Harshvardhan Mishra
India has achieved a major milestone in its global economic diplomacy with the successful conclusion of the India–European Union Free Trade Agreement (India–EU FTA). The historic announcement was jointly made at the 16th India–EU Summit by Hon’ble Prime Minister Narendra Modi and European Commission President Ursula von der Leyen, marking a new era of strategic and economic partnership between India and the European Union.
A Historic Trade Milestone for Two Global Economic Giants
India, the world’s 4th largest economy, and the European Union, the 2nd largest economy, together account for nearly 25% of global GDP and around one-third of global trade. The conclusion of the India–EU FTA positions both sides as trusted partners committed to open markets, rule-based trade, and inclusive growth.
Negotiations for this ambitious agreement were relaunched in 2022, and after years of sustained dialogue, the FTA reflects strong political will and a shared vision for a balanced, modern, and future-ready economic partnership.
Unprecedented Market Access for Indian Exports
One of the most significant outcomes of the India–EU FTA is the preferential market access for over 99% of Indian exports by value into the EU. This is expected to provide a major boost to India’s export-driven growth, with exports worth INR 6.41 lakh crore (USD 75 billion) poised for rapid expansion.
Labour-intensive sectors such as:
- Textiles and apparel
- Leather and footwear
- Marine products
- Gems and jewellery
- Handicrafts and engineering goods
will benefit immensely, with tariffs of up to 10% reduced to zero on nearly USD 33 billion worth of exports upon the agreement’s entry into force.
Boost to MSMEs, Jobs, and Make in India
The FTA is designed to be inclusive, creating new opportunities for MSMEs, women, artisans, youth, and skilled professionals. By integrating Indian businesses more deeply into global value chains, the agreement strongly supports the Make in India initiative while enhancing India’s competitiveness in international markets.
Carefully calibrated and reciprocal market access ensures that domestic manufacturing is strengthened while opening new export opportunities.
Agriculture and Processed Food: Balanced Growth with Safeguards
India’s agricultural and processed food exports—such as tea, coffee, spices, fruits, vegetables, and processed foods—are set to gain improved access to the EU market. This will help strengthen rural livelihoods and reinforce India’s reputation as a reliable global supplier.
At the same time, India has prudently safeguarded sensitive sectors, including dairy and select agricultural products, ensuring that domestic farmers and food security interests remain protected.
Automobiles and Industrial Cooperation
The agreement introduces a carefully structured, quota-based automobile liberalisation framework. This allows EU manufacturers to introduce high-end models in India while encouraging local manufacturing and future exports from India. Indian consumers will benefit from advanced technologies and increased competition, while Indian-made automobiles gain new access to EU markets.
Services, Mobility, and Skilled Professionals
Services trade—a rapidly growing pillar of both economies—features prominently in the FTA. India has secured commercially meaningful market access across 144 EU service subsectors, including:
- IT and IT-enabled services
- Professional and business services
- Education and research
- Financial services, tourism, and construction
A future-ready mobility framework enables smoother movement of professionals, business visitors, intra-corporate transferees, contractual service suppliers, and independent professionals. The agreement also supports student mobility, post-study work opportunities, and engagement on social security arrangements.
Notably, India has secured access for practitioners of Indian traditional medicine to work in EU member states where such practices are not regulated.
Addressing New-Age Trade Challenges
The FTA goes beyond tariffs by addressing non-tariff barriers, regulatory cooperation, customs facilitation, and SPS measures. Forward-looking provisions on the Carbon Border Adjustment Mechanism (CBAM) ensure constructive engagement, technical cooperation, and support for India’s green transition.
The agreement also reinforces intellectual property rights under TRIPS, protects traditional knowledge through initiatives like the Traditional Knowledge Digital Library (TKDL), and promotes cooperation in emerging areas such as artificial intelligence, clean technologies, and semiconductors.
A New Chapter in India–EU Relations
The India–EU FTA marks a transformative chapter in bilateral economic engagement, strengthening trade, investment, and strategic cooperation with the 27-member EU bloc. With built-in review and consultation mechanisms, the agreement is designed to remain resilient amid evolving global trade dynamics.
This becomes India’s 22nd Free Trade Agreement, and alongside FTAs with the UK and EFTA, it effectively opens up the entire European market for Indian exporters and entrepreneurs.
Aligned with the vision of Viksit Bharat 2047, the India–EU FTA positions India as a dynamic, trusted, and forward-looking global partner—laying the foundation for inclusive, resilient, and future-ready growth for both India and Europe.
Reference:
Press Information Bureau (PIB), Government of India
👉 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2219065®=3&lang=2
