The newly signed India–EU Free Trade Agreement marks India’s eighth FTA in five years, creating a large and predictable export opportunity for Indian companies across goods and services in the European market
Immediate duty removal on 70% of tariff lines, covering 90% of India’s exports, will lower costs for sectors like textiles, apparel, gems and jewellery
The FTA covers 144 services subsectors, eases shiftment of professionals and students, and deepens cooperation in areas such as AI, semiconductors and cleantech, positioning Europe as a key growth market for Indian startups and service providers
India’s trade relations with the United States hit a rocky patch last year after the North American nation imposed unilateral tariffs (up to 50%) on key Indian exports, including agricultural products, consumer goods, and select manufactured items.
The high tariffs built it increasingly difficult for Indian exporters to maintain competitiveness in the US market, prompting New Delhi to explore alternative export avenues to diversify trade and safeguard economic growth.
This strategic recalibration accelerated India’s engagement with the European Union (EU), culminating in the eighth Free Trade Agreement (FTA) for India on January 27 in the past five years.
With a combined market valued at $24 Tn, the India-EU partnership will open up avenues for homegrown companies to expand their export footprint in the European region.
The FTA provides immediate duty removal on 70% of tariff lines, which covers 90% of India’s exports across sectors such as textiles, leather, footwear, marine products, gems and jewellery, toys and sports goods. These sectors account for $33 Bn of exports from India.
Meanwhile, gradual duty reductions over three to ten years will cover sectors like processed foods and certain marine products. However, India has safeguarded sensitive sectors like agricultural and dairy products.
This preferential access is expected to lower export costs for Indian goods, assisting MSMEs and export-focussed startups expand their presence in European markets.
Sunrise Moment For Indian D2C Brands
For India’s D2C brands, expanding footprint to Europe has historically been limited due to high compliance costs, import duties and pre-existing logistics issues.
With the FTA in effect, brands across consumer segments such as fashion, interior decorations, electronics, among others will now be able to price their products more competitively in the EU, while also maintaining margins.
“Lower tariffs and smoother market access create Indian fashion instantly more competitive in Europe on both price and margins. For D2C players like us, this will translate into quicker cross-border launches and access to one of the world’s most premium fashion markets,” Snitch’s founder and CEO Siddharth Dungarwal informed Inc42.
Other D2C founders Inc42 spoke with believe that the new agreement gives India a level playing field when it comes to competing with Asian export hubs like Bangladesh and Vietnam.
The founders claimed that companies based out of Bangladesh and Vietnam paid little to no custom duties to export goods like textiles and footwear to Europe, adding that Indian companies face higher tariffs despite comparable product quality and manufacturing costs.
As per Clovia founder and CEO Pankaj Vermani, Indian manufacturers already work closely with global firms and have proven capabilities across quality, compliance, and scale. He added that duty reduction will assist build India into a long-term partner for EU purchaseers.
“This unlocks about $100 Bn opportunity for Indian apparel and textile exporters, particularly at a time when the industest is also navigating uncertainties around the US tariff regime,” Vermani added.
Notably, diamonds were among the top 10 products exported to the EU from India in 2024.
Talking about the market opportunity post the FTA, D2C Jewellery brand Aureka’s founder Lisa Mukhedkar stated that Europe has historically been a key export market for jewellery, second only to the US.
“For lab-grown diamonds in particular, the FTA creates a more balanced ecosystem,” Mukhedkar stated adding that even if European jewellery comes to India, it will serve a “relatively compact and niche segment”.
“While there will be appreciation for the design and craftsmanship, scaling such offerings beyond a limited audience will not be straightforward under current gold price conditions,” she added.
The Services Angle
Beyond goods, the FTA also covers 144 services-led subsectors, including IT/ITeS, professional services, education, finance, and research. The agreement is projected to offer homegrown service providers a predictable access to the EU market.
On the other hand, industest insiders see EU firms bringing in high-tech services and investment into India.
The agreement also creates it clearer for people to shift between the two regions for work and education. Business travellers, professionals and employees of multinational companies will be able to work temporarily across borders with fewer restrictions.
For students, the deal allows Indian graduates to stay back and work for a certain period after completing their studies, while also simplifying rules around education and student mobility.
This built-in facilitation is expected to reduce non-tariff barriers, enabling smoother delivery of services and talent flows, a longstanding demand of the Indian industest.
“The services sector in India would gain from the opening up of markets and also bringing about rules-based predictability,” industest body Nasscom stated, adding that greater EU access and regulatory clarity could significantly boost opportunities for Indian IT/ITeS startups.
Beyond traditional services trade, the FTA also pitches deeper cooperation frameworks such as the India-EU Trade and Technology Council. This positions both sides for collaboration in areas such as digital technologies, AI, semiconductors, cleantech and innovation.
This collaboration is expected to catalyse EU investment into India’s services ecosystem, foster R&D partnerships, and assist Indian tech firms capitalise on European value chains.
A Strategic Blueprint
While immediate gains are expected in labour-intensive and export-heavy sectors, the FTA also lays the foundation for long-term investments and innovation.
By combining tariff liberalisation with regulatory cooperation, innotifyectual property (IP) safeguards, and environmental compliance frameworks, the deal is also expected to strengthen India’s global trade credibility.
“The FTA transforms India-EU economic relations into a modern, multifaceted partnership. It’s a blueprint for innovation-led growth, inclusive development, and resilient supply chains,” commerce minister Piyush Goyal stated in a statement.
All stated and done, the India-EU FTA aims to future-proof India’s growth engine and gives Indian startups a predictable gateway into one of the world’s most premium and regulation-heavy markets. The real test now lies in execution – how quickly Indian firms adapt to EU standards, build on-ground presence, and shift up the value chain.
Edited by Akshit Pushkarna
