India and the European Union have officially concluded a historic Free Trade Agreement at the 16th India EU Summit. The announcement was made by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen. This deal connects the 4th largest economy, India, with the 2nd largest economy, the EU, together accounting for about 25% of global GDP.
What is the India EU Free Trade Agreement?
The India EU FTA is a comprehensive trade agreement covering goods, services, mobility of professionals, digital trade, SMEs, intellectual property, and climate cooperation. Negotiations restarted in 2022 and concluded in January 2026.
How Much Trade Happens Between India and the EU?
- Goods trade in 2024 to 25: INR 11.5 lakh crore or USD 136.54 billion
- India exports to EU: INR 6.4 lakh crore or USD 75.85 billion
- India imports from EU: INR 5.1 lakh crore or USD 60.68 billion
- Services trade: INR 7.2 lakh crore or USD 83.10 billion
- Total annual EU India trade exceeds €180 billion
How Does the FTA Help Indian Exports?
Over 99% of Indian exports by value will get preferential access to the EU market. Around USD 33 billion of exports from labour intensive sectors will see tariffs reduced to zero when the agreement starts.
Key Sectors Benefiting
- Textiles and apparel
- Leather and footwear
- Marine products
- Gems and jewellery
- Handicrafts
- Engineering goods
- Automobiles
How Does the Deal Impact MSMEs and Jobs?
The agreement creates major opportunities for MSMEs, women workers, artisans, youth, and professionals. It helps integrate Indian firms into global value chains and boosts job creation in export driven sectors.
What About Agriculture and Food Exports?
Indian products like tea, coffee, spices, fruits, vegetables, and processed foods will gain better access to the EU market. However, India has protected sensitive sectors.
Sectors India Protected
- Dairy
- Cereals
- Poultry
- Soymeal
- Selected fruits and vegetables
What Happens to Car and Auto Tariffs?
Auto market access is quota based and calibrated. EU car tariffs in India will gradually fall from 110% to as low as 10% under quotas. Car parts tariffs will be fully eliminated over time. This supports Make in India and future exports from India.
What Does the FTA Mean for Services?
Services are a major focus. The EU gives India predictable access across 144 subsectors including IT, professional services, education, and business services. India offers access in 102 subsectors.
Key Services Gains
- IT and IT enabled services
- Professional services
- Financial services
- Tourism
- Education services
- Construction and business services
Will Indian Professionals Get Easier Mobility?
Yes. The FTA includes a mobility framework for business visitors, intra corporate transferees, contractual service suppliers in 37 sectors, and independent professionals in 17 sectors. It also supports dependents, student mobility, and post study work opportunities.
What Is the CBAM and Climate Cooperation Part?
The agreement includes forward looking Carbon Border Adjustment Mechanism provisions. The EU has envisaged €500 million support over two years to help India reduce greenhouse gas emissions and adapt to carbon rules. Technical cooperation on carbon pricing and clean technology is included.
Does the FTA Cover Intellectual Property?
Yes. It strengthens IP protection for trademarks, copyrights, designs, trade secrets, and plant varieties. It also recognizes India’s Traditional Knowledge Digital Library.
How Big Is This Deal for the EU?
- EU goods exports to India expected to double by 2032
- Tariff cuts cover 96.6% of EU goods exports
- EU businesses save around €4 billion per year in duties
- Cars tariffs drop from 110% to 10% under conditions
- Machinery tariffs up to 44% mostly removed
- Chemicals tariffs up to 22% reduced
- Pharma tariffs up to 11% reduced
What Happens Next?
The legal text will be finalized, translated, and approved by EU institutions and India. After ratification by both sides, the agreement will enter into force.
Summary: The India EU FTA creates a trade zone covering 2 billion people, opens the European market widely for Indian exporters, protects sensitive farm sectors, boosts services and professional mobility, and strengthens climate and technology cooperation.
Bringing you the latest updates on finance, economies, stocks, bonds, and more. Stay informed with timely insights.
Be First to Comment