The European Union and India have successfully concluded negotiations for a landmark Free Trade Agreement (FTA). Described as the most ambitious and commercially significant trade pact ever concluded by either side, the agreement comes at a time of heightened geopolitical tensions and economic uncertainty worldwide.
The deal strengthens economic and political ties between the world's second and fourth largest economies, reaffirming their shared commitment to rules-based trade, economic openness, and democratic cooperation.
A Free Trade Zone Covering 2 Billion People
European Commission President Ursula von der Leyen termed the agreement historic, noting that it creates a free trade zone spanning nearly 2 billion people.
"The EU and India make history today, deepening the partnership between the world's biggest democracies. We have sent a signal to the world that rules-based cooperation still delivers great outcomes," she said.
The EU and India already trade goods and services worth over €180 billion annually, supporting nearly 800,000 jobs across the EU. With this agreement in place, EU goods exports to India are expected to double by 2032, driven by the elimination or reduction of tariffs on 96.6% of EU exports.
Overall, European exporters are projected to save around €4 billion every year in customs duties.
Unprecedented Market Access for European Businesses
This agreement represents the largest trade opening India has ever granted to any partner, offering EU businesses a decisive competitive advantage in the world's most populous country and one of the fastest-growing major economies.
Key tariff reductions include:
- Cars: Gradual reduction from 110% to as low as 10%
- Car parts: Fully eliminated within 5–10 years
- Machinery: Tariffs up to 44% largely removed
- Chemicals: Tariffs up to 22% mostly eliminated
- Pharmaceuticals: Tariffs up to 11% significantly reduced
A dedicated SME chapter ensures that small and medium-sized enterprises benefit from simplified procedures, transparency, and dedicated contact points to help navigate the agreement.
Major Relief for EU Agri-Food Exports
The FTA significantly lowers or removes high agri-food tariffs that previously restricted EU exports to India, where average duties exceeded 36%.
Notable reductions include:
- Wine: From 150% to 75% initially, falling to as low as 20%
- Olive oil: From 45% to zero over five years
- Processed foods: Tariffs up to 50% eliminated
Sensitive EU agricultural sectors remain protected. Products such as beef, poultry, rice, and sugar are excluded from liberalisation, and all Indian imports must continue to comply with the EU's strict food safety and health standards.
Services, IP Protection and Investment Confidence
The agreement grants EU companies privileged access to India's services market, including financial services and maritime transport. India's commitments in financial services go beyond those offered in any of its previous trade agreements.
Strong provisions on Intellectual Property Rights (IPR) enhance protection for copyrights, trademarks, designs, trade secrets, and plant varieties. By aligning EU and Indian IP regimes more closely, the agreement is expected to boost cross-border trade, innovation, and investment.
Sustainability and Climate Cooperation at the Core
A dedicated Trade and Sustainable Development chapter underscores commitments to environmental protection, climate action, labour rights, and women's empowerment.
In parallel, the EU and India will establish a Climate Cooperation Platform in early 2026. Subject to EU budgetary procedures, €500 million in EU support is envisaged over the next two years to assist India's green transition and long-term sustainable industrial growth.
What Happens Next?
On the EU side, the negotiated texts will soon be published, followed by legal review and translation. The agreement will then move through approval by the Council of the EU and require European Parliament consent. After ratification by India, the FTA can formally enter into force.
Background: A Long Road to Agreement
FTA negotiations between the EU and India began in 2007, were paused in 2013, and relaunched in 2022. The final negotiating round concluded in October 2025, followed by technical and political discussions.
Negotiations on a Geographical Indications Agreement and an Investment Protection Agreement are continuing alongside the FTA.
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