Quick Facts: EU–India Free Trade Agreement
- Annual EU–India trade: Over €180 billion
- Population covered: Nearly 2 billion people
- Key sectors impacted: Automobiles, machinery, chemicals, pharmaceuticals, agri-food, services
- Car tariffs: To be reduced gradually from over 100%
- SME focus: Dedicated support mechanisms included
- Climate cooperation: Separate EU–India platform planned for 2026
The European Union and India have formally concluded negotiations on a long-awaited Free Trade Agreement (FTA), marking one of the most significant trade breakthroughs for both sides in recent decades. Described as ambitious and far-reaching, the agreement is expected to deepen economic cooperation between two of the world’s largest economies at a time of global uncertainty and geopolitical strain.
The deal brings together the EU and India—currently the world’s second- and fourth-largest economies—into a trade framework that aims to boost market access, reduce tariffs, and strengthen long-term political and commercial ties.
A Historic Step in EU–India Relations
European Commission President Ursula von der Leyen hailed the agreement as a historic milestone, calling it a powerful signal that open, rules-based trade can still deliver results. According to EU officials, the FTA establishes one of the largest free trade zones globally, covering a combined population of nearly two billion people.
For both partners, the agreement is seen not only as an economic tool but also as a strategic statement, reinforcing cooperation between two major democracies amid shifting global alliances.
Trade Impact and Economic Gains
Trade between the EU and India already exceeds €180 billion annually in goods and services, supporting hundreds of thousands of jobs across Europe. Under the new agreement, tariff reductions and eliminations are expected to significantly increase European exports to India over the coming years.
The EU estimates that duties on most European goods exported to India will be either removed or substantially reduced, resulting in savings of several billion euros annually for EU businesses. Over time, exports from Europe to India are projected to grow sharply as barriers are lowered across key sectors.
Major Tariff Reductions Across Key Sectors
One of the most closely watched aspects of the agreement is India’s commitment to reduce tariffs in sectors where duties were previously among the highest in the world.
Tariffs on passenger cars, which currently stand at over 100%, will be phased down gradually, potentially reaching much lower levels over the next decade. Import duties on car components will be eliminated entirely within an agreed transition period. Significant tariff cuts will also apply to machinery, chemicals, and pharmaceutical products, offering European manufacturers a stronger competitive position in the Indian market.
India’s concessions are being described as the most extensive trade opening it has ever granted to a partner country or bloc.
New Opportunities for Small and Medium Enterprises
The agreement places special emphasis on small and medium-sized enterprises (SMEs), recognising their limited capacity to navigate complex trade regulations. Both sides will establish dedicated contact points to assist smaller businesses in understanding and using the agreement.
By simplifying procedures, increasing transparency, and reducing regulatory hurdles, the FTA aims to make it easier for SMEs to participate in cross-border trade—an area that has traditionally been dominated by larger corporations.
Agriculture and Agri-Food Trade
European agri-food exporters are expected to benefit from sharp reductions in tariffs that have long restricted access to the Indian market. Duties on products such as wine, olive oil, and processed foods will be lowered gradually, opening new opportunities for European farmers and food producers.
At the same time, sensitive agricultural sectors within the EU—such as beef, poultry, rice, and sugar—remain protected, with no additional market access granted under the agreement. All imports into the EU will continue to be subject to strict food safety and health standards.
Parallel talks on a Geographical Indications (GI) agreement are also underway, aimed at protecting iconic European products from imitation in the Indian market.
Services, Investment and Intellectual Property
Beyond goods, the agreement significantly expands access to India’s services sector. European companies will gain improved entry into areas such as financial services and maritime transport—areas where India has historically been cautious in trade negotiations.
The FTA also strengthens protection for intellectual property rights, covering copyrights, trademarks, industrial designs, and trade secrets. By aligning regulatory standards more closely, the agreement seeks to create a more predictable environment for businesses and investors on both sides.
Sustainability and Climate Commitments
Sustainability forms a dedicated pillar of the agreement. Commitments include stronger labour protections, environmental safeguards, and cooperation on climate-related trade issues. A separate EU–India climate cooperation platform is expected to be launched in 2026, supporting clean energy and emissions-reduction initiatives.
The EU has also indicated potential financial support, subject to internal approvals, to assist India’s transition toward greener industrial growth.
What Happens Next
On the European side, the draft agreement will undergo legal review and translation before being submitted to the EU Council and European Parliament for approval. India will also follow its domestic ratification process. The agreement will enter into force once all formal approvals are completed on both sides.
Background
EU–India FTA talks were first launched in 2007, stalled in 2013, and revived in 2022 amid renewed political momentum. The final negotiating round concluded in late 2025, paving the way for the current announcement.
Negotiations on a separate Investment Protection Agreement and a Geographical Indications pact are still ongoing.
Disclaimer
This article is based on publicly available information, official statements, and reports related to the EU–India Free Trade Agreement. Details may evolve as legal texts are finalised and ratification processes continue. Storify News is a news aggregation and explanatory platform and does not claim official affiliation with the European Union, the Government of India, or any negotiating authority.
Quote(s)
Ursula von der Leyen, President of the European Commission said “The EU and India make history today, deepening the partnership between the world’s biggest democracies. We have created a free trade zone of 2 billion people, with both sides set to gain economically. We have sent a signal to the world that rules-based cooperation still delivers great outcomes. And, best of all, this is only the start – we will build on this success, and grow our relationship to be even stronger”.
Maroš Šefčovič, Commissioner for Trade and Economic Security; Interinstitutional Relations and Transparency said “After a year of tireless engagement and more than a decade in the making, we have delivered the biggest FTA ever – a deal like no other. High tariffs down, opportunity unleashed. It proves that hard work pays off, that win-win trade is real, and that genuine partnership – including with my counterpart, Minister Piyush Goyal – is always worth the effort. Now, our focus is clear: ensuring businesses reap tangible benefits from this FTA as quickly as possible”.
