India-EU Free Trade Agreement: “0% Tariffs” Could Be a Game-Changer for Indian Exports

India and the European Union (EU) have signed a historic Free Trade Agreement (FTA), promising to boost Indian exports and investments while providing significant tariff savings for European buyers. The agreement is expected to strengthen economic ties between the two regions, benefiting sectors such as textiles, leather, gems and jewelry, engineering, and pharmaceuticals.

A Milestone in India-EU Economic Relations
New Delhi: The long-awaited India-EU FTA marks a significant step in India’s global trade ambitions. Termed by some as the “Mother of All Deals,” the agreement is expected to enhance India’s exports, investments, and participation in global supply chains. Under the deal, more than 90% of Indian exports to the EU will benefit from reduced tariffs, translating into nearly €4 billion in savings for European importers. Prime Minister Narendra Modi described the agreement as a major achievement in bilateral economic relations.

Industry bodies have welcomed the FTA, calling it a strategic win for India’s global trade presence. Chandrujit Banerjee, Director General of the Confederation of Indian Industry (CII), said the deal strengthens partnership between two major economies that together account for nearly 25% of global GDP.

Why the “0% Tariffs” Are Exciting for India
The agreement sets tariffs on key Indian export categories to 0%, which could be transformative for Indian industries:

CII highlighted that preferential access to over 99% of EU-bound Indian goods could serve as a “game-changer” for Indian manufacturers and service providers, enhancing their competitiveness in high-value European markets and deepening supply chains.

Opportunities for MSMEs and Startups
The All India Traders’ Association (CAIT) noted that the FTA will benefit small and medium enterprises (MSMEs), startups, and manufacturers by providing wider market access and reducing tariff and non-tariff barriers. CAIT General Secretary Praveen Khandelwal added that the agreement will attract foreign investment, encourage technology transfer, and promote innovation.

Khandelwal also emphasized that the FTA aligns with PM Modi’s vision of positioning India as a global manufacturing hub and achieving a $5 trillion economy. “The India-EU trade deal is not merely a commercial agreement; it is a strategic partnership that strengthens India’s leadership in global trade,” he said.

Expanding Indian Products’ Reach in Europe
The FTA will integrate India more deeply into the global supply chain and provide Indian companies greater access to European markets. At the same time, it ensures better access for EU products in India, creating a win-win scenario for both sides.

Currently, India enjoys a trade surplus with the EU. In the 2024-25 fiscal year, exports stood at $75.9 billion, while imports were $60.7 billion. The EU accounts for nearly 17% of India’s total merchandise exports and roughly a third of IT services exports.

According to MK Global Financial Services, India’s export basket to the EU has evolved beyond traditional goods like textiles and gems toward medium-technology products. The report noted, “Over time, India’s EU export basket has moved up the value chain, increasing the share of high-value exports such as electronics, machinery, and chemicals compared to traditional labor-intensive products.”