Indian Economy News

India and European Union trade agreement

India and the Government of India have announced the successful conclusion of negotiations on a Free Trade Agreement (FTA) with the European Union (EU), which is a significant strategic achievement in the economic partnership between the world’s 4th and 2nd largest economies. The FTA, which has been characterized as a modern and rules-based trade relationship, is expected to unlock substantial trade and investment opportunities across various sectors, while also addressing the emerging global economic challenges and supporting the development agenda of India. With a combined market size of over Rs. 2091.6 Lakh Crore (US$ 24 Trillion), the FTA is expected to provide deeper market integration and unprecedented market access for over 99% of India’s exports by value, while maintaining flexibility for the country’s sensitive sectors. The bilateral trade in merchandise between India and the EU was of Rs. 11.5 Lakh Crore (US$ 136.54 billion) in FY25, with India’s exports of goods at around Rs. 6.4 Lakh Crore (US$ 75.85 Billion).
The FTA provides substantial preferential market access, with 97.5% of EU imports to India and 99.5% of India’s export value eligible for tariff concessions, immediate elimination of duties for key labour-intensive sectors, and gradual reduction of duties in many other sectors. The strategic sectors of textiles, leather, jewellery, engineering goods, marine products, and chemicals are expected to gain improved market access in the European Union markets, while services commitments in 144 sub-sectors, including IT/ITES, professional services, and education, will provide Indian businesses with greater predictability and market access. The FTA also aims to support MSMEs, rural livelihoods, talent mobility, and cooperation on intellectual property, agricultural products, and traditional medicine services. The India-European Union FTA is expected to propel export growth, enhance value chain integration, and enhance India’s global trade presence.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.