BLOG 8/2026 DATED 29TH JANUARY 2026
The Free Trade Deal recently concluded between India and European Union is being described as mother of all deals. Let us see objectively, what it has given beyond the rhetoric. We can understand from the following facts, as to why this deal is important:
- EU’s share in India’s total export in 2024-25 was 17.33%, second only to US where Indian exports stands at 19.76% of the total export in 2024-25. Third major region of export for India is West Asia GCC countries (6 countries) with 12.99% share.
- Total value of India’s export to EU is USD 75.85 bn out of the total export of USD 437.70 bn. (2024-25)
- The share of EU in India’s total import bill in 2024-25 was 8.41%. Indian imports are however dominated by Asian countries with North East Asia (China, Japan, S. Korea etc.) sharing 25.40% of India’s export.
- Total value of India’s import from EU is USD 60.68 bn out of the total import of USD 721.20 bn.
- EU has a share of 11.79% in India’s foreign trade.
The above data shows that India stands to gain on export front more than on the import front as we export more than our import to EU countries. The deal is going to affect a whopping 17.33% of our exports while it will effect 8.41% of our imports.
History of the India EU Free Trade Agreement Deal:
The trade deal between India and European Union also gain significance as it is the result of 19 years long efforts from both sides. The entire timeline can be divided into 4 parts.
What India may gain:
- Zero and minimum tariff on India export to EU giving boost to Indian exporters.
- Major industries that may get benefits are Textiles, Leather, Gems & Jewelry, Marine Products, Chemical and consumer Goods.
- These Industries are labour intensive and hence may generate employment.
- As India will also remove tariff on imports from EU, the goods imported from EU may get cheaper in India.
- Major sectors that may get benefits are Automobile, Machinery & Electrical equipment, Pharma, Medical & Surgical equipment, Chemicals, wine & spirits and some food products.
- Other than wine and spirits all other industries may effect the life of common population.
- EU will open its market for Indian IT, Service and education sector giving business avenues to Indian firms while sophisticated firms from EU nations may get easy access to business in India bringing in investments and skilled job avenue.
- In addition, EU will also open its defense units in India giving India an upper hand in getting future defense deals from EU.
The FTA with EU will act as support to Indian industries against the US tariff hit and also it will strengthen the Indian case in negotiating trade deal with US. This may prove as one of the biggest immediate gain from the agreement. (This was suggested by sillypoint in its blog on ‘US Tariff Battle’). US Tariff Battle – At Silly Point
What is still lacking:
- EU imposes a carbon tax on the companies not complying to its standards, there is no clarity on such tax.
- EU treats Russia as a potential threat while India treats Russia as a strategic partner.
- EU is a union of 27 countries and final benefits will be seen after the country level negotiations.
What is outside the deal but it is to be seen that the tariff that India is waiving and we expect that goods will become cheaper in India may or may not happen as even after importing cheap oil from Russia, no price benefit was transferred to the common people. Government has to decide and monitor this issue to see that price benefit reaches the Indian masses.
Conclusion:
The agreement covers 17.33% of India’s export and 8.41% of India’s import and therefore this deal can have a real impression on Indian foreign trade and resultant benefits. However, real success will be achieved only if the post agreement execution part is carried out effectively to the benefit of India and its people and also if this deal can result into softening in US approach towards India.
References:
https://tradestat.commerce.gov.in/eidb/region_wise_all_countries_export
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Excellent analysis of the trade agreement. Sillypoint opinion was taken into consideration