New Opportunities in the India–EU Deal

The long-awaited Free Trade Agreement (FTA) between India and the European Union is the largest agreement of its kind in the world, creating a market of nearly two billion people.

In 2024–25, India–EU bilateral trade stood at around USD 136.54 billion. India exported goods worth USD 75.85 billion, while imports amounted to USD 60.68 billion. Together, India and the EU account for 25 per cent of global GDP and nearly one-third of global trade.

It has been agreed that the EU will reduce tariffs, on a value basis, on 99.5 per cent of goods imported from India, while India will liberalise tariffs on more than 92 per cent of goods. As soon as the agreement comes into force, India will eliminate tariffs on 30 per cent of traded goods by value, with the scope gradually expanding over time.

For now, expectations should be kept realistic. Any India–EU trade agreement will require approval from all 28 EU member states, which is a long and complex process and could take six to twelve months. Therefore, even if an agreement is reached, it will not be implemented immediately and will take time to come into effect.

From a market perspective, the announcement of the agreement itself is not as important as its details. At present, both sides are sending several signals, broadly to indicate that an alternative trade partnership is taking shape. However, the key question is whether this agreement will ultimately translate into a balanced and mutually beneficial deal.

India must now push internal reforms more aggressively. It will be able to truly benefit from trade agreements only if Indian businesses become more competitive. A common criticism of FTAs is that they do not benefit Indian businesses, largely due to competitiveness issues. Internal reforms can help prevent such outcomes in the future.

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