The European Union and India have concluded negotiations on a historic free trade agreement (FTA), ending an eighteen-year-long hiatus since talks began in 2007, that will remove or reduce duties on over 90% of EU goods exported to India, creating a trade zone covering 2 billion people and marking the largest deal ever reached by either side.
The agreement is expected to significantly boost trade, deepen political ties, and signal the power of rules-based global cooperation amid rising geopolitical tensions.
“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. And, best of all, this is only the start – we will build on this success, and grow our relationship to be even stronger,” said European Commission President Ursula von der Leyen.
Currently, India and the EU trade over €180 billion worth of goods and services annually, supporting nearly 800,000 EU jobs. The agreement is expected to create many more jobs, especially in services and manufacturing.
The FTA will eliminate or reduce tariffs covering 96.6% of EU goods exports to India, saving roughly €4 billion per year in duties.
Analysts expect EU exports to India could double by 2032, particularly in industrial and agri-food sectors, as European companies gain a competitive advantage in India’s €3.4 trillion economy, the fastest-growing large economy in the world.
Tariff reductions across key sectors
ndia will grant EU companies tariff reductions not extended to any other trading partner, covering major sectors including alcohol, food products, chemicals, machinery, pharmaceuticals, aerospace, and automotive:
Automobiles: Tariffs gradually falling from 110% to 10%, under a quota of 250,000 vehicles a year, with car parts fully exempt within five to ten years.
Machinery, chemicals, pharmaceuticals: Duties of up to 44%, 22%, and 11% largely eliminated.
Aerospace: Tariffs on aircraft and spacecraft to be eliminated for almost all products.
Agri-food: Wine tariffs cut from 150% to 75% at entry, eventually dropping to 20–30%; beer tariffs cut to 50%; spirits tariffs cut to 40%; olive oil, margarine, vegetable oils, fruit juices, and processed food tariffs eliminated. Sensitive products such as beef, chicken, rice, and sugar remain protected.
Processed goods: Bread, confectionery tariffs up to 50% eliminated.
A dedicated SME chapter ensures small and medium enterprises can fully leverage new export opportunities. SME contact points will provide guidance and support, helping firms trade and invest more easily, with fewer regulatory barriers.
Sensitive items, such as beef, chicken, rice, and sugar, are excluded. All imports must comply with EU health and food safety standards. Meanwhile, separate negotiations for a Geographical Indications (GI) agreement aim to protect iconic EU products from imitation in India.
Services access and intellectual property strengthened
The FTA grants EU companies privileged access to India’s services market, including financial services and maritime transport, with commitments surpassing those in prior agreements.
It also provides high-level protection of intellectual property (IP) -- covering copyrights, trademarks, designs, trade secrets, and plant variety rights — aligning Indian and EU laws and facilitating trade and investment for IP-dependent businesses.
Sustainability, climate action, and cooperation
A dedicated trade and sustainable development chapter strengthens environmental protections, addresses climate change, safeguards workers’ rights, and supports women’s empowerment.
The EU and India will also sign a Memorandum of Understanding to establish a climate cooperation platform in the first half of 2026. Under EU budgetary rules, up to €500 million over two years could support India’s greenhouse gas reduction and sustainable ..
Next steps toward ratification
Draft FTA texts will soon be published, legally revised, and translated into all official EU languages. The European Commission will submit the proposal to the Council for signature. Following Council adoption, EU Parliament consent, and India’s ratification, the agreement will enter into force.
Nearly two decades in the making
FTA negotiations began in 2007, were suspended in 2013, and relaunched in 2022. The 14th and final formal round took place in October 2025, with additional technical and political discussions. Parallel negotiations on Geographical Indications and an Investment Protection Agreement are still ongoing.
Source Name : Economic Times