India EU Free Trade Agreement: Strategic Breakthrough

The India EU Free Trade Agreement (FTA) has officially concluded. This significant announcement was made at the 16th India–EU Summit by Prime Minister Shri Narendra Modi and European Commission President H.E Ms. Ursula von der Leyen. This landmark agreement marks a new phase in India–EU economic relations. It establishes both entities as committed partners focused on open markets and inclusive growth, following negotiations that relaunched in 2022.

Economic Significance of the Partnership

This partnership integrates two major global economies, creating extensive trade and investment opportunities. The India EU Free Trade Agreement highlights the commitment of both India and the European Union to fostering open markets and mutual growth.

• India is the 4th largest economy globally.

• The European Union is the 2nd largest economy, contributing 25% of the Global GDP.

• Together, India and the EU account for one-third of global trade.

• The European Union is one of India’s largest trading partners.

India EU Free Trade Agreement Overview 

The bilateral trade figures between India and the EU demonstrate the substantial economic relationship. The conclusion of the India–EU Free Trade Agreement aims to further enhance these trade volumes across goods and services.

Market Access and Export Potential

India has secured considerable market access under this agreement, with preferential entry for a vast majority of its exports into the EU. This will significantly boost the ‘Make in India’ initiative and stimulate economic growth.

Over 99% of Indian exports will gain preferential entry into the EU market by trade value. This is expected to drive a significant increase in exports, estimated at INR 6.41 Lakh Crore (USD 75 Billion). Labour-intensive sectors, including textiles, leather, marine products, gems and jewellery, and automobiles, are projected to benefit immensely. Tariffs up to 10% on approximately USD 33 billion of exports will be reduced to zero.

Sectoral Impact

The India EU FTA is set to bring transformative changes across various key sectors in both economies. These changes will foster new opportunities and strengthen existing industries.

MSMEs and Employment

The Free Trade Agreement will generate new opportunities for Micro, Small, and Medium Enterprises (MSMEs). It is also expected to create jobs for women, artisans, youth, and professionals across India.

Automobiles

A carefully designed quota-based auto liberalization package will allow EU automakers to introduce models in India's higher price bands. This also opens avenues for 'Make in India' initiatives and future exports from India. Reciprocal market access in the EU will create opportunities for India-made automobiles.

Agriculture and Processed Food

This sector is poised for a significant boost, ensuring a fair playing field for Indian farmers and agricultural businesses. Key commodities such as tea, coffee, spices, and fresh produce will become more competitive. India has successfully safeguarded sensitive sectors like dairy, cereals, and poultry.

Services

The FTA targets ambitious market access in services, providing certainty of access and non-discriminatory treatment. This focus on digitally delivered services and ease of mobility will significantly boost India’s service exports. India will gain predictable access to 144 EU subsectors, while the EU will access 102 subsectors in India.

Mobility and Professional Opportunities

The India–EU Free Trade Agreement establishes a streamlined framework for business mobility, facilitating travel and work in both directions. This includes provisions for short-term visits, temporary assignments, and business travel.

Mobility commitments are provided by both the EU and India for Intra-Corporate Transferees (ICT) and Business Visitors, including rights for their dependents. The EU has made commitments in 37 sectors for Contractual Service Suppliers (CSS) and 17 sectors for Independent Professionals (IP), covering professional, computer, research, and education services. A framework for Social Security Agreements has been secured over five years. The agreement also supports student mobility and post-study work opportunities.

Intellectual Property and Technology

The FTA strengthens intellectual property protections under TRIPS, covering copyrights, trademarks, designs, and trade secrets. It also affirms the Doha Declaration and recognizes India’s Traditional Knowledge Digital Library (TKDL) project.

This agreement is expected to foster cooperation in crucial areas such as Artificial Intelligence, clean technologies, and semiconductors, contributing to India's technological advancement.

Strategic Importance

This comprehensive partnership extends beyond a typical trade deal, holding significant strategic dimensions for both India and the EU. It reinforces India’s role as a key player in global trade.

The FTA strengthens trade and strategic cooperation between India and the 27-member EU bloc. It integrates Indian businesses deeper into global value chains and empowers workers, artisans, women, youth, and MSMEs. The agreement aligns with India’s vision of “Viksit Bharat 2047,” positioning India as a dynamic global partner.

India's FTA Landscape

The European Union now becomes India’s 22nd FTA partner. This achievement builds on India’s recent efforts to expand its trade relationships globally.

Since 2014, the Government has signed trade deals with Mauritius, UAE, UK, EFTA, Oman, and Australia. In 2025, India signed trade deals with Oman and the UK, and announced the conclusion of a trade deal with New Zealand. This India-EU trade deal, along with other FTAs, effectively opens up the entire European market for Indian businesses.