The EU and India have concluded negotiations for a historic, commercially significant free trade agreement, the largest such deal ever concluded by either side, creating a market of 2 billion people.
The deal strengthens economic ties between the world’s second and fourth largest economies at a time of rising geopolitical tensions, at the same time and highlighting their joint commitment to economic openness and rules-based trade, said the European Commission president Ursula von der Leyen.
“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.”
While the EU and India already trade over €180 billion worth of goods and services per year, supporting close to 800,000 EU jobs, the trade deal is expected to double EU goods exports to India by 2032 by eliminating or reducing tariffs in value of 96.6% of EU goods exports to India. Overall, the tariff reductions will save around €4 billion per year in duties on European products, says the Commission.
The EU executive believes the deal will give a significant competitive advantage for key EU industrial and agri-food sectors, granting companies privileged access to the world’s most populous country of 1.45 billion people and fastest growing large economy, with an annual GDP of €3.4 trillion.
In the agreement, India grants the EU tariff reductions that none of its other trading partners have received. For example, tariffs on cars are gradually going down from 110% to as low as 10%, while they will be fully abolished for car parts after five to ten years. Tariffs ranging up to 44% on machinery, 22% on chemicals and 11% on pharmaceuticals will also be mostly eliminated.
A dedicated chapter will also help small EU businesses take full advantage of the new export opportunities. For instance, both sides will put in place dedicated contact points to provide SMEs with relevant information on the FTA and help them with any specific issue they would face when trying to use the FTA’s provisions. In addition to this, SMEs will particularly benefit from the tariff reductions, removal of regulatory barriers, transparency, stability and predictability provided by the Agreement.
On agri-food, the agreement removes or reduces often prohibitive tariffs (over 36% on average) on EU exports of agri-food products, opening a massive market to European farmers. For example, Indian tariffs on wines will be cut from 150% to 75% at entry into force and eventually to levels as low as 20%, tariffs on olive oil will go down from 45% to 0% over five years, while processed agricultural products such as bread and confectionary will see tariffs of up to 50% eliminated.
Sensitive European agricultural sectors will be fully protected, as products such as beef, chicken meat, rice and sugar are excluded from liberalisation in the agreement. All Indian imports will continue to have to respect the EU’s strict health and food safety rules.
In parallel, the EU and India are currently negotiating a separate agreement on Geographical Indications (GIs), which will help traditional iconic EU farming products sell more in India, by removing unfair competition in the form of imitations.
The agreement grants EU companies privileged access to the Indian services market, including key sectors such as financial services and maritime transport.
It also provides a high level of protection and enforcement of Intellectual Property (IP) rights, including copyright, trademarks, designs, trade secrets and plant variety rights. It builds upon existing international IP treaties and brings Indian and EU intellectual property laws closer.
On sustainability, the agreement has a dedicated trade and sustainable development chapter, which enhances environmental protection and addresses climate change, protects workers’ rights, supports women’s empowerment, provides for a platform for dialogue and cooperation on trade related environmental and climate issues and ensures effective implementation.
The EU and India will also sign a Memorandum of Understanding that intends to establish an EU-India platform for cooperation and support on climate action. The platform will be launched in the first half of 2026. Subject to EU budgetary and financial rules, €500 million in EU support over the next two years is envisaged to help India’s efforts to reduce greenhouse gas emissions and accelerate its long-term sustainable industrial transformation.
