EU–India trade deal (FTA): what European businesses should do before it takes effect

Short answer: The EU–India trade deal, formally the EU–India free trade agreement (FTA), will remove or cut Indian duties on 96.6% of EU exports by value, about €4bn a year in duty savings, with the largest cuts for machinery, chemicals, medical devices, cars, wine, spirits and processed food [3][4]. In the other direction, India's government says 90.7% of its exports to the EU by value become duty-free at entry into force, including textiles, apparel, leather and footwear [20]. The deal is not yet in force: as at 21 October 2026 it awaits Council approval and signature, reported for 16 December 2026, with entry into force expected in early 2027 [1][9][10]. For European businesses the opportunity goes beyond lower tariffs: the deal changes the economics of exporting, distributing, manufacturing, acquiring and sourcing in India, but the benefit for each company depends on staging dates, rules of origin, Indian regulation and its existing business model. The months before entry into force are the time to decide.

Who this is for: managing directors, CFOs and heads of international business at European companies that sell to India, buy from India, provide services there or are weighing an Indian subsidiary or plant. The legal detail (schedules, the origin procedure, CBAM rules and investment protection) is covered in EU–India trade deal (2026): status, FTA tariffs, rules of origin, CBAM and investment protection (ATB Legal) [17].

Five implications for European businesses:

1. Exporters gain a price advantage over competitors from countries without a trade agreement in force with India, but for many products it builds up over five to ten years, not on day one.
2. Buyers of Indian goods gain sooner: most Indian textiles, apparel, leather and footwear become duty-free at entry into force, if they meet the rules of origin.
3. Service providers get services commitments that, the Commission says, go further than India has given any other partner, including on senior management, boards and local presence, but Indian licensing and FDI rules still apply.
4. The case for an Indian plant changes both ways: tariff-jumping matters less, but cheaper European machinery and components lower the cost of building one.
5. The deal does not resolve investment protection, CBAM, tax, trade remedies or Indian market-entry compliance; these still need planning.

Where the EU–India FTA stands, and what you can rely on today (21 October 2026)

The India–EU trade agreement is reported to be an EU-only agreement that would not need ratification by the 27 member states; treat that as reported until the Council has decided the legal route [9]. The stakes are large: €118bn of goods trade in 2025, €59.8bn of services trade in 2024 and about 6,000 European companies already in India [1][2][3].

What you can rely on today: the published texts are negotiated texts, subject to legal revision until signature, and no preferential rate applies yet. Price contracts running into 2027 with a clause that passes on tariff changes, and do not quote preferential rates until the agreement is in force and the product's staging category has been checked.

EU–India FTA tariffs: what gets cheaper for exporters to India, and when

India removes duties on 86% of its tariff lines, covering 93% of EU exports by value; counting partial cuts, 96.6% of EU exports benefit [3][4].

Sources: European Commission factsheets and chapter summary [3][4][5]. Headline figures from the negotiated texts, which are subject to legal revision and not yet in force; the rate for a given product depends on its line in India's schedule.

The staging category matters more than the end rate. A machine whose duty falls to zero over seven years still carries most of today's duty in the first three years. The first commercial task is to find the staging category of each of your main products in India's tariff schedule (Appendix 2-A2 of the agreement) [6]. Car parts mostly become duty-free after five to ten years, which matters to suppliers of Indian assembly plants as much as to carmakers [3]. Machinery and chemicals exporters should also note the working group on India's Quality Control Orders, product-certification rules that can hold up shipments whatever the tariff; the agreement gives 60 days for comments on new technical rules and six months before they apply [3].

Sourcing from India: what gets cheaper for European importers

The India–EU trade deal works in both directions, and for European importers and retailers the gains come sooner. The EU imported €71bn of goods from India in 2024 [3]. The Commission puts the EU's eventual duty elimination at 91% of Indian exports by value, or 99.3% including partial cuts [3]. India's government, which counts all preferential access rather than full elimination only, gives its own breakdown: 90.7% of its exports by value become duty-free at entry into force, 2.9% over three or five years, and 6% get reduced duties or quotas [20]. The two sets of figures are defined differently and should not be added together.

Source: Government of India, Ministry of Commerce and Industry factsheet [20]; values are India's export figures as published there. The European Commission's chapter summary confirms the 91% figure, the farm exclusions and the steel quotas [3]. Negotiated texts, not yet in force.

