10 important points on the India-EU Free Trade Agreement

10 important points on the India-EU Free Trade Agreement

Historic Scale and Coverage

The deal connects nearly 2 billion people (India + EU's 27 countries) and a combined economy of around $27 trillion, making it one of the world's largest FTAs and often called the "mother of all deals" by both sides.

Tariff Elimination on Over 90% of Goods

Tariffs will be eliminated or significantly reduced on more than 90% of traded goods, covering a wide range of products and boosting bilateral trade (currently ~$136-137 billion in goods, with potential to exceed $200-250 billion in the coming decade).

Key Benefits for Indian Exports

Lower or zero duties on major Indian exports like textiles, garments, footwear, pharmaceuticals, steel, jewelry, petroleum products, machinery, and chemicals — helping restore competitiveness lost due to the EU's withdrawal of GSP (Generalised System of Preferences) benefits on many products since 2023/2026.

Access for EU Products in India

India will phase down high tariffs on EU imports, notably reducing car import duties from up to 110% to around 40% (especially for high-value vehicles >€15,000), benefiting brands like BMW, Volkswagen, and Renault, plus easier access for wines, spirits, machinery, and electrical goods.

Focus on Goods, Services & Trade Rules

The core FTA covers goods, services, investment facilitation, digital trade, and regulatory alignment. Separate negotiations continue for investment protection and geographical indications (GIs), narrowing the main pact's scope for faster conclusion.

Sectoral Boosts and Job Creation

Expected gains in labor-intensive sectors like textiles and garments (EU imports $125 billion annually; India currently holds 5-6% share), pharmaceuticals, autos, electronics, and clean energy — potentially creating millions of jobs and enhancing industrial competitiveness.

Strategic Timing Amid Global Trade Shifts

Accelerated by rising protectionism (e.g., higher US tariffs under current policies), the deal helps India diversify exports away from the US market and offsets losses from suspended EU GSP preferences (affecting ~87% of eligible Indian exports).

Safeguards for Sensitive Areas

India has protected sensitive sectors like agriculture and dairy from deep liberalization to safeguard farmers and local industries. Non-tariff barriers, services restrictions, and EU's climate measures (e.g., CBAM – Carbon Border Adjustment Mechanism) remain concerns that could partially offset benefits.

India's FTA Momentum

This will be India's 9th major FTA in the last 4 years (following deals with UK, Oman, New Zealand, Australia, UAE, EFTA, etc.), reflecting New Delhi's aggressive push for market access in a protectionist global environment.

Next Steps and Timeline

Announcement on January 27 → Final text finalization → Ratification by EU Parliament and member states (could take 1+ year) → Implementation (not immediate). It will also pair with parallel pacts on security/defense cooperation and skilled worker mobility.