Negotiations for the EU-India FTA began in 2007 but were suspended in 2013 before being formally relaunched in 2022. The conclusion of the agreement on January 27, 2026, was driven by a powerful geopolitical imperative for both parties to strengthen ties between major democracies, diversify supply chains, and build resilience amidst global economic challenges.
With bilateral trade in goods and services already exceeding €180 billion annually, the European Commission projects the deal will double EU goods exports to India by 2032.[1] The EU-India Free Trade Agreement (FTA) has been presented by EU institutions as a strategic and economic milestone, intended to deepen ties between two major economies and reduce barriers that have historically constrained bilateral trade, especially India’s high applied tariffs and administrative friction.[2]
Sectoral Analysis:
An examination of the specific sectoral commitments reveals the ‘give-and-take’ that defined the EU-India negotiations.
Automobile Sector
India’s Concessions to EU: This was a major breakthrough. India agreed to reduce tariffs on EU cars from a peak of 110% down to as low as 10% under an annual Tariff Rate Quota (TRQ) of 250,000 vehicles.[3]The reduction is phased over 5 to 10 years, with a slower transition for electric vehicles (EVs) to protect India’s nascent domestic EV industry.[4] Tariffs on auto parts will be fully abolished over five to ten years.
EU’s Concessions to India: India secured preferential access for its own automotive exports through reciprocal TRQs and tariff reductions.[5]
EU motor vehicle exports to India were valued at €1.6 billion in 2024, a figure set to grow substantially under the new tariff regime.[6]
Machinery Sector
India’s Concessions to EU: India will eliminate most tariffs, which currently range up to 44%.[7]The EU’s official summary states tariffs for “almost all products” in this category will go to 0%.[8] To support its ‘Make in India’ policy, the agreement builds in a transition period for certain Product Specific Rules (PSRs) in this sector.[9]
This is the EU’s largest goods export category to India, valued at €16.3 billion in 2024. The elimination of duties represents a significant commercial gain for the EU.[1]
Chemical Sector
India’s Concessions to EU: Most tariffs, currently up to 22%, will be eliminated.
EU’s Concessions to India: The EU will provide zero-duty access for 97.5% of India’s chemical export basket by value, removing its own duties of up to 12.8%.[2]
EU chemical exports to India were valued at €3.2 billion in 2024. For India, chemicals (specifically heterocyclic compounds) and related petroleum products represent some of its largest export categories to the EU, totaling over $10 billion annually.[3]
Oil & Petrochemical Sector
India & EU Concessions: The FTA focuses more on processed goods. For EU agri-food, Indian tariffs on olive oil will drop from 45% to 0% over five years. EU data shows petroleum oil preparations are one of its top imports from India, valued at $4.6 billion (Jan-Oct 2025). An FTA would secure and enhance market access for these products.[4]
2) EU-India FTA: Comparative Tariff Concessions
Since all the sectors above are key strategic sectors for many countries, while they also face similar initial tariffs outlined above in the EU market, we can expect huge competition from India in this market due to the greater market access by Indian firms in this market. Therefore, the countries that have not yet arrived at a trade deal with the EU could aim to replicate some of these successful strategies, adapted to its own economic structure and objectives. Following are some examples.
Employ Asymmetric and Phased Liberalisation- The automotive concession is the prime example where the tariff cut was limited by a 250,000-unit TRQ and a multi-year phase-in.[1] This allows India to open its premium market to EU brands while protecting its mass-market domestic producers from a sudden import surge.
Transform the CBAM Challenge into a “Green Partnership”- The EU committed to a technical dialogue to help Indian firms with compliance, especially SMEs.[2] The deal is linked to €500 million in EU support for India’s green transition and decarbonisation efforts. A Most Favoured Nation (MFN) clause ensures any future flexibility on CBAM granted to other countries (e.g., the U.S.) will automatically extend to India.[3]
Prioritise High-Value NTBs in different sectors. The EU-India deal includes robust chapters on Customs and Trade Facilitation, Technical Barriers to Trade (TBT), and Sanitary and Phytosanitary (SPS) measures, with commitments to simplified procedures, transparency, and recognition of conformity assessments.[4]
Services Liberalisation. The EU received its “most ambitious commitments on financial services by India in any trade agreement.”