Introduction
Nearly 20 years after talks began, the free trade agreement between the European Union and India is moving from negotiation to law. In September the European Commission sent its proposals to EU member states to approve signing and concluding the deal, which was agreed in New Delhi in January. Together the two economies cover about two billion people and a quarter of world GDP. For businesses in Asia, the agreement changes the case for where to produce goods bound for Europe.
What the deal does
Negotiations began in 2007, were suspended in 2013 and relaunched in 2022. They concluded at the 16th India–EU Summit on 27 January 2026.
| Feature | Detail |
|---|---|
| Tariffs | About 90% of tariff lines eliminated or reduced. By trade value, India liberalises about 96.6% of EU exports and the EU about 99.5% of Indian exports |
| Expected EU gain | About €58bn more in annual EU exports to India and about €4bn a year in duty savings |
| Existing trade | Over €180bn a year in goods and services |
| Services | Preferential access to India’s market, including financial and maritime services |
| IP | Commitments on copyright, trademarks, designs and trade secrets |
| Protected EU sectors | Beef, sugar, rice, chicken, milk powder and others keep current tariffs; a bilateral safeguard applies |
The agreement also includes commitments on labour rights, climate and the Paris Agreement. Separate agreements on geographical indications and investment protection are still being negotiated.
The road to entry into force
Several steps remain. The EU Council must adopt the decision, the two sides must sign, the European Parliament must give consent, and the Council must then formally conclude the deal. India must also ratify it. Entry into force is therefore some way off, probably in 2027 at the earliest, but businesses are already planning for it.
The timing reflects the US backdrop. India faced punitive US tariffs of up to 50% from August 2025, and Brussels has also been exposed to unpredictable US trade policy. Both sides wanted a large, rules-based agreement that does not depend on Washington. A US–India deal to lower tariffs followed soon after the January agreement.
What it means for Asia
The deal has the biggest effect on Southeast Asian countries that compete with India for European orders. Vietnam (since 2020) and Singapore (since 2019) already have trade agreements with the EU. Indonesia concluded negotiations on its EU deal in September 2025. Others, including Thailand, the Philippines and Malaysia, are still negotiating, and their advantage over India in the European market is shrinking.
The sectors to watch are textiles and apparel, pharmaceuticals, machinery, auto components and processed food. In these areas Indian manufacturers combine scale with what will soon be preferential access to Europe. Companies running China+N strategies may find India more attractive as the “N”.
There are also legal and compliance questions. Rules of origin will decide which products qualify. Companies that source inputs across Asia and assemble in India will need to check how much regional content they can use and still meet the origin test. The IP chapter and services commitments will matter to technology, financial and professional services firms planning to grow in India.
Summary
The India–EU FTA has moved from political agreement to the formal approval process, with entry into force likely in 2027 or later. It will lower tariffs on nearly all trade between two very large markets and strengthen India’s position as a manufacturing base for European buyers. ASEAN economies without their own EU agreements will face tougher competition, and companies should start reviewing supply chains and origin rules now.
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