About the India-EU FTA
- The India-EU Free Trade Agreement was concluded on 27 January 2026 after nearly two decades of negotiations, dubbed the “Mother of All Deals”. It links two economies representing 25% of global GDP (over USD 24 trillion) and a combined 2 billion consumer base.
- Bilateral merchandise trade stood at USD 136.54 billion in FY25 (India exports USD 75.85 billion, imports USD 60.68 billion), with services trade at USD 83.10 billion in 2024.
Tariff Commitments
- EU’s Commitments: Preferential access on 97% of tariff lines (99.5% of trade value); 70.4% of tariff lines (90.7% of India’s exports) see immediate duty elimination, saving €4 billion annually.
- India’s Commitments: Concessions on 92.1% of tariff lines (97.5% of EU exports); 49.6% of tariff lines get immediate elimination, remainder phased over 5, 7, and 10 years.
Key Sectoral Concessions made through the Agreement
- Automotive: Luxury car tariff cut from 110% to 10% under a Tariff Rate Quota of 250,000 vehicles/year; EVs excluded for 5 years, then a 90,000-unit quota phase-down; auto components to zero duty over 5-10 years.
- Textiles & Leather: Immediate zero-duty access (from earlier EU tariffs of 8-17%), subject to “double transformation” and 40% local value addition rules of origin.
- Chemicals & Pharma: Zero duty on 97.5% of India’s chemical export basket; EU pharma tariffs of up to 11% removed.
- Wines, Spirits & GIs: India’s 150% tariff drops to 40% immediately and 20% over 10 years; over 400 EU and 300 Indian Geographical Indications gain protection; sensitive agriculture (dairy, cereals, poultry, soymeal) fully excluded.
Services and Mobility (Mode 4)
- Subsector Access: EU opens 144 services subsectors to India (37 for Contractual Service Suppliers, 17 for Independent Professionals); India opens 102 subsectors to EU firms.
- Talent Mobility: Spouses/dependents of Intra-Corporate Transferees get automatic work permits; AYUSH practitioners can practise using Indian qualifications where EU states don’t formally regulate traditional medicine.
Implementation Challenges
- CBAM: No exemption from the EU’s Carbon Border Adjustment Mechanism, but India secured a Most-Favoured-Nation assurance on future flexibilities.
- EUDR: EU Deforestation Regulation traceability rules impose compliance costs, especially for MSMEs.
- Data Flows: GDPR-DPDP Act, 2023 divergence has denied India “Data Secure” status; cross-border data governance to be reviewed within five years of entry into force.
- Target Implementation: Early 2027.
Conclusion
Concluded on 27 January 2026 after two decades of talks, the India-EU FTA opens tariff relief across autos, textiles, chemicals, and pharma while safeguarding sensitive agriculture, and expands services mobility through Mode 4 access. Its full implementation, targeted for early 2027, remains contingent on resolving CBAM, EUDR, and data-governance frictions.
| This concept has been elaborately discussed in the following article — Strategic Dimensions of India–European Union Free Trade Agreement Negotiations |