GSP adds a reason to look again. Since 1 January 2026 the EU has suspended its GSP preferences for India in several product sections, including textiles, chemicals, plastics, machinery and jewellery, until the end of 2028 (Commission Implementing Regulation (EU) 2025/1909) [21]. The effect differs by product: some goods have lost a reduced GSP rate, others never had one. For products that lost it, the FTA can restore a preference, but only once it is in force and only for goods that meet its rules of origin. The suspension is a reason for European buyers to reassess the economics of sourcing from India product by product, not a uniform saving. Most finished medicines already enter the EU duty-free, so the deal matters less for them than for chemicals.

India becomes a potential duty-free source for apparel, home textiles, footwear and leather goods, sectors where suppliers in Bangladesh and Vietnam already enter the EU free or close to free. The decision for European buyers is whether the landed-cost gain justifies moving part of the supply chain (see case 3 below).

Beyond tariffs: what changes for European service providers and investors

For many European companies the services chapter matters more than the tariff tables. The Commission says India's services commitments go further than those it has given any other partner [3][4]. They include:

• Establishment and management: first-time commitments by India on senior management and boards of directors, and on local presence [3].
• Licensing procedures: most of the WTO rules on domestic regulation of services, which India has not otherwise joined, covering the transparency and fairness of licensing and authorisation [3].
• Financial services: a framework modelled on the WTO Understanding on Commitments in Financial Services [3].
• Mobility of professionals: India's factsheet lists commitments on contractual service suppliers in 37 subsectors and independent professionals in 17, and says social security agreements with all EU member states are targeted within five years [20].
• Coverage: India says it has offered 102 services subsectors and the EU 144 [20].

What the commitments do not do. A commitment in a trade agreement binds India not to restrict access beyond what it has promised; it is not a licence. A European bank, insurer, engineering consultancy, logistics or technology firm still needs the approvals of the relevant Indian regulator, must respect FDI caps and entry routes, and must meet local rules on data, staffing and capital. The practical question for a service company is whether the commitments make an Indian operation feasible enough to justify setting up a company in India, and in what form.

Export, distribute, manufacture, acquire or source: India market-entry choices after the FTA

The deal does not affect every company in the same way. What changes depends on how you do business with India today.

Sources: [3][6][12][13]. Rules of origin can be met in different ways depending on the product: a change of tariff classification, a specified manufacturing process or a maximum value of non-originating materials. Check the rule, any tolerances and the documentation before claiming preference.

The manufacturing case moves in both directions. A company that set up in India mainly to get behind the tariff wall loses that reason as duties fall. But cheaper European machinery and components lower the capital cost of an Indian factory, and an Indian presence can still be justified by closeness to customers, public procurement preferences for local suppliers, logistics, product adaptation, after-sales service, workforce costs and production incentives such as India's PLI schemes. Manufacturing in India therefore needs a fresh business case, not an automatic yes or no.

The strategic questions to ask now:

Three illustrative business cases

All three cases use hypothetical figures to show the economics; they are not forecasts, and the actual schedule and classification of your product govern.

Case 1: a German machine builder. A German company ships one production line a year to an Indian customer, with an assumed customs value of €2,000,000 (CIF basis). Assume the line carries 11% Indian customs duty today, that the value and volumes stay constant, and that its staging category removes the duty in seven equal annual cuts.

Over the seven staging years, the customer saves €880,000 in duty on these seven shipments. The first staging year may be shorter than twelve months; the general notes to India's schedule set when each cut applies. The deal does not cut India's integrated GST on imports; a GST-registered buyer can generally claim it as input tax credit, subject to eligibility, whereas basic customs duty is a real cost, so the duty saving is the gain. Assuming the same tariff classification and the same standard duty rate for a comparable product, a competitor without preferential access would still pay the assumed 11%. Reading: the saving builds up slowly and supports a pricing strategy over several years. It arrives only if the line meets its rule of origin, so a Swiss spindle or Chinese drive unit must be checked against the rule's limits, and the exporter must self-certify origin with a statement on origin [3]. If the company had been weighing Indian assembly mainly to avoid the 11% duty, that reason fades over the same period.

Case 2: a French wine exporter. A Bordeaux house ships a container of 12,000 bottles with an assumed customs value of €5 a bottle (CIF basis), €60,000 in total.

The customs duty on each bottle falls by €3.75 on day one and by €6.00 once the cut is complete. That could materially improve pricing flexibility, distributor economics or margins; the effect on retail prices will depend on state taxes on alcohol, which the deal does not touch, distribution costs and commercial arrangements. Check India's schedule for the exact timetable and any conditions for your wines before setting prices [5][6].

