Nearly 19 years after talks on the India-EU Free Trade Agreement (FTA) began in 2007, there are positive signs of the deal being finally signed during the course of this month. The talks had begun in 2007, with many rounds of negotiations being held until 2013, but the negotiations had got stuck over differences in tariffs on automobiles, wine & spirits, data security for Indian IT firms, intellectual property rights, labour standards and public procurement. Efforts to revive talks began in 2016, but little progress was made until 2020. In June 2022, the talks were formally re-launched.
The India-EU FTA is said to be in the final stages of negotiations at present and, once signed and implemented, it could substantially increase India’s exports to the 27-nation bloc and deepen strategic ties, amidst ongoing global uncertainties. Speculation is rife on the deal being signed during the upcoming visit of Ursula von der Leyen, president, European Commission, and Antonio Costa, president, European Council. They have been invited to be the chief guests at India's 77th Republic Day celebrations on 26 January 2026. Once concluded, the India-EU FTA will become India’s 19th trade agreement.
Since 2014, India has concluded/implemented multiple trade agreements, including those with Mauritius, Australia, the UAE, Oman, the UK, EFTA countries and New Zealand. This will diversify and expand India’s market for exports and imports. The EU is India’s largest trading partner for goods at present, to which India exported $437 billion in goods and $387.5 billion in services in 2024-25, while importing goods worth $720 billion and services worth $195 billion.
The FTA is expected to help Indian exporters diversify into the EU markets at a time when the US tariffs and geopolitical tensions are reshaping global supply chains. With a GDP of about $19.5 trillion and a population exceeding 450 million, the EU remains a major trade market. The US tariffs had created panic amongst Indian exporters and precipitated an urgency to conclude other trade deals, which had disrupted trade flows.
Advantages of an FTA include tariffs or import duties being reduced or, at times, done away with, as also permission being granted for easier market access and regulatory alignment. The India-EU deal is likely to benefit sectors such as technology, pharmaceuticals, automobiles, textiles, steel, petroleum products and electrical machinery. Labour-intensive sectors like garments, leather and pharmaceuticals could also see improved competitiveness in the EU market, while Indian services exports, particularly telecommunications, transport and business services, are also expected to grow. The EU will import aircraft spares, electrical machinery, diamonds and chemicals from India.
India’s bilateral trade in goods with the EU was $136.53 billion in 2024-25 ($75.85 billion in exports and $60.68 billion in imports), making the EU India’s largest goods trading partner. The EU accounts for about 17 per cent of India’s total exports, while India represents about 9 per cent of the bloc’s overseas shipments. In 2023-24, India exported $76 billion in goods and $30 billion in services to the EU, while EU exports to India included $61.5 billion in goods and $23 billion in services. Spain, Germany, Belgium, Poland and the Netherlands are among the top EU destinations for Indian exports.
Indian textile exports face tariffs of 12-16 per cent in the EU today, making them less competitive than products from countries like Bangladesh and Vietnam, which enjoy preferential access under EU trade agreements. India’s main imports from the EU include machinery, aircraft and parts, electronics, medical devices, scientific instruments, rough diamonds, chemicals, plastics, cars and auto components. In services, India exports business, IT, telecom and transport services, while importing intellectual property and IT-related services.
Alcohol is a significant component of bilateral trade. In 2023-24, India exported wines worth $1.5 million and spirits worth $64.9 million to the EU, while importing wines worth $412.4 million and spirits worth $22.3 million. On the investment front, cumulative FDI inflows from the EU into India during April 2000-September 2024 stood at $117.4 billion, accounting for 16.6 per cent of India’s total FDI equity inflows. About 6,000 EU companies operate in India today.