India and the European Union (EU) have concluded a long-awaited Free Trade Agreement (FTA), marking a major shift in economic relations between two of the world’s largest and most influential markets.
The agreement was jointly announced by Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen at the 16th India–EU Summit, following years of negotiations that were re-launched in 2022. Officials described the pact as one of the most comprehensive and consequential trade deals signed by either side, positioning India and the EU as trusted partners committed to open markets, predictable rules and inclusive growth.
Together, India and the 27-member EU account for about 25% of global GDP and nearly a third of world trade. Their economic integration is expected to unlock significant new trade and investment flows across goods, services and emerging sectors.
Trade scale and economic impact
The EU is already one of India’s largest trading partners. In the 2024–25 financial year, bilateral trade in goods reached INR 11.5 lakh crore (about $136.5 billion), with Indian exports worth $75.9 billion and imports at $60.7 billion. Services trade added another $83.1 billion, underscoring the growing importance of cross-border digital, professional and business services.
Indian Commerce and Industry Minister Piyush Goyal said the FTA secures “unprecedented market access” for Indian exporters, with more than 99% of India’s exports by value gaining access to the EU market. He added that the deal goes beyond tariffs, embedding strategic, technological and mobility dimensions that support India’s long-term competitiveness.
Boost for manufacturing, MSMEs and labour-intensive sectors
The agreement eliminates tariffs of up to 10% on nearly $33 billion worth of Indian exports once it enters into force. Labour-intensive sectors such as textiles, apparel, leather, footwear, marine products, gems and jewellery, handicrafts, engineering goods and automobiles are expected to be among the biggest beneficiaries.
Indian officials say the pact strengthens the “Make in India” agenda by integrating domestic manufacturers more deeply into global value chains, while supporting employment for workers, artisans, women and small businesses.
In the automotive sector, a calibrated, quota-based liberalisation framework allows European carmakers to introduce higher-end models into India, while also opening future opportunities for manufacturing and exports from India to the EU. Consumers are expected to benefit from greater competition and access to advanced technologies.
Agriculture, food and safeguards
India’s agricultural and processed food sectors are also set to gain improved access to EU markets, particularly for tea, coffee, spices, fresh produce and processed foods. At the same time, India has protected sensitive sectors such as dairy, cereals, poultry and soymeal, balancing export ambitions with domestic food security and farmer interests.
Services, mobility and talent flows
Services, the fastest-growing component of both economies, are a central pillar of the deal. The FTA guarantees predictable, non-discriminatory access for Indian service providers across 144 EU subsectors, including IT and IT-enabled services, professional services, education, finance, tourism and construction.
The agreement also introduces a structured mobility framework, easing short-term business travel, intra-corporate transfers and contractual service provision. The EU has committed access in dozens of sectors for Indian professionals, alongside entry and work rights for dependents of intra-corporate transferees.
India also secured provisions to engage on social security agreements, support student mobility and post-study work opportunities, and allow practitioners of Indian traditional medicine to work under home-country qualifications in EU member states where such practices are not regulated.
Digital trade, climate and regulation
Beyond tariffs, the pact addresses non-tariff barriers through regulatory cooperation, streamlined customs procedures, and clearer rules on sanitary, phytosanitary and technical standards.
On climate-related trade rules, including the EU’s Carbon Border Adjustment Mechanism (CBAM), India secured commitments on technical cooperation, recognition of carbon pricing systems and support to help exporters meet emerging emissions requirements.
Financial services provisions aim to deepen integration, promote innovation and support cross-border electronic payments, while intellectual property chapters reinforce TRIPS protections and recognise initiatives such as India’s Traditional Knowledge Digital Library.
Strategic and future-facing partnership
Officials on both sides said the FTA will support cooperation in artificial intelligence, clean technologies and semiconductors, aligning trade with long-term technological and sustainability goals.
The India–EU deal becomes India’s 22nd free trade agreement and, alongside recent pacts with the UK and the European Free Trade Association, effectively opens much of the European market to Indian exporters.
Framed within India’s “Viksit Bharat 2047” vision, the agreement is intended not only to expand trade but also to anchor a resilient, future-ready partnership that supports innovation, job creation and inclusive growth across both economies.
