The India-EU Free Trade Agreement (FTA) hailed as the “mother of all deals” by both the EU and India, has been under negotiation since 2007. Since the text of the agreement is not available yet to fully verify this claim, it is worth evaluating what can be gleaned about the agreement from the documents released by both sides so far (the EU and India).

The Highlights

Goods

The biggest immediate gain for both sides appear to be on goods, and both parties’ statements focus on these. The coverage appears significant. The FTA reduces tariffs on textiles, apparel, leather, footwear, chemicals, sports goods, toys, gems, and jewellery by India. For the EU, the gains lie in industrial goods, precision machinery, electrical equipment, aviation components, medical devices and other advanced tech. Beyond that, India reducing the high tariffs on cars (although subject to TRQ) is a significant win for the EU. Removing tariffs on chocolate and olive oil altogether, reducing tariffs on wine and spirits, and apples and pears is the cherry on top for the EU’s agriculture sector. Both sides targeted the low hanging fruits and pushed liberalisation of the more controversial goods for further down the road. Sensitive agricultural products such as wheat, poultry, sugar, dairy and rice have been completely left out to protect domestic producers, although the justification for these exclusions have been questioned in commentary.

Services and Digital

While tariff reductions are championed loudly, the decibel level reduces slightly when we move to services trade, specifically digital trade. India has traditionally played hardball on e-commerce and digital trade issues at the WTO, such as objecting to the continuation of the moratorium on customs duties on electronic transmissions. However, its recent FTAs, such as with the UK, signal a shifting mood, albeit limited. In the EU-India FTA, the EU memo indicates that the digital trade chapter focuses primarily on cooperation on the digital economy, stating that the FTA “integrates the majority of the rules agreed under the WTO’s Electronic Commerce Joint Initiative, of which India is not a member.” It lists rules on the protection of source codes, online consumer protection, and the prevention of spam as agreed under the FTA. However, silence on key issues like data protection, data localisation and customs duties on e-commerce is telling. India’s press release regarding the FTA says nothing about provisions on digital trade and only mentions cooperation in critical areas like AI, clean technologies, and semiconductors. This should not be a surprise, considering India has been steadfast in its positions on digital trade. It is unlikely that India will have changed its position significantly from the recent agreement with the UK, where it made negotiations on data protection and localisation contingent on future events.

India and the EU are services powerhouses, each boasting booming service-led growth, with around 83 billion USD worth bilateral trade in 2024. The EU has secured liberalisation commitments in 102 subsectors: professional, business, telecommunications, maritime, financial, and environmental services. On the other hand, India has secured broader and deeper commitments across 144 services subsectors, including IT/ITeS, professional services, education, and other business services. But at this juncture, it is still unknown which modes of service trade are to benefit the most from deeper liberalisation. The EU memo also celebrates that the FTA incorporates high ambition commitments from India, such as rules under the WTO Domestic Regulation Joint Initiative; provisions on mobility of professionals; and clear commitments related to senior management and boards of directors, as well as local presence. But it remains unclear which sectors relate to these commitments.

Sustainability

There is a chapter on sustainability, although it is difficult to comment on the depth of obligations, based on the information available. The EU has indicated the inclusion of certain standard provisions found in FTAs: clauses on non-regression, right to regulate, and commitment to work towards the implementation of different environmental treaties such as the Paris Agreement, the Convention on Biological Diversity, and the Convention on International Trade in Endangered Species. What is not clear is whether the Paris Agreement has been elevated to the status of an “essential element”. An “essential elements” clause is a provision that is considered essential to the operation of the agreement, such that either Party can partly or fully suspend the agreement if it is breached (Article 60, Vienna Convention on the Law of Treaties). The matter of the inclusion of this “essential element” clause is key: its omission would represent a significant coup for India and a concession by the EU, especially after having negotiated similar provisions with other developing countries such as Indonesia and those in the MERCOSUR trade bloc. It remains to be seen whether this could risk another MERCOSUR fiasco by affecting political approval for the FTA.

