India and the European Union on Tuesday announced the conclusion of the long-awaited India-EU Free Trade Agreement (FTA), marking a historic milestone in bilateral relations between two of the world’s largest economies. The announcement was made at the 16th India-EU Summit by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen during the visit of European leaders to India.
The agreement positions India, the world’s fourth-largest economy, and the European Union, the second-largest economy, as trusted global trade partners, together accounting for 25 per cent of global GDP and nearly one-third of global trade. The Ministry of Commerce & Industry said the FTA lays the foundation for inclusive, resilient, and future-ready growth while strengthening global supply chains.
A key feature of the agreement is the unprecedented market access granted to Indian exporters, with over 99 per cent of Indian exports by value receiving preferential entry into the EU. This is expected to significantly boost India’s export competitiveness, particularly in labour-intensive sectors such as textiles, apparel, leather, footwear, marine products, gems and jewellery, handicrafts, engineering goods, and automobiles.
According to official estimates, exports worth USD 75.85 billion (INR 6.4 lakh crore) are poised for accelerated growth, including nearly USD 33 billion in labour-intensive sectors where tariffs of up to 10 per cent will be eliminated upon the agreement’s entry into force. The FTA is also expected to create employment opportunities for women, artisans, youth, MSMEs, and professionals.
The agreement includes a carefully calibrated approach to automobile liberalisation through a quota-based system, enabling EU manufacturers to introduce high-end models in India while promoting future Make in India manufacturing and export opportunities. Reciprocal access will also allow Indian-made automobiles to enter EU markets.
India has safeguarded sensitive sectors, particularly agriculture and dairy, ensuring no market access for products such as dairy, cereals, poultry, soymeal, and certain fruits and vegetables. At the same time, favourable access has been secured for agricultural and processed food exports including tea, coffee, spices, fresh fruits, vegetables, and processed foods, strengthening rural livelihoods.
Services, a dominant and fast-growing component of both economies, receive significant emphasis in the FTA. India has secured commercially meaningful access across 144 EU service subsectors, including IT and IT-enabled services, professional services, education, financial services, tourism, construction, and business services. The EU, in turn, gains access to 102 service subsectors in India.
The agreement also establishes a future-ready mobility framework, providing predictable pathways for the temporary movement of skilled and semi-skilled professionals. Provisions cover intra-corporate transferees, business visitors, contractual service suppliers, and independent professionals, along with entry and work rights for dependents. Frameworks supporting student mobility, post-study work opportunities, and future social security agreements have also been included.
Beyond tariff liberalisation, the FTA introduces mechanisms to address non-tariff barriers, enhance regulatory cooperation, streamline customs procedures, and strengthen sanitary and phytosanitary standards. Provisions related to the EU’s Carbon Border Adjustment Mechanism (CBAM) include assurances on flexibility, technical cooperation, recognition of carbon pricing mechanisms, and financial assistance to support India’s transition towards lower emissions.
The agreement reinforces intellectual property protections under the TRIPS framework, recognises the importance of India’s Traditional Knowledge Digital Library (TKDL), and affirms commitments under the Doha Declaration. It also opens avenues for cooperation in emerging areas such as artificial intelligence, clean technologies, and semiconductors.
Union Commerce and Industry Minister Piyush Goyal described the agreement as a defining achievement in India’s global economic engagement, stating that it goes beyond a conventional trade deal to represent a comprehensive strategic partnership. He said the FTA would boost exports, strengthen the Make in India initiative, enhance mobility for Indian professionals, and integrate Indian businesses more deeply into global value chains.
The European Union remains one of India’s largest trading partners. In 2024-25, bilateral trade in goods stood at USD 136.54 billion, while trade in services reached USD 83.1 billion. The Ministry said the integration of two large, complementary economies would create unprecedented trade and investment opportunities.
The India-EU FTA becomes India’s 22nd free trade agreement and, along with recent FTAs with the UK and EFTA, effectively opens the entire European market to Indian exporters and entrepreneurs. The government noted that since 2014, India has signed trade agreements with Mauritius, UAE, Australia, Oman, the UK, EFTA, and announced the conclusion of a trade deal with New Zealand.
Aligned with the vision of “Viksit Bharat 2047,” the India–EU FTA marks a new chapter in bilateral economic engagement, reinforcing shared values, fostering innovation, and positioning India as a dynamic and trusted partner in the global trading system.
