Amid tariff wars, sanctions, and geopolitical tensions, one development stands out in particular. In January 2026, negotiations on the free trade agreement (FTA) between the European Union and India were concluded. Already described as the “mother of all trade agreements,” it covers a market of more than 2 billion people, accounting for approximately 25% of global GDP.
Text by Anna Zeitlinger, Lansky, Ganzger, Goeth+partner
Product Coverage
The new agreement eliminates tariff imbalances affecting key Indian export products such as textiles, leather goods, footwear, tea, spices, toys, and jewelry. Duty-free access to the EU market strengthens India’s competitiveness compared with countries benefiting from the Generalised System of Preferences (GSP), including Bangladesh, Pakistan, Cambodia, and Sri Lanka. At the same time, duty-free imports of EU technology products will help India reduce its dependence on Chinese imports.
For sensitive Indian goods, particularly steel products, tariff-rate quotas have been agreed upon. Given the EU’s planned 50% steel tariffs, this provides Indian manufacturers with a tangible competitive advantage. India, in turn, opens its market to engineering products, aerospace goods, optical and medical equipment, as well as pharmaceuticals. Import duties on wine will be reduced from 150% to between 20% and 30%.
Rules of Origin
The agreement follows the traditional approach of strict rules of origin, which determine whether a product qualifies for preferential tariff treatment. Only goods that are wholly produced in a signatory state or have undergone substantial processing there are eligible for preferential treatment.
A significant simplification for exporters on both sides is the ability to certify the origin of goods through a self-issued declaration, rather than obtaining an official certificate of origin from a chamber of commerce or government authority, as was previously required.
The agreement also includes a de minimis threshold, allowing tariff preferences even when a limited proportion of foreign components is used. For most goods, the threshold is set at 10% of the final product’s value, while for certain agricultural products it ranges between 5% and 10% of the product’s weight.
Trade in Services
The agreement seeks to achieve an unprecedented level of liberalization of access to the Indian market, exceeding what has been granted to other trading partners. The EU has provided market access guarantees for 144 service subsectors, while India has done so for 102. India has also made concessions in the area of financial services that resemble WTO disciplines, despite not being a party to certain related agreements.
Particularly noteworthy is the simplified mobility framework for intra-corporate transfers between Indian companies’ branches in the EU and vice versa. The EU guarantees this right not only to employees but also to their family members, and India provides an equivalent guarantee.
Other Non-Tariff Trade Barriers
Unlike most EU trade agreements, geographical indications are not regulated directly in the FTA but are left to a separate agreement.
In the field of intellectual property, the agreement does not contain provisions on generics or compulsory licensing, two instruments that are essential to India’s pharmaceutical industry. Regarding technical barriers to trade, the agreement largely incorporates existing WTO rules and establishes bilateral consultation mechanisms. No mutual recognition of technical regulations has been agreed, and the EU retains full autonomy over its food safety standards. As a result, both areas remain significant obstacles to trade.
In the digital sphere, both parties retain the freedom to establish their own data protection standards. Electronic contracts and signatures will be mutually recognized, and source code disclosure may not be required as a condition for market access.
The Carbon Border Adjustment Mechanism (CBAM) was a major point of contention, particularly regarding its application to Indian exports, especially in the steel sector. The EU assured India that the same rules would apply as for other countries. An accompanying memorandum of understanding provides for the financing of decarbonization projects in India.
The sustainability provisions are generally regarded as weak due to the absence of binding commitments, a feature widely viewed as a notable concession by the EU.
Who Does It Apply To and When Will It Enter into Force?
The agreement applies to all natural and legal persons registered in the EU or India, including state-owned and private enterprises, non-governmental organizations, trusts, joint ventures, and sole proprietorships. Existing bilateral investment protection agreements remain unaffected, while negotiations on a separate EU-wide investment agreement are still ongoing.
The agreement must still undergo ratification. It is not expected to enter into force before early 2027.