Another sticking point throughout the negotiations was that of climate action, especially as the EU’s sustainability regulations such as the Carbon Border Adjustment Mechanism (CBAM) and the EU Deforestation Regulation loom large. We do not see any references to the CBAM or exemptions and relaxations in the EU memo. However, Indian government documents (also here) suggest that an annex on the CBAM has been agreed that includes EU commitments to provide most-favoured nation assurances. This means extending any flexibilities granted to third countries under the regulation. The EU – US deal of August 2025 has opened the door for potential CBAM flexibilities. While the WTO compatibility of exemptions is questionable due to the possibility of discrimination without sound legal pathways or justifications (as we have previously analysed), this commitment is politically expedient and reflects a spirit of bilateral compromise. The documents also suggest that the EU has made commitments relating to “enhanced technical cooperation on recognition of carbon prices, recognition of verifiers, as well as financial assistance and targeted support to reduce greenhouse gas emissions and comply with emerging carbon requirements.” The parties have declared their intent to sign a memorandum of understanding to establish a platform in 2026. The EU plans to commit €500 million over two years to support India’s efforts in reducing greenhouse gas emissions and accelerating its long-term sustainable industrial transformation. Although this commitment is qualified by the EU’s budgetary and financial rules and procedures, it reveals a continuation of India’s recent efforts at securing financial commitments as part of trade deals (such as the investment commitment in the India-EFTA FTA).

This approach towards climate cooperation also signals an attempt towards a balance between climate action and industrialisation to assuage concerns previously articulated by developing countries who felt punished by the EU’s sustainable trade crusade. We are yet to see from the texts whether these concerns have been addressed in a broader fashion, such as through linkage with technology transfers, as other commentators have also noted. The design of the intellectual property chapter is crucial for understanding the holistic nature of the FTA, as connections between the provisions can reinforce or undermine their effectiveness.

Notable Omissions

The FTA clearly is going for “low-hanging fruit”, as evidenced by the omission of sticky issues. Chief among the omissions is the lack of provisions on investment protection, public procurement and some agricultural products. However, all omissions are not equally egregious: the UK-India FTA lacks a chapter on investment protection, and there is no clarity regarding future negotiations on one. However, it is clear that negotiations for a Geographical Indications Agreement and an Investment Protection Agreement are ongoing separately between the EU and India.

Further, there is no chapter on energy and raw materials, which has become a feature of recent EU FTAs. While such a chapter would be new for India, its absence speaks volumes in the context of the recent EU, US and Japan cooperation on critical minerals. Yet an FTA is not the only way for the parties to secure such cooperation. Today, non-binding Memoranda of Understanding (MoUs) are increasingly used by countries to coordinate positions on critical minerals. It is unclear if an MoU is under negotiation or consideration.

Even in the disciplines where obligations have been undertaken, the extent and coverage of such obligations dictate the “depth” of the FTA. One might suppose that if the FTA included significant commitments on such disciplines, both sides would have publicised it more forcefully. It is concerning that the limited public information released may indicate that the commitments could also be limited.

Finally, it is easy to sit and pick apart what an FTA includes or omits. But this FTA cannot be analysed in isolation from the current geopolitical context marked by rising tariffs, economic coercion, supply chain vulnerabilities, and a focus on economic security. These broader considerations arguably explain why both India and the EU have been willing to set aside long-standing differences to conclude negotiations that had stalled for nearly two decades. Seen in this light, the FTA appears less as a standalone trade instrument and more as a pillar of a wider strategic partnership. The agreement sits alongside growing cooperation in other sensitive and strategic areas such as defence, critical technologies, climate transition, and supply-chain diversification. Alongside the FTA, India and the EU also signed a Security and Defence Partnership, making it the first of its kind between them. Traditionally, India has not been viewed as a strategic ally of the EU. Yet, at a time when some traditional partnerships have become less predictable, building a closer relationship with a large, independent economic power may be strategically valuable for the EU. Closer engagement with India, an “ally that is not an ally”, could offer the EU both market opportunities and a degree of geopolitical and economic resilience.

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