India and the EU have recently announced the conclusion of a long-pending FTA, marking a major step in bilateral economic relations. The negotiations were finalised during the India–EU Summit held in New Delhi. Here is all you need to know more about this important deal.
The agreement was concluded during meetings between Prime Minister Narendra Modi and European Commission President Ursula von der Leyen, along with European Council President António Costa. The European leaders were in India following their participation in the Republic Day celebrations.
The deal comes at a time of heightened uncertainty in global trade, with renewed tariff pressures and shifting trade policies in major economies, including the United States. Against this backdrop, the agreement is seen as a move to deepen economic cooperation between two large markets.
The European Union is among India’s largest trading partners. Bilateral trade in goods stood at around €120 billion in 2024, accounting for nearly 11.5% of India’s total trade, while services trade has grown steadily in recent years.
Trade Ties Deepen
According to official data, India ranks as the EU’s ninth-largest trading partner, while the EU remains a key destination for Indian exports such as textiles, leather, gems and jewellery, and seafood. Trade in services reached €59.7 billion in 2023, almost double the level seen in 2020.
Negotiations on the FTA were formally relaunched in 2022 after remaining stalled for several years. Talks also ran in parallel on an Investment Protection Agreement and a Geographical Indications Agreement. While the original target was end-2025, discussions continued into early 2026 to resolve outstanding issues.
The European Commission has described the pact as the largest trade agreement ever concluded by the EU with a single country. For India, it represents the most wide-ranging trade deal negotiated so far.
Under the agreement, India will gradually reduce or eliminate tariffs on about 96.6% of goods imported from the EU. European estimates suggest this could double EU goods exports to India by 2032 and lead to annual duty savings of around €4 billion.
Significant tariff reductions are planned for sectors such as machinery, electrical equipment, aircraft, pharmaceuticals, chemicals, plastics, iron and steel, and medical devices. Many duties will be phased out over periods of five to ten years.
India has also agreed to lower import duties on premium cars priced above €15,000, subject to an annual quota of 250,000 units. Duties are expected to fall in stages from current levels of up to 110% to around 10% over time.
In agriculture and food products, tariffs on items such as olive oil, processed foods, fruit juices and chocolates will be reduced, while wine and spirits will see substantial duty cuts. Certain sensitive agricultural products have been excluded from liberalisation.
On the EU side, import duties will be removed on about 90% of Indian goods, rising to nearly 93% within seven years. This is expected to provide near-zero duty access for many Indian exports to the European market.
Services and Safeguards
In services, India has made deeper commitments than in any of its earlier trade agreements, including those with the UK and Australia. New areas such as dredging and maritime cable-laying have been opened, alongside provisions on transparency and intellectual property.
The agreement also includes a dedicated chapter for small and medium-sized enterprises, along with safeguard mechanisms to address import surges. Parallel talks on investment protection aim to ensure fair treatment of investors while preserving regulatory space.
A separate Geographical Indications Agreement, once finalised, is expected to protect traditional products and support rural producers on both sides. However, differences remain on issues such as data rules and the EU’s Carbon Border Adjustment Mechanism.
Overall, the India–EU FTA is expected to reshape trade flows over the coming decade, with gradual tariff reductions, expanded services access, and stronger economic integration between the two economies.
