 lakh crore (US$ 136.54 billion), with exports worth Rs 6.4 lakh crore (US$ 75.85 billion) and imports amounting to Rs 5.1 lakh crore (US$ 60.68 billion). India–EU trade in services reached Rs 7.2 lakh crore (US$ 83.10 billion) in 2024.
India and the EU are the world’s fourth- and second-largest economies, respectively, together comprising around 25 percent of global GDP and accounting for about one-third of global trade. The integration of two large, diverse, and complementary economies is expected to create unprecedented trade and investment opportunities. The conclusion of the India–European Union Free Trade Agreement represents a defining milestone in India’s economic engagement and global outlook, supporting the country’s approach to securing trusted, mutually beneficial, and balanced partnerships.
Bilateral benefitsBeyond a conventional trade deal, it represents a comprehensive partnership with strategic The agreement is comprehensive in its dimensions and is among the most consequential FTAs concluded by India. India has secured unprecedented market access for more than 99 percent of its exports to the EU by trade value, while also bolstering the Make in India initiative. Beyond goods, the agreement unlocks high-value commitments in services, complemented by a comprehensive mobility framework that enables the seamless movement of skilled Indian professionals.
Powered by a young and dynamic workforce and as one of the fastest-growing major economies, India is well positioned to leverage this FTA to create jobs, spur innovation, unlock opportunities across sectors, and enhance its competitiveness on the global stage. The India–EU trade pact covers conventional areas such as trade in goods and services, trade remedies, rules of origin, customs, and trade facilitation, as well as emerging areas including SMEs and digital trade, among others.
The India–EU FTA provides a decisive boost to labour-intensive sectors such as textiles, apparel, leather, footwear, marine products, gems and jewellery, handicrafts, engineering goods, and automobiles, with tariffs of up to 10 percent on nearly US$ 33 billion worth of exports reduced to zero upon the agreement’s entry into force. Beyond enhancing competitiveness, the pact empowers workers, artisans, women, youth, and MSMEs, while integrating Indian businesses more deeply into global value chains and reinforcing India’s role as a key global trade partner and supplier.
EU auto models in IndiaIn automobiles, a calibrated and carefully crafted, quota-based liberalisation package will not only allow EU automakers to introduce their models in India in higher price bands but also open opportunities for Make in India manufacturing and exports from India in the future. Indian consumers are expected to benefit from high-tech products and greater competition. Reciprocal market access in the EU will also create opportunities for India-made automobiles to enter the European market.
India’s agricultural and processed food sectors are poised for a transformative boost under the India–EU FTA, creating a level playing field for Indian farmers and agrarian enterprises. Key commodities such as tea, coffee, spices, fresh fruits and vegetables, and processed foods will gain enhanced competitiveness, strengthening rural livelihoods, promoting inclusive growth, and reinforcing India’s position as a trusted global supplier. At the same time, India has prudently safeguarded sensitive sectors—including dairy, cereals, poultry, soymeal, and certain fruits and vegetables—balancing export growth with domestic priorities.
Services sectorIndia’s predictable access to the EU’s 144 services subsectors—including IT/ITeS, professional services, other business services, and education services—will provide a significant boost to Indian service providers, enabling them to offer competitive, world-class services to EU consumers. At the same time, the EU’s access to 102 subsectors offered by India will bring high-technology services and increased investment from Europe into India, resulting in a mutually beneficial arrangement.
On mobility, the India–EU FTA provides a facilitative and predictable framework for business mobility, covering short-term stays, temporary assignments, and business travel in both directions. These provisions enable professionals to move between the two economies to deliver services under various scenarios. India and the EU are providing reciprocal mobility commitments for intra-corporate transferees (ICTs) and business visitors, along with entry and work rights for the dependents and family members of ICTs.
ConclusionThe EU has also offered commitments in 37 sectors and sub-sectors for Contractual Service Suppliers (CSS) and in 17 sectors and sub-sectors for Independent Professionals (IP), many of which are of particular interest to India, including professional services, computer and related services, research and development services, and education services.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
