Why India and EU Free Trade Agreement Matters?
The India–EU FTA reshapes one of the world’s largest economic corridors, combining scale, market access, and long-term geopolitical alignment beyond near-term tariff cuts.
January 2026
India and European Union (EU) have just finalized a landmark Free Trade Agreement (FTA) after nearly two decades of negotiations.
Together they represent a market of about 2 billion people and one of the largest economic partnership in the world.
In 2024-25, bilateral trade in goods alone was over USD 135 billion with India exporting over USD 75 billion and importing over USD 60 billion from EU. Trade in services between India and European Union was over USD 80 billion, highlighting a deep economic connection beyond merchandise.
Under the deal, tariffs on 97% of EU exports to India will be reduced or eliminated, saving European companies about USD 5 billion per year in duties. India will provide preferential access to more than 99% of its export value, opening key sectors in Europe.
For Indian exporters, over seven years, the EU will cut tariffs on 99.5% of goods imported from India. Labour-intensive sectors such as textiles, leather, and gems & jewellery, will gain zero duty access to European markets. Tariff on major goods such as machinery, chemicals, and electronics will be eliminated or significantly reduced, increasing competitiveness.
In automobiles, duties that were as high as 110% on EU cars are set to fall to about 10% over time, under a quota arrangement possibly boosting foreign investments in India.
The deal is expected to boost bilateral trade and create jobs, especially in services and manufacturing sectors within both economies. It also comes amid broader geopolitical shifts, helping both India and EU diversify trade ties beyond the United States and China. Overall, this agreement is not just about tariffs, it is about deeper economic integration and long-term strategic alignment.
Recommended Readings
https://economictimes.indiatimes.com/news/economy/foreign-trade/india-eu-fta-the-worlds-biggest-economies-just-changed-global-trade-forever/articleshow/127604639.cms
https://www.reuters.com/business/autos-transportation/india-eu-slash-tariffs-autos-spirits-textile-landmark-deal-2026-01-27/
India and European Union (EU) have just finalized a landmark Free Trade Agreement (FTA) after nearly two decades of negotiations.
Together they represent a market of about 2 billion people and one of the largest economic partnership in the world.
In 2024-25, bilateral trade in goods alone was over USD 135 billion with India exporting over USD 75 billion and importing over USD 60 billion from EU. Trade in services between India and European Union was over USD 80 billion, highlighting a deep economic connection beyond merchandise.
Under the deal, tariffs on 97% of EU exports to India will be reduced or eliminated, saving European companies about USD 5 billion per year in duties. India will provide preferential access to more than 99% of its export value, opening key sectors in Europe.
For Indian exporters, over seven years, the EU will cut tariffs on 99.5% of goods imported from India. Labour-intensive sectors such as textiles, leather, and gems & jewellery, will gain zero duty access to European markets. Tariff on major goods such as machinery, chemicals, and electronics will be eliminated or significantly reduced, increasing competitiveness.
In automobiles, duties that were as high as 110% on EU cars are set to fall to about 10% over time, under a quota arrangement possibly boosting foreign investments in India.
The deal is expected to boost bilateral trade and create jobs, especially in services and manufacturing sectors within both economies. It also comes amid broader geopolitical shifts, helping both India and EU diversify trade ties beyond the United States and China. Overall, this agreement is not just about tariffs, it is about deeper economic integration and long-term strategic alignment.
Recommended Readings
https://economictimes.indiatimes.com/news/economy/foreign-trade/india-eu-fta-the-worlds-biggest-economies-just-changed-global-trade-forever/articleshow/127604639.cms
https://www.reuters.com/business/autos-transportation/india-eu-slash-tariffs-autos-spirits-textile-landmark-deal-2026-01-27/