India and EU : Prepare to Announce Landmark Free Trade Agreement
India and EU: India is set to host a major diplomatic and economic milestone as New Delhi prepares for the 16th European Union–India Summit on Tuesday. Prime Minister Narendra Modi will welcome senior European leaders, including European Commission President Ursula von der Leyen and European Council President Antonio Costa, for talks expected to culminate in the formal announcement of the conclusion of negotiations on a long-pending Free Trade Agreement between India and the European Union.
Confirmation of FTA Negotiations Conclusion
Indian Commerce Secretary Rajesh Agrawal has confirmed that negotiators from both sides have successfully completed discussions on the comprehensive trade pact. The official declaration marking the end of negotiations is scheduled to be made during the summit, signalling a breakthrough after years of dialogue aimed at aligning trade priorities and regulatory frameworks.
Broader Scope of the India–EU Summit
Beyond trade, the summit is designed to deepen the India–EU strategic partnership across multiple sectors. Discussions will focus on cooperation in areas such as security and defence, climate action and clean energy transition, digital innovation, and enhanced people-to-people exchanges. Officials on both sides view the meeting as a platform to reinforce political trust while setting long-term economic and strategic goals.
Timeline for Signing and Implementation
While negotiations have concluded, the agreement will still undergo a detailed legal review process, commonly referred to as legal scrubbing. Officials estimate that the formal signing of the pact could take place within six months. Once signed, the agreement is expected to enter into force sometime next year, following ratification procedures in both India and the European Union.
Growing Momentum in Bilateral Relations
The summit comes amid steadily improving ties between India and the EU over recent years. Diplomatic engagement has intensified, with both sides seeking closer alignment on global supply chains, sustainability standards, and economic resilience. This positive momentum has helped create favourable conditions for finalising the trade agreement.
Economic Impact and Trade Expansion
Describing the agreement as balanced and future-oriented, Agrawal has said it is expected to deepen economic integration and significantly increase trade and investment flows. Policymakers believe the pact will play a key role in expanding India’s presence in global markets, particularly at a time when shifting trade dynamics and higher tariffs in some regions are prompting exporters to seek alternative destinations.
Benefits for Indian Exports
The European market is expected to offer expanded opportunities for Indian exporters once the agreement comes into effect. Sectors such as textiles, gems and jewellery, engineering goods, and services could benefit from improved market access and reduced trade barriers, helping diversify export destinations and strengthen supply chains.
Automobile Sector Liberalisation
One of the most closely watched aspects of the agreement is the proposed opening of India’s automobile market to European manufacturers. Import duties on European passenger vehicles are expected to fall sharply, from current levels of around 110 per cent to approximately 40 per cent. This reduction could make European cars more competitively priced for Indian consumers and potentially increase the market presence of European brands.
Current Trade Landscape
At present, European automakers account for only about 4 per cent of India’s annual car market, which totals roughly 4.4 million units. More broadly, the European Union is already a significant trade partner for India, accounting for around 17 per cent of India’s total exports. Conversely, exports to India represent about 9 per cent of the EU’s overseas shipments.
Trade Figures Highlight Scale of Partnership
In the 2024–25 financial year, bilateral trade in goods between India and the EU reached $136.53 billion. Indian exports were valued at $75.85 billion, while imports from the EU stood at $60.68 billion, making the bloc India’s largest trading partner in goods. Trade in services also remains substantial, with exchanges between the two sides amounting to $83.10 billion in 2024.