Prime Minister Narendra Modi on Tuesday hailed the free trade agreement between India and the European Union (EU) as a new blueprint for shared prosperity. Terming it a historic day, PM Modi said that India's biggest free trade deal with the 27-nation European Union will open a new chapter in our relations on trade, security, and people-to-people ties.
"Today, India has concluded the biggest Free Trade Agreement in its history. On 27th January, India signed this FTA with 27 European nations...This will boost investment, form new innovation partnerships and strengthen supply chains at the global level...This is not just a trade agreement, it is a blueprint for shared prosperity," PM Modi said.
FTA to boost India's exports to 27-nation bloc
The free trade agreement (FTA) will help boost the country's exports to the 27-nation bloc. Since 2014, India has finalised seven trade pacts - Mauritius (April 2021 implemented), Australia (December 2022 implemented), UAE (May 2022 implemented), Oman (signed in December 2025), UK (signed in July 2025), EFTA (implemented in October 2025 - Switzerland, Iceland, Liechtenstein, Norway), and New Zealand (talks concluded in December 2025).
Importance of this FTA
The imposition of high tariffs by the US has disrupted the global flow of goods. India is facing steep 50 per cent tariffs. The FTA is expected to help Indian exporters diversify their shipments. It will also help reduce dependence on China. The EU is also facing a threat of high US tariffs.
Benefits for India, EU
Tariffs or import duties are either reduced or eliminated under an FTA. Therefore, an FTA will open markets, align regulatory frameworks, and benefit key industries such as technology, pharmaceuticals, automobiles, and textiles.
Lower or zero import duties will make Indian exports, including from labour-intensive sectors, such as garments, leather, pharmaceuticals, steel, petroleum products, and electrical machinery, more competitive in the EU.
India's exports and imports
Major exports are petroleum products (Diesel and ATF), electronics (including smartphones), textiles, machinery and computers, organic chemicals, iron and steel, gems and jewellery, pharmaceuticals, and auto parts.
Currently, India's textile exports to the EU face tariffs of 12-16 per cent, making Indian products less competitive than those from countries like Bangladesh and Vietnam, which enjoy preferential market access under EU trade agreements, a GTRI (Global Trade Research Initiative) report said.
Main imports are Machinery, computers (including turbojets), electronics (including mobile phone parts and integrated circuits), aircraft, medical devices, scientific instruments, rough diamonds, organic chemicals, plastics, iron and steel, cars, and auto parts.
Alcohol trade
Both regions are key players in this segment. India's exports to the EU in 2023-24 included wines (USD 1.5 million), blended whiskeys, vodka, brandy, and liqueurs (USD 64.9 million). Imports included wines (USD 412.4 million), blended whiskeys, brandy, gin, tequila, vodka, and liqueurs (USD 22.3 million).
FDI Inflows
India's cumulative FDI inflows from the EU from April 2000 to September 2024 totalled USD 117.4 billion, with about 6,000 EU firms operating in India. FDI from the EU accounted for 16.6 per cent of the cumulative FDI equity inflows from all countries, which stood at USD 708.6 billion.
According to GTRI, India's FDI outflows to the EU totalled about USD 40.04 billion from April 2000 to March 2024.