Case 3: a Dutch fashion retailer sourcing from India. The retailer imports €1,000,000 of Indian cotton shirts. Assume the shirts' EU tariff line carries 12% today and, as India's factsheet states for textiles and apparel, falls to zero at entry into force [20]. Duty falls from €120,000 a year to nothing, provided the shirts meet the deal's rule of origin. Confirm the tariff classification and the rate in the EU's schedule, check whether the rule for your products allows imported fabric or yarn, and make sure the Indian exporter will issue a valid statement on origin before the first shipment.

EU–India trade deal benefits, country by country

Each country page below covers India market entry from that country.

• Germany: machinery and automation, chemicals, automotive and medical technology, the EU export sectors with the largest tariff cuts by value. See Germany–India.
• France: aircraft and parts (to zero, mostly over five years), wine and spirits, agri-food and healthcare. See France–India.
• Italy: machinery and machine tools, car components, olive oil, processed food and wine. See Italy–India.
• Spain: olive oil, processed food, wine and car components. See Spain–India.
• Netherlands: agri-food and horticulture, chemicals and high-tech equipment; Dutch ports may also gain as entry points for Indian goods. See Netherlands–India.
• Belgium: pharmaceuticals, medical technology and chemicals. See Belgium–India.
• Ireland: pharmaceuticals, medical devices and spirits. See Ireland–India.
• Denmark: processed food, life sciences and medtech, and energy equipment. See Denmark–India.
• Sweden: industrial machinery, vehicles, medtech and telecom equipment. See Sweden–India.
• Finland: industrial machinery, telecom equipment and clean technology. See Finland–India.

Swiss-made goods are not covered by the India–EU free trade agreement. They use the EFTA–India Trade and Economic Partnership Agreement, in force since 1 October 2025 [14]; goods that a Swiss-owned group makes in the EU can use the EU deal if they meet its rules of origin, because origin, not ownership, decides. Each preference claim is assessed separately under the agreement used: Swiss content counts as non-originating under the EU deal, and EU content as non-originating under the EFTA agreement, and the two are not expected to allow cumulation [17]. See Switzerland–India. UK companies use the UK–India trade deal, in force since 15 July 2026 [15]; see UK–India.

What the FTA does not resolve

• Investment protection. The FTA itself has no investment chapter and no investor–state arbitration; a separate EU–India investment protection agreement is still being negotiated and would need ratification by every member state [3][19]. India has ended its bilateral investment treaties with EU member states except Lithuania, and the survival clauses of the ended treaties generally protect only investments made before termination [16][17]. Whether any treaty covers a particular investment depends on the investor's nationality, the holding chain and the timing, and a holding company in a third country does not automatically bring treaty protection. Assess this, together with contractual protections and political-risk insurance, before committing capital.
• CBAM. The deal removes customs duty, not the EU's carbon border cost. Steel, aluminium, cement, fertilisers and other covered goods from India still need CBAM certificates for their embedded emissions, even from a European-owned plant; certificates for 2026 imports are bought from February 2027 [12][13]. Because EU free allowances for these sectors are phased out between 2026 and 2034, the charge rises over time [22]; the amount for a given product follows the calculation in Commission Implementing Regulation (EU) 2025/2620 [23]. Simplified illustration: a company imports €1m a year of an Indian metal product. If the deal removes an assumed 6% EU duty, the duty saving is €60,000 a year, with import value and volume unchanged. If the product is covered by CBAM, the carbon cost has to be worked out separately: it depends on actual or default embedded-emissions values, the CBAM benchmarks, the free-allocation adjustment, certificate prices and any carbon price already paid in India. Depending on the product and its emissions intensity, that cost can significantly reduce or exceed the duty saving, so model both in the landed cost. Downstream aluminium may also be subject to quotas under the deal [20].
• Trade remedies. Anti-dumping, anti-subsidy and global safeguard measures remain available to both sides, and the deal adds a bilateral safeguard if preferential imports cause serious injury [3].
• Tax. Double tax treaties and the taxation of your Indian profits are unchanged. The deal changes customs duty, not GST, and customs savings feed through to pricing, transfer pricing and margins.
• Government procurement. Unlike the UK–India deal, it has no procurement chapter [6][15]. European firms can still bid in Indian tenders that are open to foreign suppliers, but without treaty rights and subject to India's preferences for local suppliers.
• Geographical indications are negotiated separately [19].
• Market-entry compliance. Preferential trade access does not replace the steps of doing business in India: FDI sector caps and approval routes; entity and joint-venture structuring; GST registration and customs classification; transfer pricing; FEMA reporting and profit repatriation; BIS and other product registrations; distribution and agency contracts; and employment, intellectual property and sector licensing. These decide whether the tariff gain reaches your bottom line.

