India and EU conclude long-pending free trade agreement, says commerce secretary
Diplomacy Meets Fashion
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After nearly two decades of negotiations, India and the European Union have successfully concluded talks for a comprehensive free trade agreement (FTA), a milestone expected to significantly expand two-way trade, boost investment flows and deepen economic integration between the two sides, Commerce Secretary Rajesh Agrawal said on Monday.“Negotiations have been successfully concluded.
The deal has been finalised,” Agrawal said, adding that the agreement is balanced and forward-looking from India’s perspective and will help integrate the country more closely with the EU economy, PTI reported.
Earlier in the day, European Commission President Ursula von der Leyen, who was the Chief Guest at India’s Republic Day celebrations, said that India makes the world “more stable, prosperous and secure”.“It is the honour of a lifetime to be Chief Guests at the Republic Day celebrations.
A successful India makes the world more stable, prosperous and secure, and we all benefit,” She posted on X.
Legal scrubbing underway, signing expected this year
Agrawal said legal scrubbing of the FTA text is currently underway, with efforts focused on completing procedural formalities and signing the pact at the earliest.
The agreement is expected to be signed later this year and could come into force early next year.While implementation in India requires approval from the Union Cabinet, the pact will need ratification by the European Parliament, a process that could take time.The formal announcement of the conclusion of negotiations is expected at the India-EU Summit in New Delhi on Tuesday, which will be attended by European Commission President Ursula von der Leyen and European Council President Antonio Costa.
The two leaders will hold talks with Prime Minister Narendra Modi on January 27.
‘Mother of all trade deals’
Commerce and Industry Minister Piyush Goyal has described the India-EU FTA as “the mother of all deals” signed by India so far, underscoring its scale and strategic importance.Negotiations for the agreement began in 2007, making it one of India’s longest-running trade talks.
The pact covers 24 chapters, including trade in goods, services and investment, and is also accompanied by parallel negotiations on investment protection and Geographical Indications (GI).
Tariff cuts to benefit labour-intensive sectors
The agreement is expected to provide duty-free or preferential access for a wide range of Indian exports, particularly from labour-intensive sectors such as textiles, chemicals, gems and jewellery, electrical machinery, leather and footwear.Currently, the EU’s average tariff on Indian goods is about 3.8 per cent, but labour-intensive products face import duties of around 10 per cent.
India’s weighted average tariff on EU goods is about 9.3 per cent, with particularly high duties on automobiles and parts (35.5 per cent), plastics (10.4 per cent), and chemicals and pharmaceuticals (9.9 per cent).Under a typical FTA framework, both sides eliminate or reduce import duties on over 90 per cent of goods traded and liberalise norms for services trade, including telecommunications, transport, accounting and auditing.
Strategic relevance amid global trade disruption
The pact assumes added significance at a time when global trade flows have been disrupted by high tariffs imposed by the United States.
India is currently facing tariffs as steep as 50 per cent, making market diversification critical for exporters.The India-EU FTA is expected to help Indian exporters reduce dependence on traditional markets and diversify shipments, while also lowering reliance on China.
Trade and investment snapshot
India’s bilateral trade in goods with the EU stood at $136.53 billion in 2024-25, with exports worth $75.85 billion and imports at $60.68 billion, making the EU India’s largest goods trading partner.
Services trade between the two sides was valued at $83.10 billion in 2024.India recorded a trade surplus of $15.17 billion with the EU in 2024-25.
The bloc accounts for around 17 per cent of India’s total exports, while exports to India form about 9 per cent of the EU’s total overseas shipments.
Key export and import baskets
India’s major goods exports to the EU in FY25 included petroleum products ($15 billion), electronics ($11.3 billion, including smartphones worth $4.3 billion), textiles and garments ($6.1 billion), machinery and computers ($5 billion), organic chemicals ($5.1 billion), iron and steel ($4.9 billion), pharmaceuticals ($3 billion), gems and jewellery ($2.5 billion), auto parts ($1.6 billion), footwear ($809 million) and coffee ($775 million).Key imports from the EU included machinery and computers ($13 billion), electronics ($9.4 billion), aircraft ($6.3 billion), medical devices and scientific instruments ($3.8 billion), gems and jewellery ($3 billion), organic chemicals ($2.3 billion) and plastics ($2.3 billion).India’s main services exports to the EU were in other business services, telecommunications and IT, and transportation, while imports were led by intellectual property services and telecom and IT services.
Part of India’s expanding trade pact network
With the India-EU agreement, the NDA government has now finalised eight major trade pacts since 2014, including deals with Australia, the UK, Oman, New Zealand, the UAE, the EFTA bloc and Mauritius, positioning trade diplomacy as a central pillar of India’s economic strategy.
