After nearly 20 years of negotiations, India and the European Union (EU) finalised a landmark free trade agreement (FTA) in January 2026. The pact establishes a large free-trade zone by eliminating tariffs on over 90% of the goods exchanged between the two regions. This represents a major win for India, especially for sectors that currently face EU import duties ranging from 4% to 26%. ICRA has assessed the sector-wise implications of the agreement for India, examining unlocked opportunities as well as the challenges that may emerge across key industries.

Exhibit: Merchandise trade between India and the EU