90-day action plan

• List your main products for export to India with their HS codes, and find each one's staging category
• Check bills of materials against each product's rule of origin, including its limits on non-originating materials; request supplier declarations
• Decide which agreement each product will use (EU deal, EFTA–India or UK–India) where you make in more than one country
• Add tariff-change clauses to contracts running into 2027, and review distributor margins and pricing
• Re-test the export, distribute, manufacture or acquire decision against the staged duty path and the cost of an Indian plant
• For sourcing from India, compare landed cost by product, including CBAM where it applies
• For services, map the new commitments against the licences and FDI rules for your sector
• Before investing, fix the entry route, structure and protections; see FDI in India: rules, routes and approvals (ATB Legal) [18]
• Name an owner to check the deal's status monthly until it is in force

How ATB Corporate can help

ATB Corporate advises companies and investors on entering, structuring and operating in India and the UAE: choosing the entry route and holding structure, tax and exchange-control planning, regulatory compliance, and setting up and running the local business. To discuss your plans, contact ATB Corporate.

FAQ

What does the EU–India trade deal mean for European companies?

For European companies, the EU–India trade deal means lower Indian tariffs on 96.6% of EU exports by value, about €4bn a year in duty savings, phased in from entry into force, often over several years [3][4]. It also adds services market-access commitments, without lifting India's licensing and investment rules, and makes most Indian goods duty-free in the EU. Whether a company gains depends on its products' staging and origin, and on how it does business in India.

When does the India–EU FTA take effect?

The India–EU FTA has no official date of entry into force; early 2027 is expected, after signature, reported for 16 December 2026, and European Parliament consent [1][9][10]. Many tariff cuts then apply in stages over up to ten years, so the rate for each product depends on its staging category in India's schedule [6].

Which sectors benefit most, for exports to and imports from India?

For exports to India, the largest cuts are on machinery (up to 44% to zero), medical and optical goods (up to 27.5% to zero), chemicals (up to 22% to zero), cars (110% to 10% within a quota), wine (150% to 20–30%) and spirits (up to 150% to 40%) [3][4][5]. For imports from India, textiles, apparel, leather and footwear become duty-free at entry into force, according to India's government [20].

Does the EU–India FTA protect European investments in India?

No, the EU–India FTA itself does not protect investments: it has no investment chapter or investor–state arbitration, and a separate investment protection agreement is still being negotiated [3]. Whether any existing treaty covers a particular investment depends on the investor, the holding chain and the timing, so check it, and the contractual and insurance options, before investing [16][17].

Do Swiss companies benefit from the EU–India trade deal?

Only for goods they make in the EU: Swiss-made goods use the EFTA–India Trade and Economic Partnership Agreement, in force since 1 October 2025, not the EU deal [14]. Each preference claim is assessed under one agreement at a time, against that agreement's product-specific rule of origin.

Related reading

• India market entry by home country
• India manufacturing entry for foreign companies
• India and China plus one manufacturing
• PLI: India's manufacturing incentives for foreign companies
• India entry strategy: JV, acquisition or greenfield
• Holding jurisdiction, investment treaties and substance
• FEMA advisory
• EU–India trade deal (2026): status, tariffs and rules (ATB Legal)

