After nearly two decades of negotiations, India and the European Union have signed a Free Trade Agreement (FTA), which is described as the "mother of all trade deals". This agreement is seen as a structural shift between two major economic blocs engaged in relations with global trade, supply chains and long-term partnerships.
This agreement between India and the EU creates opportunities across a combined market of nearly two billion people and connects economies together.
The main feature of the agreement is reduction or elimination of tariffs on approximately 97% of traded goods between India and the EU. For European exporters, this means savings of up to €4 billion annually in custom duties, while for India it provides enhanced access to one of the world’s most regulated and high-value markets.
Here are some of the tariffs changes introduced under this agreement:
- Automobile duties will gradually fall from around 110% to as low as 10%.
- Wine tariffs will be reduced from 150% to approximately 20%.
- Duties on processed foods such as pasta and chocolates will be fully eliminated.
Opportunities for India
For India, the FTA offers a major opportunity for labour-intensive and export-oriented sectors such as textiles, gems and jewellery, leather products, footwear and selected agricultural products.
In particular, the textile sector is expected to benefit from near zero tariff access to the EU market, which is valued at around $263.5 billion.
However, to get the full advantage of this FTA, India should focus on meeting European buyers’ expectations regarding:
- On-time delivery performance
- Consistent quality standards
- Supply chain transparency and traceability
- Environmental and social compliance
- Professional service and long-term partnership approaches
Opportunities for EU
From the European market perspective, India is a fast-growing consumer market and a strategic production partner. The FTA lowers tariff barriers for European exports including:
- Machinery equipments
- Medical devices
- Premium consumer goods
- Wines, chocolates and selected food products
- Financial, maritime and professional services
In addition, European companies gain the opportunities to invest in India’s infrastructure, manufacturing, and technology sectors.
EU exports to India are projected to grow at twice the amount in the coming years as regulatory access improves and tariffs are reduced.
Beyond trade figures, the Free Trade Agreement between India and the EU carries significant geopolitical and strategic implications. At a time when global supply chains are being reshaped and trade barriers are rising in many regions, this agreement stands out and shows shared commitments to openness, diversification and stability.
India is positioning itself as a reliable global manufacturing and export hub, while Europe is actively seeking to reduce supply chain related risks. Under the leadership of Prime Minister Narendra Modi, India has referred to this partnership as the « double engine of global growth », highlighting the long-term ambition behind this deal.
The success of the agreement will largely depend on effective implementation, regulatory alignment, and how well Indian businesses adapt to European standards. If the agreement is executed thoughtfully, it will not only lower tariffs but also redefine India’s role in global manufacturing, exports and strategic economic partnerships.