- within Compliance topic(s)
The long-awaited Free Trade Agreement ('FTA') between India and the European Union ("EU") is on the cusp of fruition, with the countries expected to announce the conclusion of the trade deal today, i.e. on 27 January 2026.
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Relevance of India-EU FTA
Considering the recent suspension of the Generalized System of Preferences ("GSP"), the India-EU FTA holds even more relevance. The GSP is a trade program that allows developing countries such as India to export certain goods to the EU at reduced or zero tariffs, to support the economic growth of developing countries.
On 24.09.2025, the EU has suspended the GSP benefit granted to multiple product categories originating from India for the period from 2026 to 2028. This means that products that were earlier subject to reduced or zero duties, will now be subject to MFN rates.
Further, since the EU already has FTAs with multiple countries such as Japan, Singapore, Vietnam, etc., the India-EU FTA holds great significance to ensure the competitiveness of Indian exports. This can be illustrated with the help of the below table:
| CTH | Description | MFN rate in EU | GSP or FTA benefits | ||
| Countries | Preferential rate | Name of the Free Trade Agreement | |||
| 4011 | New pneumatic tyres, of rubber of a kind used on motor cars (including station wagons and racing cars) | 4 or 4.5% | Vietnam | 0% | EU-Vietnam Free Trade Agreement |
| Japan | 0% | EU-Japan Economic Partnership Agreement | |||
| Pakistan | 0% | GSP + | |||
| Sri Lanka | 0% | GSP + | |||
| India | No preferential rate | No FTA or GSP | |||
India-EU FTA to boost Trade
The India-EU FTA is expected to further boost trade in the above sectors and beyond. Also, considering the rising US tariffs and changing global supply chains, the India-EU FTA is likely to help exporters diversify markets and reduce vulnerabilities.
Thus, the India-EU FTA is set to be India's largest free trade agreement as it will offer preferential access to all the 27 EU member states through a single framework. To put it aptly, the European Commission President, Ursula von der Leyen recently referred to the India-EU FTA as the 'mother of all deals'.
Footnotes
1. EU trade relations with India
2. https://www.trademap.org/Index.aspx
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