Summary: With the India–EU FTA proceeding towards finalisation, both economies now have an opportunity to prepare for sweeping tariff cuts, new market access, and revised compliance obligations before the agreement is finally concluded. The blog sets out the key provisions of the FTA, particularly those related to the automotive, agri-food, financial services, and IP-sensitive sectors, so that businesses can start reviewing supply chains, contracts, and market-entry strategies.
After nearly two decades of intermittent negotiations, the European Union (“EU”) and India appear close to implementing a landmark trade agreement. On September 11, 2026, the European Commission formally requested the Council of the European Union to authorise the signing and conclusion of the India–EU Free Trade Agreement (“FTA”) between the two parties.
On becoming effective, the FTA is expected to expand market access, reduce tariffs, address non-tariff barriers, and establish more predictable rules governing trade and investment between the two economies. The EU and India currently exchange goods and services valued at more than €180 billion annually, a relationship that supports approximately 800,000 jobs within the EU alone.
Background and Principal Provisions of the FTA
Initial negotiations for the FTA began in 2007, followed by a suspension amid disagreements over tariffs and regulatory standards in 2013, before being formally relaunched in 2022. Both sides reached final agreement on January 27, 2026, at the 16th India–EU Summit held in New Delhi, following the final formal negotiating round in October 2025.
Published on the European Commission’s trade portal, the final text of the FTA comprises 20 chapters and more than a dozen annexes. Alongside provisions on market access for goods and rules of origin, it contains standalone chapters addressing trade in services, digital trade, intellectual property, anticompetitive conduct and subsidies, small and medium-sized enterprises, sustainable food systems, and trade and sustainable development.
Tariff Cuts and Market Access for Goods
The FTA terms eliminate/reduce tariffs on 96 per cent of the EU’s goods exports to India. The European Commission estimates this move will save EU exporters approximately €4 billion annually in duties, give consumers on either side access to a broader range of goods at more competitive prices, and approximately double EU goods exports to India by 2032. It also notes that India’s tariff concessions to the EU extend beyond what it has offered to any other trading partner, which gives European businesses a competitive edge over rivals from other regions. The FTA is also expected to secure meaningful relief for several valuable sectors of the Indian economy while creating significant new opportunities for European exporters across several major sectors.
- Tariffs on automobiles will be reduced progressively from 110 per cent to as low as 10 per cent, while tariffs on automotive components will be eliminated entirely over a period of 5 to 10 years. European carmakers will also benefit from a dedicated import quota. Starting at 100,000 units for internal combustion engine and hybrid vehicles in the first year, nearly six times the volume of EU cars imported into India in 2025, it is expected to rise to 160,000 units by the tenth year, with in-quota duties falling to 10 per cent over the same period. This will give European manufacturers substantially cheaper and more predictable access to India’s vehicle market.
- Tariffs of up to 44 per cent on machinery, 22 per cent on chemicals, and 11 on pharmaceuticals will similarly be largely removed. These reductions present genuine and substantial commercial opportunities for European automotive, machinery, chemical, and pharmaceutical exporters, sectors that have long sought improved access to the Indian market.
Agricultural Market Opening
Through the reduction of various tariffs, the FTA will open India’s protected agri-food market to European producers, providing them with a substantial new export market in India.
- Agricultural tariffs currently averaging more than 36 per cent will be reduced.
- Tariffs on wine will fall from 150 per cent to 75 per cent at entry into force, eventually reaching 20 per cent.
- Tariffs on olive oil will be phased out from 45 per cent to zero over five years.
- Tariffs of up to 50 per cent on processed goods, such as bread and confectionery, will be eliminated entirely.
In a deliberate move to protect farmers both in India and the EU, however, sensitive sectors have been entirely excluded from liberalisation. All imports will also continue to be subject to the EU’s food safety requirements.
Services and Mobility Provisions
The FTA’s provisions on Trade in Services will open the Indian services market to European companies, including those in financial services and maritime transport. The European Commission describes this as the most far-reaching opening of India’s financial services sector under any trade agreement to date, providing a new avenue for growth in a rapidly expanding services economy. This access is underpinned by four annexes, including an annex on the entry and temporary stay of natural persons and three service-related annexes on professional services, financial services, and telecommunications services. The annex on the temporary entry and stay of natural persons also benefits European businesses operating in India, providing clearer and more predictable rules for EU personnel, intra-corporate transferees, and professionals working on cross-border projects in the Indian market.
Similarly, more favourable and predictable provisions governing the mobility of Indian professionals working in, or travelling to, the EU would represent a significant gain for India’s information technology and services export sector, which has long constituted one of the country’s principal competitive advantages in global markets.
Intellectual Property, Dispute Settlement, and Sustainability
Beyond provisions governing trade flows, the FTA establishes a more comprehensive institutional framework that strengthens protection for European businesses operating in India. It provides for stronger enforcement of intellectual property rights, encompassing copyright, trademarks, designs, trade secrets, and plant varieties along with a dedicated chapter on sustainable development addressing climate, labour, and gender provisions. For European businesses, this more robust and clearly defined intellectual property enforcement in India will offer improved protection against infringement and counterfeiting, a longstanding concern for EU companies operating in the Indian market.
The FTA further establishes a dispute settlement mechanism, complete with its own rules of procedure, a code of conduct, and a mediation annex, and provides for a Joint Committee to oversee its implementation.
The Bottom Line
Council approval represents one step within a longer sequence of requirements before the FTA can formally enter into force. It will require the European Parliament’s consent alongside the completion of India’s own ratification process. With the current timeline pointing to signature in December 2026 and entry into force in early 2027, European businesses could prepare for a substantially more open Indian market, reviewing supply chains, export strategies, and market-entry plans.
Should these remaining requirements be satisfied, the FTA stands to substantially reshape the trading relationship between India and the EU. This will mean expanded and more competitive access for European exports of automobiles, machinery, chemicals, and pharmaceuticals; a new opening for EU wine, spirits, olive oil, and processed food producers in a market of over 1.4 billion consumers, with sensitive European agricultural sectors fully protected; the most ambitious opening of India’s financial services and maritime transport sectors secured under any Indian trade agreement to date; and a stronger framework for the protection of European intellectual property in India. The coming months of ratification and finalisation will merit close attention from both European and Indian businesses across every one of these sectors.
Separately, the European Commission has confirmed that concurrently with the FTA, negotiations are underway on a Geographical Indications agreement and an Investment Protection Agreement between the EU and India. A Geographical Indications agreement would extend reciprocal protection for both Indian and EU products, while an Investment Protection Agreement would provide European investors with a clearer and more secure framework for capital deployed into India, complementing the market-access gains already secured under the FTA.
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