EU-India Free Trade Agreement
Significant tariff reductions & improved market access for European companies
In January 2026, the European Union and India finalized an ambitious free trade agreement (FTA), that covers a market of around 2 billion people and almost a quarter of the global GDP. For European exporters, manufacturers, investors and service providers, the agreement delivers significant tariff reductions, improved market access, stronger intellectual property protection and greater regulatory predictability.
We will update this article as more details about the deal become available.
The FTA significantly lowers the barriers to entry and expansion. For European decision makers considering India, the question is no longer whether to act, but when. The time to make a strategic decision on India is now, let us explain to you why.
The EU-India Free Trade Agreement
The EU-India FTA is a comprehensive trade and economic partnership agreement concluded after negotiations that were relaunched in 2022 and finalized in January 2026. It is the largest trade deal ever concluded by both parties, both in economic value and scope.
Key components of the agreement are:
- Reducing or eliminating tariffs on the vast majority of traded goods;
- Opening access to services markets;
- Strengthening investment conditions and intellectual property protection;
- Simplifying customs and regulatory procedures;
- Embedding sustainability and labor commitments.
The EU and India already trade more than €180 billion in goods and services annually, supporting around 800,000 EU jobs. The agreement is expected to double EU goods exports to India by 2032.
The most important agreements from the EU-India Free Trade Agreement for companies
1. Significant tariff reductions on EU exports
India will eliminate or reduce tariffs on 96.6% of EU goods exports, making this the most far-reaching trade opening India has ever granted to a partner. The scale of tariff reduction is expected to deliver up to €4 billion per year in duty savings, materially improving price competitiveness in the Indian market compared to non-EU suppliers. At the same time, the agreement introduces greater long-term cost transparency, allowing companies to plan India-focused growth strategies with significantly more confidence and predictability.
Notable sector examples:
| Automotive sector | Tariffs on cars gradually reduced from 110% to as low as 10% (within quotas); car parts fully liberalised over the next 5 to 10 years. |
| Aircraft and aerospace (components) sector |
Tariffs of up to 11% will be reduced to zero for almost all products over a phased period of up to 10 years. |
| Machinery and electrical equipment industry |
Tariffs of up to 44% largely eliminated. |
| Iron, steel and metal sector |
Tariffs of up to 22% will be largely eliminated over time. |
| Chemicals and pharmaceutical sector |
Tariffs of up to 22% and 11%, respectively, mostly reduced to zero. |
| Medical, optical and precision equipment |
Significant tariff elimination across product lines. |
| Agri-food sector | Tariffs on products such as wine (from 150% to 75% to as low as 20%), olive oil (from 45% to 0% over a five-year period) and processed agricultural products (from up to 50% to 0%, subject to product category) will be significantly lowered. |
2. Improved access to India’s services markets
The agreement contains India’s most ambitious services commitments to date, exceeding the level of access and legal certainty India has granted in any of its previous trade agreements.
Key areas include:
| Financial services | In the FTA India agrees to open its market for financial services at a level higher than in any of its previous trade agreements. For European banks, insurers, asset managers and fintech providers, this increases legal certainty around market access, licensing conditions and operational continuity, reducing the risk of future regulatory backsliding. |
| Maritime transport, dredging and cable-laying services | For the first time in an Indian trade agreement, binding commitments are made in maritime transport–related services, including dredging and submarine cable-laying. This is particularly relevant for European companies active in shipping, port development, offshore infrastructure, energy and digital connectivity, where access has historically been restricted or subject to case-by-case approvals. |
| Enhanced transparency on local presence, management and governance | The agreement introduces clearer and more predictable rules around requirements for local establishment, senior management, and boards of directors. This reduces uncertainty for European companies setting up or expanding operations in India and improves planning around corporate structuring, staffing, compliance and long-term investment decisions. |
For European companies delivering high-value services alongside goods, like engineering, logistics, finance, after-sales and technical services, these changes reduce structural barriers that have historically slowed market entry.
3. Stronger intellectual property (IP) protection
IP protection is a critical concern for many European companies operating in India. The FTA significantly strengthens:
- Protection of trademarks, designs and copyrights;
- Enforcement mechanisms and legal remedies;
- Protection of trade secrets, undisclosed information and plant varieties.
The alignment of EU and Indian IP frameworks improves reliability for companies in sectors such as pharmaceuticals, industrial technology, medical devices, consumer brands and advanced manufacturing.
4. Simplified customs and greater regulatory predictability
Beyond tariff reductions, the agreement addresses non-tariff barriers that have traditionally complicated trade with India. It simplifies customs procedures, improves transparency around regulatory rules and approvals, and creates a more stable and predictable framework for long-term investment decisions. For European companies managing import and export flows or operating regional supply chains, these changes reduce administrative friction, limit delays and lower compliance risk, making India a more reliable and scalable market to operate in.
5. Sustainability and strategic alignment
The FTA includes a dedicated chapter on trade and sustainable development, covering:
- Labor rights and social protections;
- Environmental and climate commitments;
- Support for women’s economic participation.
In parallel, the EU and India plan an EU-India climate cooperation platform, supported by up to €500 million in EU funding to accelerate India’s sustainable industrial transformation.
The time to make a strategic decision on India is now
The EU-India Free Trade Agreement lowers barriers, reduces risk and opens one of the world’s most dynamic growth markets for European companies, on terms we have never seen before. For businesses already active in India, it offers a chance to scale faster and operate more efficiently. For those still on the sidelines, it removes many of the historical obstacles to entry.Call to action: Doing business in India has never been more attractive. With lower tariffs, improved market access and greater predictability, now is the time to take a strategic decision on India. Get in touch with us to asses the opportunities for your company.
