India, EU Seal Landmark Free Trade Deal, Unlocking $100B+ Market Access

The European Union is already one of India’s largest trading partners. In 2024–25, bilateral trade in goods reached USD 136.5 billion, while services trade crossed USD 83 billion.

India and the European Union have concluded a historic Free Trade Agreement (FTA), marking a major breakthrough in global trade and positioning the two economies as trusted partners committed to open markets, resilience, and inclusive growth.

The announcement was made jointly by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen at the 16th India–EU Summit, held during the visit of European leaders to India. The deal follows the re-launch of negotiations in 2022 and caps years of intensive dialogue aimed at delivering a modern, rules-based trade partnership.

With India and the EU ranking as the 4th and 2nd largest economies globally, together accounting for 25% of global GDP and one-third of world trade, the agreement is expected to reshape trade and investment flows across continents.

A Trade Deal With Strategic Weight

The European Union is already one of India’s largest trading partners. In 2024–25, bilateral trade in goods reached USD 136.5 billion, while services trade crossed USD 83 billion. The FTA significantly deepens this relationship, granting duty-free access for over 99% of Indian exports by value to the EU once the agreement enters into force.

Union Commerce and Industry Minister Piyush Goyal called the deal “one of the most consequential FTAs India has ever concluded,” noting that it goes far beyond tariff cuts.

“This agreement secures unprecedented market access, strengthens ‘Make in India’, unlocks high-value services opportunities, and establishes a comprehensive mobility framework for skilled Indian professionals,” Goyal said.

Big Wins for Manufacturing, MSMEs, and Jobs

Tariffs of up to 10% will be eliminated on nearly USD 33 billion worth of Indian exports, delivering a major boost to labour-intensive sectors such as:

• Textiles and apparel

• Leather and footwear

• Marine products

• Gems and jewellery

• Handicrafts

• Engineering goods and automobiles

The agreement is expected to empower MSMEs, women entrepreneurs, artisans, and youth, while integrating Indian firms more deeply into global value chains.

On automobiles, a carefully calibrated, quota-based liberalisation allows EU manufacturers to enter India’s premium market, while opening future opportunities for India-made vehicles to access EU markets, supporting exports and domestic manufacturing.

Agriculture, Services, and Digital Trade Get a Lift

Indian agriculture and processed food exports—including tea, coffee, spices, fruits, vegetables, and value-added foods—stand to gain enhanced competitiveness, while sensitive sectors such as dairy and cereals remain safeguarded.

In services, the fastest-growing component of both economies, the FTA delivers:

• Predictable market access across 144 EU service subsectors for India

• Strong commitments in IT/ITeS, professional services, education, finance, tourism, and construction

• Easier business mobility, including for intra-corporate transferees, contractual service suppliers, and independent professionals

• A framework for social security agreements, student mobility, and post-study work opportunities

India also secured access for traditional medicine practitioners to work under home titles in EU countries where such practices are not regulated.

Climate, AI, and Future Tech Cooperation

The agreement addresses non-tariff barriers through streamlined customs, SPS measures, and regulatory cooperation. It includes forward-looking commitments on the EU’s Carbon Border Adjustment Mechanism (CBAM), technical cooperation on carbon pricing, and financial support to help Indian exporters meet climate requirements.

The FTA also opens pathways for cooperation in artificial intelligence, clean technologies, semiconductors, and digital trade, reinforcing India’s ambition to become a global innovation and manufacturing hub.

A New Chapter in Global Trade Strategy

The India–EU FTA becomes India’s 22nd trade agreement and, alongside deals with the UK and EFTA, effectively opens the entire European market to Indian businesses.

Aligned with India’s vision of “Viksit Bharat 2047”, the agreement positions India as a reliable, forward-looking global partner, while embedding review and consultation mechanisms to adapt to future economic and technological shifts.

Beyond boosting trade, the deal reinforces shared democratic values, supports sustainable growth, and creates opportunities across society—from farmers and MSMEs to skilled professionals and global investors.