The long-awaited free trade agreement between India and the European Union was announced on Tuesday. While the EU has already released a chapter-by-chapter summary, India’s official text is still awaited. Often billed as the “mother of all trade deals”, the pact spans 20 chapters and is being pitched as a major win for both sides.
From India’s perspective, the agreement promises substantial gains in goods and services exports and deeper integration with a large developed market. At the same time, it locks in some of the EU’s toughest regulatory standards, while leaving sensitive areas—especially agriculture and carbon-related costs—largely unresolved. Mint explains the agreement, chapter by chapter.
Trade in goods: Clear export upside
India’s biggest gain is improved market access for goods. The EU will eliminate tariffs on over 90% of tariff lines, covering 91% of trade value, rising to 99.3% with partial liberalisation.
This sharply improves competitiveness for labour-intensive exports such as textiles, apparel, footwear, marine products, chemicals and pharmaceuticals, which earlier faced EU duties of 6–12% or more. Tariff cuts level the playing field for Indian manufacturers in a key developed market.
EU is one of India’s largest trading partners. In 2024–25, India’s bilateral trade in goods with the EU stood at ₹11.5 trillion, or $136.54 billion, with exports worth ₹6.4 trillion ($75.85 billion) and imports amounting to ₹5.1 trillion ($60.68 billion), resulting in a surplus. India-EU trade in services reached ₹7.2 trillion ($83.10 billion) in 2024.
Rules of origin: Modern but tight
The agreement adopts EU-style rules of origin aligned with recent EU FTAs, based on self-certification and digital verification. While this reduces paperwork and helps MSMEs, the value-addition thresholds are relatively strict, which could challenge Indian exporters with complex global supply chains.
Tight rules of origin will protect domestic spirits manufacturers. Confederation of Indian Alcoholic Beverage Companies (CIABC) director general Anant S. Iyer said, “Robust and enforceable rules of origin would help stop third-country products from entering India through indirect routes, which often leads to unfair competition and loss of revenue for the country."
"In the case of alcoholic beverages, especially geographical indication (GI)-tagged products such as Scotch whisky, Irish whiskey, Cognac, Champagne or Tequila, the GI-linked country should be recognised as the true country of origin for tariff purposes, regardless of where the shipment originates, which is vital to preserve the authenticity of such products and uphold the integrity of trade commitments,” he added.
Customs and trade facilitation
Commitments on advance rulings, simplified procedures and expedited release of goods mean that exporters will get clarity on tariff classification, valuation and origin requirements in advance, reducing uncertainty at the border and the risk of disputes.
Faster clearance mechanisms and simpler documentation will cut waiting time at ports, lower logistics costs and ease the compliance burden, which is especially important for small and mid-sized exporters.
Deeper customs cooperation, including coordination on supply-chain security and data exchange, will allow trusted and compliant Indian exporters to benefit from risk-based inspections and faster green-channel clearances, helping their consignments move more predictably and quickly into the EU market.
Sanitary and phytosanitary measures: A sticking point
This is where India gains the least. The EU has made it clear that all Indian agri-food exports will continue to face its strict food safety, animal and plant health rules, with no dilution. The EU also retains the right to impose provisional SPS measures where scientific evidence is deemed insufficient.
Unlike the India–UK FTA, there is no joint SPS committee with a softer, consultative approach, raising concerns that SPS norms will continue to act as non-tariff barriers for Indian agriculture.
In practice, this means Indian exporters of rice, spices and tea will still have to comply with pesticide residue limits that are often far stricter than international benchmarks, increasing costs and the risk of shipment rejections.
Marine exports such as shrimp and fish will remain vulnerable to enhanced inspections or bans over traces of antibiotics not tolerated by the EU, while fresh fruits could face sudden restrictions on plant health grounds.
Dairy exports, already limited, will continue to struggle as the EU does not recognise milk from animals treated with certain hormones or antibiotics. Without an institutional mechanism to address such issues through dialogue, these SPS requirements are likely to remain one of the most restrictive elements of the agreement for India’s farm and food exporters.
Other chapters
Technical Barriers to Trade: This chapter reinforces WTO principles and introduces mandatory consultation timelines for new regulations. A dedicated working group on conformity assessment, including India’s quality control orders, provides a formal platform to address regulatory frictions, though it stops short of mutual recognition.
Trade Remedies: Both sides preserve the right to use anti-dumping, anti-subsidy and safeguard measures. A bilateral safeguard mechanism allows temporary action if import surges cause serious injury, offering comfort to the domestic industry.
Services: India has secured commitments that go beyond its WTO obligations, including clearer rules on domestic regulation, senior management and local presence. Provisions on mobility of professionals are among the more ambitious that India has negotiated, though they remain calibrated rather than liberal.
Digital Trade: The Digital Trade chapter incorporates most WTO e-commerce joint initiative rules, including consumer protection, anti-spam provisions and safeguards against forced disclosure of source code. At the same time, it preserves regulatory space for privacy and public policy, aligning with India’s digital priorities.
Intellectual Property Rights: The IP chapter provides robust protection and enforcement across copyrights, trademarks, designs, trade secrets and plant varieties, largely in line with India’s existing legal framework. Crucially, India has avoided commitments that could weaken access to affordable medicines.
Competition and Subsidies: The EU gains the ability to seek information on subsidies and deepen cooperation between competition authorities. This reflects the EU’s concern over state support, though it does not create automatic penalties.
SMEs, Transparency, and Regulatory Practices: Dedicated SME provisions, single digital information portals and stronger transparency rules should help smaller Indian firms navigate the EU market. Good regulatory practices, including impact assessments and early consultations, increase predictability but also add procedural discipline.
Sustainable Development, Labour, Environment: The FTA includes legally binding commitments on labour rights, climate action and environmental protection, backed by consultation and dispute mechanisms. While this supports India’s green transition goals, it also raises compliance expectations for exporters.
CBAM: Notably, the agreement does not mitigate the immediate impact of the EU’s Carbon Border Adjustment Mechanism. Indian exports in steel and aluminium will continue to face Europe’s carbon tax, with the risk of expansion to other industrial products, potentially eroding tariff gains over time.
There is no transition relief or special consideration for developing countries under the agreement, and Indian exporters will have to comply with detailed emissions reporting and verification requirements, adding to costs.
As the EU phases out free carbon allowances for its own producers, the effective tax burden on Indian steel and aluminium exports is expected to rise further, increasing the risk that CBAM offsets a significant part of the tariff benefits under the FTA.
The bottom line
From India’s standpoint, the India–EU FTA delivers strong gains in labour-intensive exports, services and deeper supply-chain integration, while also improving access to a large developed market. Once the FTA comes into force, European products such as wines and spirits, premium cars and auto components, machinery, electrical equipment, medical devices, chemicals and specialty chemicals are expected to become cheaper for Indian consumers and businesses as duties are reduced, lowering input costs for manufacturing and making high-end goods more affordable.
The textiles sector is among the biggest winners, with sharp tariff cuts expected to significantly expand India’s footprint in Europe. Exports could rise rapidly from about $7 billion to $30–40 billion, as highlighted by commerce minister Piyush Goyal, potentially generating 6–7 million jobs. At the same time, cheaper textile machinery imports from Germany should aid technology upgrades and reduce dependence on China.