The European Union and India have concluded negotiations on a long-awaited free trade agreement (FTA), creating a market encompassing nearly two billion people. The deal brings to an end almost two decades of intermittent and often complex negotiations.
The EU and India have concluded negotiations on a major new free trade zone. This was announced by EU Commission President Ursula von der Leyen and India's Prime Minister Narendra Modi in New Delhi.
The dismantling of trade barriers and tariffs is intended to boost the exchange of goods and services between the EU and India. The aim is to promote growth and jobs and at the same time reduce undesirable dependencies on other countries.
Against the backdrop of the aggressive tariff and trade policy of the USA and China's increasing striving for power, the agreement is also considered a geopolitically significant step.
The agreement paves the way for the opening of the Indian market, which has so far been very closed to companies from the EU, which is already the country's largest trading partner. Tariffs on more than 90 percent of EU exports to India will be abolished or reduced. For 30 percent of goods traded with the EU, tariffs will fall to zero. For example, most tariffs on industrial goods such as machinery, electrical equipment, chemicals and pharmaceuticals will be completely abolished. In addition, customs procedures are to be simplified. The EU said it is expected that the agreement will lead to a doubling of EU exports to India by 2032.
The European car industry will benefit in particular. India's car tariffs will fall from 110 to ten percent over five years. This applies under an annual quota of 250,000 vehicles and should significantly benefit Volkswagen, BMW, Mercedes-Benz and Renault. Also, for Italy, the agreement represents a particularly significant opportunity; the Italian automotive sector, with its premium and specialised brands, will surely benefit from the reduction of tariffs opening new growth prospects in the world's third-largest automotive market.
At the heart of the agreement is the agri-food sector, characterised by high levels of tariff protection in India, with average duties exceeding 36% and peaks of up to 150%. The agreement provides for a significant reduction in duties on numerous European products that are key to France, Italian and German exports: tariffs on wines will fall from 150% to 75% upon entry into force and subsequently to 20%; duties on olive oil will drop from 45% to 0% over five years; for processed agricultural products, such as pasta, biscuits and confectionery, duties of up to 50% will be eliminated.
For Italy, with its excellence in the agri-food sector, the agreement opens particularly favourable prospects. The abovementioned sectors represent the heart of Made in Italy agri-food and the reduction of tariff barriers could translate into a significant increase in Italian exports to a market of over 1.4 billion consumers, with a rapidly expanding middle class.
Agricultural products and cars from India are not affected by the tariff reduction. Beef, rice, sugar, dairy products and poultry are exempt from the agreement. EU food safety rules remain unchanged. In contrast to the postponed Mercosur agreement – the other major FTA that the EU wants to conclude – no protest from farmers is to be expected.
India is seeking better access to the EU's duty-free import quotas for steel. A decision on this is expected by June 30. Not only goods, but also services are affected by the agreement. The EU is opening more than 140 service sectors to India, and India is opening up almost 100 to the EU. The agreement also establishes binding rules on labour rights, environmental protection and women's empowerment. Digital trade rules are designed to support the economy while ensuring privacy and security.
Following the agreement on the new FTA, the EU and India also want to cooperate more closely in the areas of security and defence. Both sides agreed on a corresponding partnership in New Delhi. The aim should be projects in the areas of maritime security, counter-terrorism and cyber defence, the EU Commission announced.
Commission President von der Leyen said that the EU and India were making history today "and deepening the partnership between the world's largest democracies". A free trade zone with two billion people would be created, from which both sides would benefit economically. In addition, it sends a signal to the world that rules-based cooperation continues to deliver excellent results.
The agreement will not be as comprehensive as that of the EU with the Mercosur states. Given the size of the Indian market, it is nevertheless one of the largest that has been agreed so far.
Special attention from regulators will be required regarding the equivalence of standards and quality used for manufacturing products to be imported into the EU under this agreement, comparable to those imposed on competing EU-made products. Equivalence of rules regarding the free movement of goods enforced in the EU will also be necessary to ensure that EU producers are not disadvantaged by unfair or detrimental competitive conditions. For the same purposes, FSR rules will contribute to balancing the rights and obligations of non-EU manufacturers competing with EU producers.
India is the most populous country in the world with more than 1.45 billion inhabitants, ahead of China. Around 450 million people live in the EU. Together, the two sides represent nearly a quarter of the world's GDP and population.
The German-Indian trade volume was around 31 billion euros in 2024. Goods worth 17 billion euros were exported from Germany to India, from where goods worth 14 billion were imported. In the past ten years, the trading volume has almost doubled. In India, around 2,000 German companies are represented with subsidiaries that employ a total of more than 500,000 people.
Italy–India trade relations have also shown steady momentum in recent years. In 2024, bilateral trade amounted to approximately €14 billion, with Italian exports to India exceeding €5 billion and imports from India accounting for the remainder. Preliminary figures and official statements for 2025 confirm a broadly stable trade volume, with both governments emphasising the strategic importance of further deepening economic ties. The Italian Government has repeatedly highlighted India as a key partner in the Indo-Pacific region and has publicly supported the EU–India FTA as a crucial instrument to expand trade flows, enhance market access for Italian companies and foster long-term industrial and investment cooperation, with an explicit objective of significantly increasing bilateral trade volumes over the coming years.
In New Delhi, EU Commission President von der Leyen spoke of a signal to the world that rules-based cooperation continues to deliver excellent results. "The EU and India are making history today," the Commission President stressed. Indian Prime Minister Modi said the agreement opens up great opportunities for India's 1.4 billion people and people. Business representatives also praised the agreement. For example, Volkswagen CEO Blume said that India, as the world's third-largest automotive market, offers great opportunities.
It is likely to take some time before the agreement comes into force. The reason is that the text of the contract still has to be legally reviewed. It will then also need the approval of the Member States and the European Parliament.
German industry hopes for a speedy announcement of the agreement. This would be a real game-changer, said the head of foreign trade at the German Chamber of Industry and Commerce, Volker Treier. He added that it was important that market access was not prevented again through the back door with bureaucratic rules. "In order for companies to be able to use the agreement, the documentation of the origin of the goods must not contain any new documentation obligations."
Italian industry has also welcomed the conclusion of the EU–India FTA as a major strategic breakthrough. Confindustria described the closure of negotiations as “an extremely positive signal”. Italian business organisations have long been strong advocates of the FTA, emphasising that ambitious commercial policy and clear, high-standard rules can enhance competitiveness and strengthen supply-chain resilience for Italian firms.
As far as France is concerned, the sectors most likely to benefit are the wine industry, which is suffering from declining domestic consumption, as well as the technology, automotive, and defense markets, which will benefit from expanded access to a rapidly growing Indian market. Sensitive agricultural sectors have also been protected, as mentioned above, which was essential for France. The full effects are expected to materialize over several years, with tariff reductions being implemented gradually.
ADVANT provides legal and tax advice to SMEs and has been supporting cross-border investments and M&A projects for many years. In recent years, India has taken on an increasingly important role – for internationally positioned companies or those that want to become one.
We look forward to continuing to support our clients on their way to India.
Markus Linnartz
Filippo Federici
Paolo Gallarati
Fabien Pouchot
Marie Hindré
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