India – EU Trade Pact: A strategic push for deeper global integration
India is set for a quantum leap in a global trade as India and the European Union (EU) have clinched the deal for a Free Trade Agreement (FTA), marking a red-letter day in one of India’s most strategic economic partnerships, described as “mother of all deals” by European Commission President Ursula von der Leyen. Steered and drawn as modern, rules-based trade partnership, the FTA responds and withstands to contemporary global challenges while enabling deeper market integration between the world’s 4th and 2nd largest economies. The free trade agreement (FTA) between India and the European Union (EU) is significant not just on account of the sizes of the economies involved, but also because it showcases Indian negotiators’ skill and maturity when dealing with a powerful counterparty. India has managed to negotiate favourable terms in each of the previous eight FTAs of the last four years or so, but those were with much smaller economies. With a combined market estimated at over INR 2091.6 Lakh Crore (USD 24 trillion), bringing unparalleled opportunities for the 2 billion people of India and the EU, the FTA unlocks significant potential for trade and innovation.
The FTA delivers unprecedented market access for more than 99% of India’s export by trade value, while preserving policy space for sensitive sectors and reinforcing India’s developmental priorities. The data revealed by Ministry of Commerce and Industry, Government of India that the bilateral merchandise trade between India and the EU has demonstrated sustained growth, valued approximately at INR 11.5 Lakh Crore (USD 136.54 billion) in 2024-25, with India exporting roughly INR 6.4 Lakh Crore (USD 75.85 billion) to the EU. India-EU trade in services reached INR 7.2 Lakh Crore (USD 83.10 billion) in 2024. Despite robust and thriving trade, there is a significant untapped potential considering the size of each other’s market and trade. The FTA provides an unparalleled pathway and holds immense promise for both, India and the EU, to emerge as each other’s major economic partners.
This FTA of strategic significance evolves India-EU relations from a traditional into a modern, multifaceted partnership, providing a stable and predictable environment for exporters, enabling Indian businesses including MSMEs to plan long-term investments, integrate into European value chains, and ensure consistent favourable market access amid global economic uncertainties. Under this deal, India had Secured Strategic Access to European Markets India has gained preferential access to the European markets across 97% of tariff lines, covering 99.5% of trade value.
The Key labour-intensive sectors (such as textiles, apparel, marine, leather, footwear, chemicals, plastics/rubber, sports goods, toys, gems, and jewellery), comprising more than INR 2.87 Lakh Crore (USD 33 billion) of exports that are currently subjected to import duty between 4% to 26% in the EU and are crucial for employment generation, will enter zero duty from entry into force of the FTA and thus gain enhanced competitiveness in the EU market. These sectors are poised to benefit from tariff liberalisation and enhanced competitiveness, enabling deeper integration into global and European value chains and simultaneously creating job opportunities. The FTA is expected to have a significant positive impact on the Indian agricultural and processed food sector. Preferential Market Access for agricultural products like tea, coffee, spices, grapes, gherkins and cucumbers, dried onion, fresh vegetables and fruits as well as for processed food products will make them more competitive in the EU. This market access will strengthen farmers’ realised incomes, reinforce rural livelihoods, and elevate the global competitiveness of Indian agricultural products. India has prudently safeguarded sensitive sectors, including dairy, cereals, poultry, soy meal, certain fruits and vegetables, etc. balancing export growth with domestic priorities.
The FTA positions Indian agriculture to capture higher value in European markets, drive sectoral prosperity, and bolster long-term resilience through sustained livelihood and reliable income opportunities.
Services being dominant and faster growing part of both economies will trade more in future. Under the FTA, broader and deeper commitments have been secured from the EU across 144 services subsectors, including IT/ITeS, professional services, education, and other business services. This covers a vast range of services sectors spectrum in which Indian service providers will get a stable and conducive regime in the EU market to supply their services. India’s competitive, high-tech services are expected to drive India’s exports while benefitting EU businesses and consumers. To impart more strength and stability to India’s talent across Europe, the FTA establishes an assured regime for temporary entry and stay for professionals, including Business Visitors, Intra-Corporate Transferees, Contractual Service Suppliers, and Independent Professionals. Through a comprehensive mobility framework, India strengthens its position as a global hub for talent. The framework eases movement of employees (and their spouses and dependents) of Indian Corporates established in the EU in all services sectors. For business entities aiming to provide services under a contract to EU clients, India can access 37 sub-sectors including IT, business, and professional services. The FTA also reinforces intellectual property protections provided under TRIPS relating to copyright, trademarks, designs, trade secrets, plant varieties, enforcement of IPRs, affirms Doha Declaration and recognises the importance of digital libraries, specifically the Traditional Knowledge Digital Library (TKDL) project initiated by India.
Aligned with the vision of “Viksit Bharat 2047,” the India–EU FTA marks a new chapter in bilateral economic engagement, reinforcing shared values, fostering innovation, and positioning India as a dynamic and trusted partner in the global trading system. However, India must push for as speedy a clearing process and implementation of this pact as possible. Otherwise, the gains so painstakingly bargained for will be too late to offset the U.S. tariff affliction.
Zubair Mushtaq, Research Scholar in Department of Commerce, Kashmir University
