Indian corporate leaders, industry bodies and rating agencies have welcomed the conclusion of the India–European Union free trade agreement (FTA), describing it as a strategic milestone that strengthens trade, investment and technology ties between the two economies.
The pact, concluded on Tuesday, January 27, comes alongside a broader strategic partnership and is expected to boost manufacturing, services, mobility and market access. The FTA is targeted for operationalisation by 2027.
Indian consumers and exporters stand to gain from the India–EU FTA as both sides slash tariffs across major product categories. Imported alcohol, food products, fruits, meat and industrial equipment will become significantly cheaper, while Indian textiles, footwear, marine goods, gems and heavy industry products get duty-free access to Europe. However, dairy and sensitive farm items remain excluded to protect farmers, and some industrial sectors will see phased liberalisation
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Reacting to the development, Dr Anish Shah, Group CEO & MD, Mahindra Group, said the India–EU FTA provides the “next wave of economic impetus for India,” building on earlier policy reforms.
He added that the pact strikes a balanced approach by opening the market while nurturing domestic manufacturing, describing it as a “huge positive for the auto sector” given its duty-free access to European markets and the likelihood of attracting European OEM investments. He noted that lower duties at higher-priced segments would enhance scale without altering competitive dynamics, and called the agreement a generational opportunity across emerging areas such as AI, clean tech, mobility and innovation.
Moody’s Ratings said the conclusion of negotiations reflects India’s efforts to diversify trade relationships and, once operational, the FTA will be credit-positive, with lower tariffs and better market access supporting India’s manufacturing ambitions and export competitiveness in labour-intensive goods. Moody’s noted that calibrated liberalisation will offer European carmakers an opportunity in India’s auto market, while broader benefits will depend on improvements in business friendliness and regulation.
From a sectoral research perspective, Hemal Thakkar, Director, Crisil Intelligence, said the quota-based tariff approach lowers duties on European automobile imports and opens the luxury segment to a wider pool of affluent consumers, without disturbing pricing in the ₹10–25 lakh category, which dominates domestic sales volumes.
IT industry body NASSCOM said the agreement marks an important step for services, with gains expected through market access, predictability and rules-based digital trade. It noted that Indian tech firms could benefit from lower non-tariff barriers, easier cross-border delivery and potentially improved mobility of professionals, while the commitment to a framework for social security agreements within five years strengthens long-term engagement.
Read More: Industry welcomes India-EU FTA as ‘game-changer’ for trade and jobs
NASSCOM said deeper cooperation on technology, innovation and digital ecosystems could catalyse investment, joint ventures and R&D in AI, semiconductors, clean tech and startups, supporting MSME growth and job creation.
Shailesh Chandra, President of SIAM and MD & CEO, Tata Motors Passenger Vehicles Ltd, said the FTA will play a key role as India advances towards ‘Viksit Bharat.’ He said the calibrated structure balancing market access and domestic manufacturing should deliver a “win-win” by drawing global participation while supporting investments, employment and consumer choice in both regions.
