The India-EU free trade agreement (FTA), concluded on January 27, 2026, during the 16th India-EU Summit, marks a historic milestone after negotiations relaunched in 2022 (originally launched in 2007 and suspended in 2013). Often called the “mother of all deals," it creates a free trade zone encompassing nearly 2 billion people and about 25 per cent of global GDP, positioning India and the 27-member EU bloc for transformative economic integration. Current bilateral trade stands at approximately anywhere between USD 136.5-140 billion in goods (India’s exports to EU at USD 75.85 billion and imports at USD 60.68 billion in 2024-25) plus substantial services trade (USD 83 billion). The FTA delivers unprecedented market access; over 99 per cent of Indian exports by trade value gain preferential entry into the EU, with immediate zero-duty access on 70.4 per cent of tariff lines covering 90.7 per cent of India’s exports (primarily labour-intensive sectors).

This deal opens immense positive possibilities for India, driving export-led growth, job creation, FDI inflows, MSME empowerment, supply chain integration, technological advancement and strategic diversification amidst global uncertainties. Projections suggest Indian exports to the EU could rise by up to 41 per cent, significantly boosting bilateral trade (one estimate says, up to 65 per cent overall increase). It aligns with PM Modi’s idea of “Viksit Bharat" enhancing competitiveness, inclusive growth and resilience.

Tariff liberalisation and immediate market access will remove long-standing barriers. The EU will eliminate or phase down duties on critical Indian categories–textiles, apparel, footwear, leather, marine products, fisheries, gems & jewellery, chemicals, pharmaceuticals and engineering goods. Self-certification under modern Rules of Origin (aligned with recent EU FTAs) simplifies compliance for exporters, especially SMEs, via uploaded origin statements and customs portals. This reduces costs, speeds clearance and enables cumulation benefits for regional value chains.

Customs facilitation, advance rulings, simplified procedures, sanitary and phytosanitary Measures (SPS) and technical barriers to trade (TBT), both World Trade Organization (WTO) agreements regulating product standards and safety to prevent unnecessary trade barriers, will further cut red tape and non-tariff barriers (NTBs), making EU entry predictable and efficient, while upholding high standards. A bilateral safeguard mechanism protects against surges and dispute settlement ensures enforceability. Labour-intensive export sectors stand to gain massively, empowering millions in MSMEs, artisans, women and rural workers.

The EU accounts for roughly 38 per cent of India’s textile exports. Immediate zero duties will unlock premium EU markets for India, with Indian exports benefitting from reduced 8-12% tariffs, thereby improving our price competitiveness against the likes of Vietnam and Bangladesh. It will further help us via higher volumes, better margins, diversification into high-value garments, technical textiles and sustainable fashion. States like Tamil Nadu (Tirupur knitwear), Gujarat, Maharashtra, Rajasthan, and Uttar Pradesh (handlooms and........

© News18