EU deal puts Europe at the centre of India's trade

This is one more sign that trade blocs are reorganising in a less stable world. 

In FY2025, the European Union was India’s biggest goods-trading partner, and the new pact aims to lock that in as US tariffs rise. India and the EU signed a free-trade agreement after nearly 20 years of talks. The deal cuts tariffs on most traded goods over the next decade.

This is trade policy as geopolitics. Europe is trying to hedge against the US and China, and India is trying to sell itself as a reliable, open market, even as Washington, DC turns more tariff-happy. For Indian exporters — especially labour-heavy sectors like apparel and footwear — the timing matters.

For years, India-EU trade talks have stalled on familiar landmines: farm protections in Europe, and India’s high tariff walls in sectors that touch jobs and politics. This time, both sides pushed through — with the global backdrop doing the arm-twisting.

US President Donald Trump’s tariff threats have made allies twitchy. Europe wants options beyond the US market and wants fewer choke points in supply chains tied to China. India, facing punishing US tariffs, has its own reason to diversify and to look less protectionist.

The agreement’s centre of gravity is tariffs. India is set to cut duties on a wide array of European imports — cars, machinery, chemicals, pharmaceuticals, steel, and iron — while keeping some sensitive sectors out. Europe, in return, is set to open more space for Indian goods, including labour-intensive exports that are most exposed when tariffs rise elsewhere.

The deal also reaches beyond containers and customs. Brussels is offering concessions tied to services and student visas in your draft, while India is pitching the pact as a confidence signal for investors, a promise that rules will be more predictable, and market access less political.