After almost two decades of negotiations, India and the EU signed a robust free trade agreement (FTA) on January 27, strengthening their trade ties. The India-EU trade deal, which is expected to benefit 2 billion people, is likely to be implemented in early 2027, following approval by the Indian Cabinet, the European Parliament and the Council of the European Union.
While the FTA has been subject to intermittent negotiations over the years, the vigor needed to reach an agreement has increased in 2022. Its finalization now appears to be a hedge against renewed U.S. protectionism. India has faced high US tariffs since mid-2025, with labor-intensive sectors warning of permanent market loss. EU-US trade relations also remain volatile despite a limited framework agreement. The deal also strengthens the EU’s Indo-Pacific strategy and reduces dependence on China.
After signing the FTA at the 16th India-EU Summit in Delhi, Ursula von der Leyen, President of the European Commission, said the agreement sends the message that “rules-based cooperation always delivers excellent results.” Prime Minister Narendra Modi added that the FTA would boost the manufacturing sector and develop service-related sectors in India.
Preferential market access for both sides remains the priority, with tariff reduction or elimination on all tariff lines. According to a fact sheet on the FTA released by the Union Commerce Ministry, the agreement provides unprecedented market access for over 99 percent of India’s exports by commercial value.
Key labour-intensive sectors such as textiles, apparel, marine products, leather and footwear, gems and jewellery, which account for 70.4 per cent of India’s tariff lines, will see immediate removal of customs duties. Certain marine products, processed food products, weapons and ammunition (20.3 percent of tariff lines) will see duties reduced to zero over three to five years.
In the remaining 6.1 percent of tariff lines, products such as certain poultry products, canned vegetables and bakery products will benefit from a tariff reduction, while cars, steel and certain shrimp products will benefit from tariff rate quotas (TRQs). Tariff quotas imply zero duty up to a defined quantity.
For the EU, industrial machinery and electrical equipment, aircraft and spacecraft, optical and medical instruments, pharmaceuticals and chemicals (49.6 percent of tariff lines) will benefit from immediate removal of customs duties in India. Automobiles and automobile parts, certain machinery and capital goods, steel products and certain durable consumer goods (39.5 percent of tariff lines) will be phased out over five, seven or ten years. Agricultural and horticultural products (3 percent of tariff lines) will benefit from a tariff reduction or progressive tariff quotas.
Significant changes in major sectors have led to the FTA being unofficially nicknamed “the mother of all deals”. At the same time, this raises questions about the protection of national markets and producers. Down to earth (DTE) analyzes a few sectors to understand how the agreement addresses these concerns:
Agriculture
Broader market access from both sides with built-in guarantees
With little or no tariffs on most agricultural products, Indian farmers enjoy broad access to the EU market, increasing their potential for higher incomes. Preferential market access for tea, coffee, spices, grapes, pickles and cucumbers, dried onions, fresh fruits and vegetables as well as processed food products will make them more competitive in the EU, the Union commerce ministry’s fact sheet said. Exports of shrimp, frozen fish and other marine products will benefit coastal communities.
Likewise, the EU will see greater access to the Indian market for wine and spirits, olive oil, fruit juices, processed foods and sheep meat. The EU and India are also negotiating a separate agreement on…
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