India and the European Union have concluded a long-awaited Free Trade Agreement (FTA), marking one of the most significant trade deals for both sides. The agreement, finalised at the 16th India–EU Summit, aims to deepen economic ties, improve market access and strengthen long-term strategic cooperation.
A key highlight of the pact is the wide market access it offers to Indian exporters. The EU will eliminate or reduce tariffs on around 97% of its tariff lines, covering nearly 99.5% of India’s exports by value. More than 70% of these tariff lines will become duty-free as soon as the agreement comes into force.
Labour-intensive sectors such as textiles, apparel, leather, footwear, gems and jewellery, marine products, toys and sports goods are expected to benefit the most. Exports worth nearly $75 billion could gain from this move, with tariff cuts of up to 10% on a large share of goods.
India will also provide tariff concessions on about 92% of its tariff lines, covering roughly 97.5% of EU exports. Around half of these concessions will be implemented immediately, while the rest will be phased in over five to ten years. Sensitive areas such as dairy, cereals, poultry and soymeal have been excluded to protect domestic producers.
The agreement includes a carefully structured approach to automobile imports, allowing limited entry of higher-end European vehicles while encouraging manufacturing under the ‘Make in India’ programme and potential exports from India to the EU.
Beyond goods, the FTA gives a strong push to services trade. The EU has opened access across 144 services subsectors, while India has made commitments in over 100 subsectors. Areas such as information technology, professional services, education, financial services and telecommunications stand to benefit.
The pact also creates a framework for temporary movement of professionals. Indian IT experts, engineers, consultants and researchers are expected to gain from clearer and more predictable rules in the EU, while European firms benefit from easier operations in India.
The EU is India’s largest trading partner in goods, with bilateral trade at $136.5 billion in 2024–25. Services trade added another $83 billion. Officials believe current levels do not reflect the true potential of both economies.
The agreement is expected to come into force in 2027 after legal checks and approvals. It becomes India’s 22nd FTA and, alongside recent deals with the UK and EFTA, significantly widens access to European markets.
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The India–EU FTA goes beyond a standard trade deal. It supports exports, strengthens services and mobility, protects sensitive sectors and deepens strategic ties. Over time, it is expected to drive jobs, support MSMEs and integrate India more closely into global value chains.
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Published on: Jan 28, 2026, 1:12 PM IST
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