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An overview by Economic Laws Practice, Taxand India
The India–EU Free Trade Agreement, concluded on 27 January 2026, is a landmark deal set to eliminate or significantly reduce tariffs on around 96–97% of bilateral trade, delivering up to €4 billion in annual duty savings for EU exporters once implemented.
The agreement provides unprecedented access to India’s market through major tariff reductions on key EU exports such as machinery, chemicals, pharmaceuticals, medical devices, aircraft and automobiles, alongside phased EU duty elimination on a wide range of Indian exports. Following legal scrubbing, the agreement is expected to enter into force in late 2026 or early 2027, creating significant strategic and compliance opportunities for EU businesses trading with India.
Nishant Shah and Rohit Jain from our Indian member firm Economic Laws Practice have published a more detailed overview of the agreement, which you can read below:
Taxand is represented across the European Union through its member firms and in India through Economic Laws Practice (ELP). The recently concluded India–EU Free Trade Agreement (India–EU FTA) opens significant opportunities for our clients in these jurisdictions. We set out below a brief update on key aspects of the FTA from an EU perspective.
Overview
On 27 January 2026, India and the European Union concluded negotiations on a landmark Free Trade Agreement covering trade in goods and services, investment, customs and trade facilitation, technical barriers to trade, sustainability and digital trade. The FTA will eliminate or substantially reduce tariffs on approximately 96–97% of bilateral trade by value and is expected to generate duty savings of up to €4 billion annually for EU exporters once implemented.
Indian tariffs will be sharply reduced on key EU exports (machinery, chemicals, automobiles, medical equipment, aircraft, pharmaceuticals and selected agri‑food products), while the EU will phase out duties on most Indian exports, including textiles, leather, marine products, gems and jewellery and engineering goods.
Tariff Reductions and Market Access – Selected Sectors (EU Exports to India)
| Product | 2024 exports (EUR) | Current tariffs | Future tariffs | Staging |
| Machinery and electrical equipment | €16.3 billion | Up to 44% | 0% for almost all products | Up to 10 years (mostly 5–7) |
| Aircraft and spacecraft | €6.4 billion | Up to 11% | 0% for almost all products | Up to 10 years (mostly 5) |
| Optical, medical and surgical equipment | €3.4 billion | Up to 27.5% | 0% for 90% of the products | Up to 10 years (mostly EIF, 5 or 7) |
| Plastics | €2.2 billion | Up to 16.5% | 0% for almost all products | Up to 10 years (mostly 7) |
| Pearls, precious stones and metals | €2.1 billion | Up to 22.5% | 0% for 20% of the products and tariff reduction for another 36% of the products | Up to 10 years (mostly 5) |
| Chemicals | €3.2 billion | Up to 22% | 0% for almost all products | Up to 10 years (mostly EIF) |
| Motor vehicles | €1.6 billion | 110% | 10% (quota of 250k) | Not specified in factsheet row |
| Iron and steel | €1.5 billion | Up to 22% | 0% for almost all products | Up to 10 years (mostly EIF, 5 or 7) |
| Pharmaceuticals | €1.1 billion | 11% | 0% for almost all products | Up to 10 years (mostly 5 or 7) |
The agreement grants unprecedented access to India’s market, including gradual reduction of tariffs on fully built cars from 110% to as low as 10% within a quota of 250,000 vehicles, and full elimination of duties on most machinery, chemicals and medical devices over transition periods of up to 10 years.
Rules of Origin and CAROTAR Framework
Preferential tariffs under the India–EU FTA will be available only where goods meet the Agreement’s Rules of Origin. In India, origin claims are administered through the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR). Importers must make an origin declaration and maintain supporting “Proof of Origin” (including, where permitted, self‑declarations) and may be subject to post‑clearance verification. Recent amendments replacing the term “Certificate of Origin” with “Proof of Origin” align Indian procedures more closely with modern FTA practices and are expected to be relevant to India–EU FTA implementation.
Regulatory and Standards Dimension
Regulatory issues, including India’s Quality Control Orders and BIS‑based standards, were a core part of the negotiations and are addressed under the Technical Barriers to Trade (TBT) and Good Regulatory Practices (GRP) chapters. These provisions seek to:
Beyond Tariffs: Sustainability and Services
The FTA contains broad commitments on sustainable development, labour and environmental protection, as well as tailored provisions for MSMEs and services. Enhanced market access is expected across IT/ITES, professional services, transport and financial services, supported by regulatory cooperation and mobility‑related disciplines.
Next Steps
The FTA text is currently undergoing legal scrubbing and will subsequently be signed and ratified by both sides, with entry into force expected in late 2026 or early 2027.
Once the full text of the FTA is publicly available, Taxand will organise a detailed webinar in which representatives from Taxand firms in the EU and from ELP in India will undertake an in‑depth discussion of the practical implications, tariff structuring and opportunities under the India–EU FTA for businesses on both sides.
For the detailed write‑up, please refer to the link here.
Contacts at Taxand India
Nishant Shah, Partner – Email – nishantshah@elp-in.com
Rohit Jain, Partner – Email – rohitjain@elp-in.com
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