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Government data shows that customs duty foregone on imports on account of FTAs amounts to a significant figure, which will hopefully be offset by higher exports, which at the net level is expected to benefit the economy
Prime Minister Narendra Modi also said the free trade agreement (FTA) reached with the European Union recently would benefit Indian manufacturers, including those in Punjab, in exporting their products.
India has not offered market access in legal services under the proposed agreement with the EU.
The EAC-PM Chairman called the India-EU FTA a great opportunity for both parties. "India will benefit with this. Exports in many labor intensive commodities, like textiles, gems and jewelry and auto parts will benefit."
Diversification is now the dominant strategy in a fragmenting global trade system. But it remains a strategy of margins, not miracles.
These provisions will help India in dealing with challenges arising from EU's regulations in the future and protect FTA benefits.
One of the areas with significant potential under the evolving India–EU framework is defence manufacturing, particularly through joint ventures focused on co-development and co-production, Srivastava tells Moneycontrol
The deal will also provide tariff cuts on EU’s wines and spirits under a quota system, while chocolates and other processed food items will see significant duty reductions, boosting exports from countries such as France, Italy, Spain and Belgium.
Preferential access for EU exporters could reshape market share in high-value segments such as machinery, metals and medical devices
To be sure, the benefits from tariff reductions or eliminations will materialise once the FTA is implemented, which may take at least a year after the deal is signed.
The FTA between the two nations is expected to lower or eliminate tariffs for India’s labour-intensive sectors, while EU may gain greater market access for its high-end cars and wines.
On non-tariff barriers such as the EU’s Carbon Border Adjustment Mechanism (CBAM), Wadhawan said India has been able to meet the bloc’s existing standards for exports and can navigate stricter regulations.
He said concessions can be granted cautiously for EU cars and wines through safeguards such as tariff rate quotas.
Higher tariffs kick in this month, affecting most industrial and apparel exports until the India–EU FTA is implemented
While lower tariffs in the EU market, streamlined customs procedures and regulatory cooperation could help, non-tariff barriers can become the biggest challenge for Indian firms, say experts.
EU's steel safeguard measures and carbon tax have emerged as major sticking points, which, if left unresolved, could limit India's benefits from the FTA despite tariff reductions.
Bilateral trade between India and Myanmar reached $2.15 billion during 2024–25.
The FTA is expected to be signed on January 27, with EU Commission president Ursula von der Leyen and European Council president António Costa expected in Delhi as the chief guests at the Republic Day parade
Under the deal, 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.
As India readies Budget 2026–27, the effectiveness of FTAs hinges on customs reform, predictable border processes, and simpler origin rules, without which trade agreements risk remaining underutilised despite tariff concessions
Both sides remain engaged and committed to securing a deal, Rajesh Agrawal said, dismissing speculation about a scenario where talks could fail
In 2023–24, India’s arms and ammunition shipments to Russia accounted for only a small share of its global defence sales and an even smaller portion of overall exports to Russia, underscoring the limited scale of trade in this segment.
Commerce and Industry Minister Piyush Goyal will hold discussions with European Union Commissioner for Trade and Economic Security Maros Sefcovic during a two-day official visit.
In 2025, India signed FTAs with the United Kingdom and Oman, concluded negotiations with New Zealand, and saw the Trade and Economic Partnership Agreement (TEPA) with the EFTA nations, Iceland, Liechtenstein, Norway, and Switzerland, enter into force in October.
US tariffs, EU's CBAM, and global headwinds challenge India's merchandise exports, while alternative markets and services exports offer potential support.
