EU–India free trade agreement opens new trade pathways for the textile and apparel sector

The European Union and India have concluded negotiations on a free trade agreement that carries major economic and strategic weight for both sides. It is the largest trade deal ever signed by either the EU or India and comes at a time when global trade faces pressure from geopolitical tension and economic uncertainty. The agreement reflects a shared interest in openness, predictability, and cooperation based on clear rules.

European Commission President Ursula von der Leyen described the agreement as a historic moment for the two largest democracies. The deal creates a free trade zone covering nearly two billion people and signals confidence in rules-based cooperation as a way to deliver real economic benefits.

Trade between the EU and India already exceeds €180 billion in goods and services each year and supports close to 800,000 jobs in the EU. Under the agreement, EU goods exports to India are expected to double by 2032. Tariffs will be eliminated or reduced on 96.6% of EU exports to India, saving European exporters an estimated €4 billion annually in duties.

For India, the agreement represents its most extensive trade opening to date. European companies will gain improved access to the world’s most populous country, home to 1.45 billion people and a fast-growing economy with an annual GDP of around €3.4 trillion. Key industrial and agri-food sectors in the EU stand to benefit from this preferential access.

The agreement brings clear gains for European businesses of all sizes. India has offered tariff reductions that go beyond what it has granted to other trading partners. Car tariffs, currently as high as 110%, will gradually fall to as low as 10%, while tariffs on car parts will be phased out over five to ten years. High duties on machinery, chemicals, and pharmaceuticals will also be largely removed.

Small and medium-sized enterprises are expected to see practical benefits. The agreement includes a dedicated chapter for SMEs, with contact points on both sides to provide guidance, answer questions, and help companies navigate the agreement. Lower tariffs, fewer regulatory barriers, and clearer rules should make exporting to India more predictable and manageable for smaller firms.

European farmers and food producers will also gain new opportunities. Average tariffs of over 36% on EU agri-food exports will be reduced or removed. Wine tariffs will drop from 150% to 75% at entry into force and fall further over time. Olive oil tariffs will be phased down from 45% to zero within five years. Processed products such as bread and confectionery will also see significant tariff cuts. Sensitive EU agricultural sectors, including beef, poultry, rice, and sugar, are excluded from liberalisation, and all Indian imports must continue to meet EU health and food safety standards.

Alongside the FTA, the EU and India are negotiating a separate agreement on Geographical Indications. This aims to protect well-known European food and drink products in the Indian market by reducing imitation and misuse of established names.

The agreement also opens doors in services. EU companies will gain improved access to India’s services market, including financial services and maritime transport. India’s commitments in financial services go beyond those in its previous trade agreements, offering greater certainty for European firms operating in the sector.

Strong protection of intellectual property forms another core element. The agreement covers copyrights, trademarks, designs, trade secrets, and plant variety rights, aligning EU and Indian frameworks more closely. This will support businesses that depend on intellectual property when trading or investing across borders.

Sustainability features prominently in the agreement. A dedicated chapter covers environmental protection, climate action, workers’ rights, and women’s empowerment. It also establishes a platform for dialogue and cooperation on trade-related environmental issues. A separate EU–India platform on climate action is expected to launch in the first half of 2026. Subject to EU budget procedures, up to €500 million in EU support over the next two years is planned to assist India in reducing greenhouse gas emissions and advancing sustainable industrial development.

Taken together, the EU–India free trade agreement lays a broad foundation for deeper economic ties. It combines market access with clear rules, protection for sensitive sectors, and shared commitments on sustainability. For both sides, it represents a practical step toward closer cooperation in a changing global trade environment.