Sources

1. European Commission, "The EU–India trade agreement" (updated 11 September 2026; accessed 21 October 2026) — https://commission.europa.eu/topics/trade/eu-india-trade-agreement_en
2. European Commission (DG Trade), "EU trade relations with India" (accessed 12 October 2026) — https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india_en
3. European Commission (DG Trade), "Memo: EU–India free trade agreement – chapter-by-chapter summary" (2026; accessed 21 October 2026) — https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india/eu-india-agreements/memo-eu-india-free-trade-agreement-chapter-chapter-summary_en
4. European Commission (DG Trade), "Factsheet: EU–India free trade agreement – main benefits" (2026) — https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india/eu-india-agreements/factsheet-eu-india-free-trade-agreement-main-benefits_en
5. European Commission (DG Trade), "Factsheet: EU–India free trade agreement – EU agri-food exports" (2026) — https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india/eu-india-agreements/factsheet-eu-india-free-trade-agreement-eu-agri-food-exports_en
6. European Commission (DG Trade), "EU–India: text of the agreements" (accessed 12 October 2026) — https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india/eu-india-agreements/text-agreements_en
7. European Commission, press release IP/26/184, "EU and India conclude landmark free trade agreement" (27 January 2026) — https://cyprus.representation.ec.europa.eu/news/eu-and-india-conclude-landmark-free-trade-agreement-2026-01-27_en
8. European Commission, press release IP/26/1842, "Commission presents landmark India trade deal to Council for signature" (11 September 2026) — https://ec.europa.eu/commission/presscorner/detail/en/ip_26_1842
9. The Hindu, "India-EU FTA to be signed on December 16" (24 September 2026) — https://www.thehindu.com/business/Economy/india-eu-fta-to-be-signed-on-december-16/article71499760.ece
10. SteelOrbis, "India-EU FTA to be signed in Dec 2026, to take effect from Feb-Mar 2027" (25 June 2026), reporting India's Minister of Commerce and Industry — https://www.steelorbis.com/steel-news/latest-news/india-eu-fta-to-be-signed-in-dec-2026-to-take-effect-from-feb-mar-2027-1460720.htm
11. The Tribune (ANI), "India-EU FTA: Progress on trade deal and tech council reviewed, says Piyush Goyal" (1 October 2026) — https://www.tribuneindia.com/news/eu-india-trade-talks/india-eu-fta-progress-on-trade-deal-and-tech-council-reviewed-says-piyush-goyal
12. EUR-Lex, Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism, as amended — https://eur-lex.europa.eu/eli/reg/2023/956/oj
13. Ministry of Commerce and Industry, Government of India, India–EU Agreement, Annex 14-A, "Carbon Border Adjustment Measures" (February 2026) — https://www.commerce.gov.in/wp-content/uploads/2026/02/14.1-Annex-14A-Carbon-Border-Adjustment-Measures.pdf
14. EFTA, "EFTA–India Trade and Economic Partnership Agreement enters into force" (1 October 2025) — https://www.efta.int/media-resources/news/efta-india-trade-and-economic-partnership-agreement-enters-force-joint
15. UK Government (business.gov.uk), "The UK–India trade deal" (accessed 11 October 2026) — https://www.business.gov.uk/campaign/alive-with-opportunity/the-uk-india-trade-deal/
16. UNCTAD Investment Policy Hub, "India: bilateral investment treaties" (accessed 12 October 2026) — https://investmentpolicy.unctad.org/international-investment-agreements/countries/96/india?type=bits
17. ATB Legal, "EU–India trade deal (2026): status, FTA tariffs, rules of origin, CBAM and investment protection" (October 2026) — https://atblegal.com/blog/international-trade/eu-india-trade-deal/
18. ATB Legal, "FDI in India 2026: rules, routes and approval process" (October 2026) — https://atblegal.com/blog/foreign-investment-in-india/fdi-approval-process/
19. European Commission (DG Trade), "EU–India: documents" (accessed 12 October 2026) — https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india/eu-india-agreements/documents_en
20. Government of India, Ministry of Commerce and Industry, "Factsheet: India and European Union Trade Agreement" (2026), published by the Embassy of India, Paris — https://www.eoiparis.gov.in/content/Paris_DOCPR_020326.pdf
21. Business Today, "India-EU summit ahead: Commerce Ministry says GSP impact limited to 2.66% of exports, not 87%" (24 January 2026), on Commission Implementing Regulation (EU) 2025/1909 — https://www.businesstoday.in/latest/economy/story/india-eu-summit-ahead-commerce-ministry-says-gsp-impact-limited-to-266-of-exports-not-87-512766-2026-01-24
22. EUR-Lex, Directive (EU) 2023/959 amending the EU Emissions Trading System Directive, including the phase-out of free allocation for CBAM sectors (Article 10a(1a)) — https://eur-lex.europa.eu/eli/dir/2023/959/oj
23. EUR-Lex, Commission Implementing Regulation (EU) 2025/2620 on adjusting the CBAM certificate obligation to reflect free allocation under the EU ETS — https://eur-lex.europa.eu/eli/reg_impl/2025/2620/oj

Disclaimer: This article is general information about the EU–India free trade agreement as at 21 October 2026. It is not legal, tax or customs advice. The texts are subject to legal revision and are not in force; check the signed text, the tariff schedule and the rules of origin for your product before acting.