Ziraat Times Team Report
New Delhi: India and the European Union on Tuesday jointly announced the conclusion of the India–European Union Free Trade Agreement (India–EU FTA) at the 16th India–EU Summit, marking a historic breakthrough in India’s global trade engagement. The announcement was made by Prime Minister Narendra Modi and European Commission President H.E. Ms. Ursula von der Leyen during the visit of European leaders to India.
Described as one of the most consequential trade agreements entered into by India, the India–EU FTA positions the two sides as trusted partners committed to open markets, predictability, and inclusive growth. India, the world’s fourth-largest economy, and the European Union, the second-largest economy, together account for nearly 25 per cent of global GDP and one-third of global trade. The integration of these two large, diverse, and complementary economies is expected to create unprecedented trade and investment opportunities.
The agreement comes after intensive negotiations following the re-launch of talks in 2022 and represents the culmination of years of sustained dialogue and cooperation. It reflects strong political will and a shared vision to deliver a balanced, modern, and rules-based economic partnership.
The European Union is among India’s largest trading partners. In 2024–25, India’s bilateral trade in goods with the EU stood at INR 11.5 lakh crore (USD 136.54 billion), with exports valued at INR 6.4 lakh crore (USD 75.85 billion) and imports at INR 5.1 lakh crore (USD 60.68 billion). Trade in services between the two sides reached INR 7.2 lakh crore (USD 83.10 billion) during the same period.
A key highlight of the FTA is unprecedented market access, with over 99 per cent of Indian exports by value gaining preferential entry into the EU. Exports worth nearly USD 75 billion are expected to benefit, including USD 33 billion in 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 per cent being eliminated upon entry into force of the agreement. The agreement is expected to create new opportunities for MSMEs and generate employment for women, artisans, youth, and professionals.
Union Minister for Commerce and Industry, Shri Piyush Goyal, lauded the strategic vision and leadership of Prime Minister Narendra Modi, calling the FTA a defining achievement in India’s economic engagement. He said the agreement goes beyond a conventional trade deal, representing a comprehensive partnership with strategic dimensions. He noted that the pact bolsters the ‘Make in India’ initiative, unlocks high-value commitments in services, and includes a comprehensive mobility framework to facilitate the movement of skilled Indian professionals.
On automobiles, the agreement provides for a calibrated, quota-based liberalisation package, allowing EU automakers to introduce models in higher price bands in India while opening future possibilities for manufacturing and exports from India. Indian consumers are expected to benefit from access to high-technology products and increased competition, while reciprocal access will enable India-made automobiles to enter the EU market.
Improved access for India’s agri products, including fruits
India’s agricultural and processed food sectors are also set to gain under the FTA, with improved market access for products such as tea, coffee, spices, fresh fruits and vegetables, and processed foods. The agreement aims to strengthen rural livelihoods and promote inclusive growth, while India has safeguarded sensitive sectors, including dairy, cereals, poultry, soymeal, and certain fruits and vegetables, by offering no market access.
Other agreements
Beyond tariff liberalisation, the FTA addresses non-tariff barriers through enhanced regulatory cooperation, greater transparency, streamlined customs procedures, and strengthened Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade disciplines. Forward-looking provisions on the EU’s Carbon Border Adjustment Mechanism (CBAM) have been included, securing commitments on technical cooperation, recognition of carbon pricing and verifiers, and financial and technical assistance to help Indian exporters comply with emerging carbon requirements.
Services, a dominant and fast-growing component of both economies, form a central pillar of the agreement. The EU has offered predictable market access across 144 subsectors, including IT and IT-enabled services, professional services, education, and other business services, while India has offered access in 102 subsectors. These commitments are expected to boost India’s services exports and bring high-technology services and investment into India from the EU.
The FTA also establishes a facilitative mobility framework covering short-term and temporary business travel. Commitments have been made for intra-corporate transferees and business visitors, including entry and work rights for dependents. The EU has offered commitments in 37 sectors for Contractual Service Suppliers and 17 sectors for Independent Professionals, including sectors of key interest to India such as professional services, computer services, research and development, and education. A framework for engagement on Social Security Agreements over a five-year horizon, as well as provisions supporting student mobility and post-study work opportunities, has also been secured. Additionally, India has obtained access for practitioners of Indian traditional medicine to work under home titles in EU member states where such practices are not regulated.
In financial services, the agreement promotes cooperation to advance innovation, facilitate cross-border electronic payments, and enhance market access in several major EU member states, deepening financial integration and supporting growth in services trade.
The FTA reinforces intellectual property protections under the TRIPS framework, affirms the Doha Declaration, and recognises the importance of digital libraries, including India’s Traditional Knowledge Digital Library. It also envisages cooperation in critical and future-oriented areas such as artificial intelligence, clean technologies, and semiconductors.
The India–EU FTA embeds review, consultation, and response mechanisms to address future challenges arising from evolving technologies and regulatory complexities. EU becomes India’s 22nd FTA partner. Since 2014, India has signed trade agreements with Mauritius, UAE, Australia, EFTA, Oman, and the UK, and announced the conclusion of an agreement with New Zealand.
The India–EU trade deal, alongside India’s FTAs with the UK and EFTA, effectively opens the entire European market to Indian businesses and exporters. Aligned with the vision of “Viksit Bharat 2047,” the agreement is expected to scale up trade, strengthen strategic cooperation, and lay the foundation for inclusive, resilient, and future-ready growth for both India and the 27-member European Union.
