NEW DELHI: India and the European Union on Tuesday concluded a long-awaited Free Trade Agreement (FTA), marking a historic milestone in bilateral economic ties and positioning the two partners firmly in favour of diversified trade at a time of rising global uncertainty.The deal, finalised after more than two decades of negotiations and relaunched talks since 2022, was announced at the 16th India–EU Summit by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen. The timing of the agreement is crucial, coming amid renewed turbulence in global trade driven by aggressive tariff policies, fragile supply chains and the prolonged Russia-Ukraine war. The pact sends a strong signal in favour of rules-based trade and deeper economic cooperation between two of the world’s largest democratic economies, against the backdrop.India and the EU are the 4th and 2nd largest economies, together accounting for 25% of global GDP and nearly one-third of global trade.Calling the agreement a defining achievement, Commerce minister Piyush Goyal said that “The conclusion of the India–European Union Free Trade Agreement represents a defining achievement in India’s economic engagement and global outlook. This supports India’s approach to secure trusted, mutually beneficial and balanced partnerships.”
Exports worth RS 6.4 lakh crore to benefit
The Indian states will be major beneficiaries of the agreement, with exports worth Rs 6.4 lakh crore set to gain access to 27 EU markets under a single trade framework, Piyush Goyal posted on X.States such as Gujarat, Maharashtra, Tamil Nadu, Karnataka, Uttar Pradesh, Rajasthan, Punjab, Telangana, Andhra Pradesh, West Bengal, Assam and Kerala are expected to see significant gains, given their strength in manufacturing, agriculture and export-oriented sectors.
Labour-intensive sectors are set for a major boost
The FTA is expected to enhance market access for Indian products across sectors including textiles and apparel, engineering goods, pharmaceuticals, medical devices, electronics, chemicals, plastics and rubber, marine products, leather and footwear, gems and jewellery, handicrafts, tea, spices and agri-products.
- Textiles and apparel: Immediate zero duty on 100% of tariff lines, opening direct access to the $263 billion EU textile market, helping Indian exporters compete globally and empowering millions of weavers.
- Leather and footwear: Tariffs slashed from 17% to zero, enabling India to tap the $100 billion EU leather and footwear market and revitalise clusters such as Agra, Kanpur, Kolhapur and Ranipet.
- Gems and jewellery: 100% duty-free access to a $79 billion premium market, benefiting hubs in Gujarat, Rajasthan, Maharashtra and West Bengal.
- Engineering and manufacturing: Preferential access to a $2 trillion EU industrial market, supporting India’s ambition to reach $300 billion in engineering exports by 2030, with MSMEs in states like Maharashtra, Karnataka, Gujarat, Andhra Pradesh and Tamil Nadu set to gain.
Overall, tariffs of up to 10% on nearly $33 billion of labour-intensive exports will drop to zero once the agreement comes into force.
MSMEs, Jobs and ‘Make in India’
The agreement is expected to significantly support micro, small and medium enterprises (MSMEs) by expanding access to EU markets and integrating Indian firms into global value chains. It is also expected to create jobs for women, artisans, youth and professionals.“Beyond a conventional trade deal, it represents a comprehensive partnership with strategic dimensions and is one of the most consequential FTA. India has secured unprecedented market access for more than 99% of Indian exports by trade value to the EU that also bolsters the ‘Make in India’ initiative,” Piyush Goyal said.“Beyond goods, it unlocks high-value commitments in services complemented by a comprehensive mobility framework enabling seamless movement of skilled Indian professionals,” he added.
Services, mobility and technology cooperation
Beyond goods, the FTA delivers commercially meaningful market access in services, including IT and IT-enabled services, professional services, education, financial services, tourism and construction. India has secured predictable access to 144 EU service subsectors, while offering access to 102 subsectors to the EU, the PIB said in a release.The pact also establishes a future-ready mobility framework, easing movement for skilled and semi-skilled professionals, including Intra-Corporate Transferees, business visitors, contractual service suppliers and independent professionals. Provisions also support student mobility and post-study work opportunities.In emerging areas, the agreement facilitates cooperation in artificial intelligence, clean technologies and semiconductors, while addressing non-tariff barriers through improved regulatory cooperation, streamlined customs procedures and SPS measures.
Trade numbers and the road ahead
The EU is among India’s largest trading partners. In 2024–25, bilateral trade in goods stood at Rs 11.5 lakh crore ($136.54 billion), with Indian exports at Rs 6.4 lakh crore ($75.85 billion) and imports at Rs 5.1 lakh crore ($60.68 billion). Trade in services reached Rs 7.2 lakh crore ($83.10 billion).The India–EU FTA becomes India’s 22nd trade agreement and, along with FTAs with the UK and EFTA, effectively opens up the entire European market for Indian businesses.Aligned with India’s vision of ‘Viksit Bharat 2047’, the agreement lays the foundation for inclusive, resilient and future-ready growth, strengthening India’s role as a trusted global trade partner.
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