After nearly two decades of negotiations, delays, and political recalibration, the EU-India Free Trade Agreement is closer to completion than ever. Once viewed as overly ambitious, the deal is now described by EU officials as almost finalised, with strong backing from the European Commission. The agreement aims to slash tariffs on most goods, boost two-way trade, and reduce reliance on the United States amid intensifying global trade tensions.
Under the deal, the EU expects its exports to India to double by 2032. Tariffs will be eliminated or reduced on 96.6% of traded goods by value, generating annual savings of about €4bn ($4.75bn) for European companies. In parallel, the EU will cut tariffs on 99.5% of goods imported from India over seven years, bringing duties to zero on key products, materials, and metals. India will gradually reduce tariffs on European cars from 110% to 10% and abolish duties on car parts within five to ten years, benefiting firms such as Renault, Volkswagen, BMW, and Mercedes.
Trade between India and the EU reached $136.5 billion in the fiscal year ending March 2025, surpassing India–US trade ($132bn) and India–China trade ($128bn). India’s exports to the EU stood at $75.85bn, while imports totaled $60.68bn. India is the EU’s ninth-largest trading partner, accounting for 2.4% of EU goods trade, while the EU ranks among India’s top partners.
Often described as the “mother of all trade deals,” the agreement creates a free trade zone encompassing nearly 2 billion people. Together, India and the EU represent around 21% of global GDP—amounting to $23.41tn in 2024—and about one-third of global trade flows. Beyond goods, the deal covers services, investment protection, technology transfer, intellectual property, regulatory cooperation, and sustainable development. It could generate six to ten million jobs in India’s textile sector alone.
Nearly 6,000 European companies already operate in India, with EU FDI stock rising from €82.3bn in 2019 to €140.1bn in 2023.
