The India-EU free trade agreement (FTA) lands at a time when global trade is being redrawn by geopolitics, supply chain shifts, and a push for resilience. This is more than just another tariff deal. It is a strategic bet to plug India into advanced value chains. The agreement opens access to a market of nearly two billion consumers and about $24 trillion in economic output. The scale is unprecedented. The question is how Indian firms can translate access into share.
From access to competitiveness
India’s share in EU imports remains around 1-3%. That is the real baseline. The FTA addresses access preferential entry across roughly 97% of EU tariff lines covering nearly 99% of trade value. While this strengthens India’s position, we need to continue working on enhancing our competitiveness by effectively evolving our domestic capabilities.
For labour-intensive sectors like textiles, leather, gems and jewellery, and marine products, tariff removal offers immediate price advantage. Sustaining momentum will require aligning with the evolving expectations of the EU market.
Access opened the door. What happens next depends on how India walks through it. The FTA, thus, is less about incremental export gains and more about correcting a structural gap in India’s presence in one of the world’s most sophisticated markets.
From tariffs to value chains
The real shift lies beyond tariff cuts. The agreement enables Indian firms to integrate into European value chains, where scale, quality, and reliability matter more than cost alone.
The opportunity pools are large. Chemicals alone represent a $500 billion import market in the EU, while textiles and apparel account for over $260 billion. While market entry is guaranteed, market retention will depend on meeting evolving demand and moving up the value chain. This is where targeted action can make a difference. Investing in product innovation, building partnerships with European firms, and developing sector-specific clusters can help Indian companies anchor themselves.
Services add a second engine. Access to 144 EU services sub-sectors, combined with a mobility framework, strengthens India’s position in business, technology, and professional services. This dual play across goods and services gives the FTA its strategic depth.
Imports have the ability to shape competitiveness
The FTA is not a one-way export story. Phased duty reductions on advanced machinery, medical equipment, and aircraft parts will lower input costs and accelerate technology adoption.
This matters. Competitiveness in global trade is increasingly driven by the quality of inputs and integration with global supply chains. Lower-cost access to European technology can help Indian manufacturing move up the value curve.
Imports, in this context, are not a threat. They are a lever to upgrade domestic capabilities and embed India deeper into global production systems.
A trade deal with strategic layers
What sets this agreement apart is its non-trade architecture. Cooperation spans security, defence, clean energy, critical technologies, and intellectual property.
Technology partnerships in areas such as AI and semiconductors, alongside climate collaboration, indicate this is designed as a long-term economic partnership. Regulatory alignment and stronger IP protection further improve investor confidence and reduce friction.
This is closer to a strategic compact than a traditional FTA.
Compliance will differentiate outcomes
If tariffs were the barrier of the past, regulation will define the future. EU frameworks such as the Carbon Border Adjustment Mechanism and deforestation-linked rules will directly shape export viability. This shift is not just about meeting standards but about embedding them early in product design and sourcing decisions.
Execution will determine outcomes. Rules of origin, quality standards, certification systems, and supply chain traceability are no longer compliance checkboxes but market-entry conditions. For Indian exporters, the shift is clear: from cost arbitrage to standards-led competitiveness.
Bridging readiness to real scale
Policy access must now translate into commercial scale. This requires investment in compliance systems, sustainability practices, and workforce skills.
What becomes critical now is building shared infrastructure—common testing facilities, digital traceability platforms, and sector-led compliance frameworks—to reduce the burden on individual firms.
MSMEs, in particular, will need support to align with EU standards while maintaining cost competitiveness. Targeted financing, capacity-building programmes, and industry-government coordination can help accelerate this transition. These steps can help ensure complete utilisation of tariff liberalisation benefits.
A strategic inflection point
The India-EU FTA is more than a trade agreement. It’s a platform to reposition India within global value chains and deepen engagement with advanced economies. While that scale is guaranteed, we must continue enhancing our competitiveness.
The next step is to ensure the Indian industry moves fast enough, on standards, on technology, and on execution to match the opportunity this agreement creates.
The writer is Partner and Head–India Global, KPMG in India
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.