India has secured unprecedented market access for more than 99% of Indian exports by trade value to the EU, bolstering the ‘Make in India’ initiative. Beyond goods, it unlocks high-value commitments in services complemented by a comprehensive mobility framework enabling seamless movement of skilled Indian professionals. 

Both in terms of volume and quantum, the deal will probably remain the biggest-ever deal that India will ink, opening up opportunities for India’s exporters of apparel, gems and jewellery, and agro-products, including seafood. 

The India-EU trade deal, along with the FTAs signed with the UK and the European Free Trade Association (EFTA), effectively opens up the entire European market for Indian businesses, exporters, and entrepreneurs. 

Beyond Competitiveness

The India–EU FTA gives a decisive boost to labour-intensive sectors such as textiles, apparel, leather, footwear, marine products, gems and jewellery, handicrafts, engineering goods, and automobiles, bringing down tariffs up to 10% on almost $33 billion of exports to zero on entry into force of the agreement.

Beyond enhancing competitiveness, it 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 player and supplier in global trade with the EU having trade deals with several geographies.

As for the automobiles sector, calibrated and carefully crafted quota-based auto liberalisation package will not only allow EU automakers to introduce their models in India in higher price bands, but also open up possibilities for Make in India and exports from India in the future.

Indian consumers will benefit from high-tech products and greater competition. The reciprocal market access in the EU market will also open up opportunities for automobiles made in India to access the EU market.

For the EU, the sectors that will benefit following the FTA include agri-food, chemicals, pharmaceuticals, machinery, medical devices, avionics and automotive industries.

On the agri-food sector, considering the very high level of protection and the sensitivities of India, the agreement is balanced because it opens market access in key export interests while preserving sensitivities.

Food Factor

The agreement will eliminate duties on several key EU agri-food exports — olive oil (current tariff up to 45% to be eliminated at entry into force or after a 5-year staging), non-alcoholic beer and several fruit juices (current tariff up to 55% to be eliminated in 5 years), processed food such as confectionary, bread, pastry, pasta, chocolate, pet food (current tariff of 33% to be eliminated at entry into force or after staging), and sheep meat (current tariff of 33% to be eliminated over staging). 

EU exports of alcoholic beverages, currently subject to very high tariffs (reaching 150% in some cases), will be reduced over time to 30% for most wines, 40% for all spirits, and 50% for beer. 

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. Sectors like seafood, which have borne the brunt of Trump’s tariffs, have a large market waiting for them in the EU. 

Yet, India has prudently safeguarded sensitive sectors including dairy, cereals, poultry, soymeal, certain fruits and vegetables, balancing export growth with domestic priorities.

Two-Way Services Street

It is not just commodities alone that will benefit from the FTA. The services sector is also a beneficiary of the deal. 

Trade in services amounted to €59.8 billion in 2024, with EU exports amounting to €26 billion and imports amounting to €33.8 billion. The agreement will expand opportunities for service suppliers in both the EU and India, ensuring a more stable and predictable trade environment.

The trade deal secures expanded and commercially significant commitments from the EU across key sectors of Indian strength, including IT and IT-enabled services, professional services, education, financial services, tourism, construction, and other business sectors.

India’s predictable access to the EU’s 144 subsectors (which include IT/ITeS, professional services, other business services and education services) will provide a boost to Indian service providers and enable them to provide competitive Indian services to the EU’s consumers, while EU’s access to 102 subsectors offered by India will bring in high-tech services investment into India resulting in a mutually beneficial arrangement.

Non-Tariff Barriers & Mobility

The FTA also provides measures to tackle non-tariff barriers through strengthened regulatory cooperation, greater transparency, and streamlined customs, sanitary and phytosanitary (SPS) procedures, and technical barriers to trade disciplines.

On mobility, the India-EU FTA provides a facilitative and predictable framework for business mobility covering short-term, temporary, and business travel in both directions. These enable professionals to travel between the two economies to provide services under different scenarios.

The EU and India are providing mobility commitments to each other for Intra-Corporate Transferees (ICT) and business visitors, along with entry and working rights for dependents and family members of ICTs. The EU has also offered commitments in 37 sectors/sub-sectors for Contractual Service Suppliers (CSS) and 17 sectors/sub-sectors for Independent Professionals (IP), many of which are sectors of interest to India, including professional services, computer and related services, research and development services, and education services.

Social Security Agreements

India also secured a framework to constructively engage on Social Security Agreements over a five-year horizon, together with a framework supporting student mobility and post-study work opportunities.

The FTA comes after intense negotiations since its re-launch in 2022. The announcement of the FTA at the 16th Summit marked the culmination of years of sustained dialogue and cooperation between India and the EU, demonstrating the political will and shared vision to deliver a balanced, modern, and rules-based economic and trade partnership. 

The 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 ₹11.5 lakh crore ($136.54 billion) with exports worth ₹6.4 lakh crore ($75.85 billion) and imports amounting to ₹5.1 lakh crore ($60.68 billion). India-EU trade in services reached ₹7.2 lakh crore ($83.10 billion) in 2024.

India and the EU are the 4th and 2nd largest economies respectively, comprising 25% of global GDP and accounting for a third of global trade. Integration of the two large, diverse and complementary economies will create unprecedented trade and investment opportunities. 

(The writer is a commentator on geopolitics. Views are personal.)