India-EU FTA: What's agreed, what's at stake for both the countries, gains for India and EU and more

India and the European Union are close to clinching a long-pending trade agreement, with an announcement expected on Tuesday (January 27) at the India-EU Summit in Delhi. Ursula von der Leyen, the president of the European Commission, said at the World Economic Forum (WEF) in Davos that the two countries are inching closer to sealing the “mother of all deals”. 

“There is still work to do. But we are on the cusp of a historic trade agreement. Some call it the mother of all deals. One that would create a market of 2 billion people, accounting for almost a quarter of global GDP,” von der Leyen said. 

Here’s what you need to know about the India-EU FTA

What happens after the pact is signed? 

Once signed and ratified by the European Parliament—a process that could take at least a year—the agreement could expand bilateral trade and boost Indian exports such as textiles and jewellery, which have been hit by 50% U.S. tariffs since late August. However, a recent vote by EU lawmakers to challenge the EU–South America pact in the bloc’s top court highlights how parliamentary hurdles could delay or complicate ratification.

What does the agreement cover?

Investment protection and geographical indications are being negotiated separately, keeping the free trade agreement focused on goods, services and trade rules.

Why does the pact matter now?

It would be India’s ninth trade agreement in four years, reflecting New Delhi’s push to secure market access as global trade becomes more protectionist. For the EU, the deal supports supply-chain diversification, reduces reliance on China and offers access to India’s $4.2 trillion economy.

What are the gains for India?

The EU is among India’s top trading partners, with bilateral goods and services trade exceeding $190 billion in 2024-25. India exported about $76 billion in goods and $30 billion in services. While average EU tariffs are low at 3.8%, labour-intensive sectors such as textiles face duties of around 10%. The pact could help restore competitiveness lost after the EU withdrew GSP benefits in 2023 and offset higher U.S. tariffs. India is also seeking easier access for professionals and IT services exports.

What does the EU gain?

EU exports to India face higher barriers, with average tariffs of about 9.3% on $60.7 billion of goods. Tariff cuts would benefit automobiles, machinery, aircraft and chemicals, while improving access to services, procurement and investment.

What are the key sticking points?

Agriculture and dairy are excluded. India is resisting EU demands to eliminate tariffs on over 95% of goods, signalling closer to 90%. Autos, wine and spirits remain sensitive, with phased cuts or quotas under consideration.

What issues remain on services and rules?

India wants data-secure status, easier professional mobility and relief from double social security payments. The EU is seeking broader access to financial and legal services and commitments on labour, environment and intellectual property.

What are India’s red flags?

Concerns include the EU’s carbon border levy and high non-tariff barriers such as regulatory delays, stringent standards and certification costs.