Overview of the EU-India Free Trade Agreement (FTA)

The EU-India FTA, signed on January 27, 2026, in New Delhi, marks a historic milestone after nearly two decades of negotiations (resumed in 2021 and accelerated in 2025). Dubbed the “mother of all deals” by leaders like Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen, it creates a free trade zone covering nearly 2 billion people and about 25% of global GDP. The agreement aims to boost bilateral trade, which stood at €120 billion in goods (2024) and €59.7 billion in services (2023), by eliminating or reducing tariffs on over 90% of traded goods. It’s positioned as a strategic hedge against global trade uncertainties, including U.S. tariffs under President Trump.

This FTA is comprehensive, covering trade in goods, services, investment, intellectual property, sustainability, and more. Separate talks continue for an Investment Protection Agreement and a Geographical Indications (GI) pact. A Sustainability Impact Assessment (SIA) was conducted to evaluate environmental and social effects.

Key Provisions

• Trade in Goods:
  • Tariffs will be eliminated or reduced on 96.6% of EU exports to India by value (e.g., EU cars, machinery, chemicals, and agri-food like wine/cheese). India will cut tariffs on 86% of lines (93% by value), including EU imports of machinery, transport equipment, and base metals.
  • Specific quotas: India gains duty-free access for 1.6 million metric tons of agricultural exports to the EU (half of current levels).
  • Rules of Origin: Strict criteria to ensure products qualify for preferential treatment, preventing circumvention.
  • Addresses non-tariff barriers like sanitary/phytosanitary (SPS) measures and technical standards.
• Trade in Services:
  • Liberalizes sectors like IT, telecom, finance, and professional services. Enhances market access for EU firms in India’s growing services market and vice versa.
  • Includes a Mobility Pact for easier movement of skilled professionals, students, and business visitors (e.g., simplified visas).
• Investment:
  • Promotes a transparent, non-discriminatory environment. EU FDI in India is already €140.1 billion (2023), with over 6,000 European companies present; this FTA aims to boost it further by resolving restrictive regimes and discrimination.
  • Focus on fair access in procurement and intellectual property rights.
• Sustainability and Other Chapters:
  • Commitments to labor rights, environmental standards, and climate goals (aligned with Paris Agreement).
  • Intellectual Property: Stronger protection for GIs (e.g., EU wines, Indian basmati rice).
  • Dispute Settlement: WTO-compatible mechanisms.

Economic Impacts

• For India: Expected to add 8-10 million jobs by 2032, boost exports by 30-40% (e.g., textiles, pharma, agri-products). Reduces dependence on high EU tariffs (e.g., cars from 110% to ~10%). Helps in diversifying from China and countering U.S. trade pressures. However, sensitive sectors like dairy/agriculture may face competition.
• For the EU: Doubles goods exports to India by 2032 (from current levels), benefiting auto, pharma, and machinery sectors. Enhances supply chain resilience amid global tensions. EU gains from India’s market of 1.4 billion consumers.
• Overall: Bilateral trade could grow to €200-250 billion by 2030. Positive for global supply chains, but potential trade diversion from other partners.

Strategic Implications

Geopolitically, the FTA strengthens the India-EU Strategic Partnership (launched 2004), countering China’s influence and U.S. protectionism. It aligns with EU’s “Global Gateway” and India’s “Make in India” initiatives. Amid Trump-era tariffs, it provides alternatives for both sides.

Challenges and Next Steps

Ratification is pending (EU Parliament approval expected by mid-2026; India’s process faster). Criticisms include uneven benefits (India’s agri sector vulnerable) and ongoing disputes (e.g., EU duties on Indian fibre optics). Implementation will require monitoring via joint committees.

This FTA positions India and the EU as key players in a multipolar world, fostering economic resilience. For real-time updates, check official sources like the European Commission or India’s Ministry of Commerce.