‘Mother of all deals’: Who could gain what from the India-EU FTA

• India and EU to sign a landmark free trade agreement on January 27
• Deal boosts Indian exports in textiles, leather, and marine products
• EU gains easier access for wines, spirits, and automobiles in India

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India and the European Union (EU) are poised to sign a landmark free trade agreement on January 27, hailed by leaders as the “mother of all deals.”

Under the agreement, the EU stands to gain easier access for its wines, spirits, and automobiles in the Indian market, while India is expected to expand its exports of labour-intensive goods such as textiles, leather, and marine products.

The India‑EU talks were first launched in 2007, when both sides began negotiations on what was initially called the Broad‑Based Trade and Investment Agreement (BTIA).

Between 2007 and 2013, multiple rounds of negotiations were held, but the process stalled due to disagreements on market access, tariffs, intellectual property rights, labour and environmental standards, and other issues.

After a hiatus, negotiations were relaunched in 2022 with renewed political will to conclude a comprehensive FTA.

In February 2025, India and the EU decided to ramp up talks for the proposed free trade agreement, targeting to initially close it by the end of that year to tide over ongoing disruptions from volatile trade policies.

In 2024‑25, India’s exports to the EU totalled $75.85 billion, while imports from the bloc reached $60.68 billion, making it India’s largest trading partner for goods.

Being negotiated for almost two decades, the India-EU trade deal has 24 chapters across goods and services.

Major Indian exports include petroleum products, textiles, machinery, pharmaceuticals, and gems and jewellery, while the EU mainly exports machinery, cars, electronics, medical devices, and chemicals to India, with trade showing strong year-on-year growth in key markets such as Germany, Spain, Belgium, and Poland.

What’s in for India

The India–EU free trade agreement is expected to boost Indian exports across labour-intensive and high-value sectors.

Labour-intensive industries such as textiles, garments, leather goods, and marine products, which currently face EU tariffs ranging from 2 percent to 12 percent, could benefit from tariff reductions or eliminations, making them more competitive.

High-value, knowledge-intensive sectors like pharmaceuticals and chemicals stand to gain mainly through streamlined regulatory approvals and aligned standards, allowing easier market access for generics, specialty drugs, and chemical products.

The agreement is expected to help Indian exports diversify at a time high tariffs by the United States, have posed challenges for labour-intensive goods.

India’s gains come without having to compromise on sensitive sectors such as agriculture and dairy, reflecting the country’s long-standing approach to protect domestic farmers.

The deal could also offer India a carve-out from the EU’s Carbon Border Adjustment Mechanism (CBAM), but this issue has not yet been resolved and remains under negotiation.

The EU introduced CBAM on October 1, 2023, a duty that translates into a 20-35 percent tax on select imports from January 1, 2026 with an aim to reach net-zero greenhouse emissions by 2050.

While the sectors covered under CBAM include cement, iron and steel, aluminium, fertilisers, electricity and hydrogen, India's iron and steel, aluminium and cement industries are expected to be hit the hardest by the EU's carbon tax.

What’s in it for EU

For EU, the agreement will open doors to one of the world’s fastest-growing markets.

Wines, spirits, and other alcoholic beverages from the bloc are expected to face lower tariffs and simpler certification requirements, making them more affordable for Indian consumers.

European carmakers, especially those producing premium vehicles, are also likely to gain easier access to India, potentially boosting auto exports that currently face steep import duties.

While wines and spirits from the EU, presently face import duties of up to 150–200 percent, their luxury cars face tariffs of up to 100–125 percent.

European exporters of industrial machinery, electrical equipment, and chemicals could also see a surge in trade as tariff and regulatory barriers are eased.

High-value services and intellectual property sectors, including IT, engineering, business services, and telecom, are also set to gain from clearer trade rules. Even specialised products such as aircraft parts, diamonds, and luxury goods could find new opportunities in India.

Beyond trade, the deal is expected to encourage European investments in manufacturing, green energy, and digital infrastructure.