Free trade agreement between the EU and India. Everything you need to know.

The European Union and India announced on January 27, 2026, the closing of negotiations on their EU-India Free Trade Agreement, a pact that, according to the European Commission, will expand market access and reduce barriers to international trade between the two economies.

For European companies working with Indian suppliers, the announcement is relevant because it anticipates potential changes in tariffs, customs, rules of origin and international logistics planning; but also because, for the time being, it does not modify current import conditions.

The agreement is not yet in force. After political closure, the text must go through the legal review and institutional process: once the corresponding decision has been adopted by the Council, it can be signed, and will then require the consent of the European Parliament and ratification by the Indian side before it can be implemented. Until then, imports from India remain subject to MFN tariffs (those in force without preference) and the usual border procedures.

With a view to its future application, the European Commission indicates that the FTA provides for the progressive elimination of tariffs on a very large part of trade, but subject to compliance with rules of origin: only products that prove their origin in accordance with the agreement will be able to benefit from preferences.

In addition, the EU stresses that, even with the agreement, European regulatory requirements (technical, safety and other) for the entry and marketing of goods will continue to apply, a key point for regulated sectors such as cosmetics, electronics and industrial products.

 

The EU and India conclude a historic agreement.

The announcement of the closure of the negotiations marks a milestone in the EU-India trade relationship, but from a customs and import point of view, the operational situation has not yet changed.

The agreement is in a pre-implementation phase, which means that companies must differentiate between the policy framework already announced and the legal reality that continues to govern international trade with India today.

 

What exactly happened

The European Commission recently confirmed the political conclusion of the free trade agreement negotiations with India, after several years of technical rounds and reactivation of the talks initiated in 2022.

The closing of the negotiations implies that both parties have reached an understanding on the main chapters of the agreement, including those on goods, customs cooperation, trade facilitation and regulatory disciplines.

This step is important because it sets the content of the future trade framework: tariff reductions, rules of origin provisions and commitments on customs procedures.

However, it does not yet create rights and obligations applicable to economic operators, as the text is not provisionally applied and has not yet been ratified.

 

At what stage are you now

After political closure, the agreement enters the phase known as legal scrubbing, in which the text is legally reviewed and translated into all official languages of the EU. Subsequently, the Commission will propose its formal signature and conclusion, which will require the approval of the Council of the European Union and the consent of the European Parliament, in addition to the corresponding internal procedures in India.

Until this process is completed, the agreement is not in force and no tariff preferences can be applied. Therefore, imports from India continue to be subject to the EU MFN tariff, normal border controls and current customs regulations, with no change in duty rates or documentary requirements under the new agreement.

The European institutions themselves have stressed that entry into force will not be immediate and will depend on the completion of these formal procedures.

 

What changes with the agreement (when it starts to be implemented)

Although the EU-India Free Trade Agreement is not yet in force, European institutions and various specialized sources have anticipated the main tariff and trade modifications that will take place once the text is formally approved and enters into force. These reforms could have a significant impact on imports from India, international trade and the cost and logistics structure of many European companies.

The elimination or reduction of tariffs will not be immediate in all cases, but will be implemented progressively according to the schedules foreseen in the agreement itself. This staggered transition seeks to balance market opening with the adaptation of sensitive industries in both the EU and India.

 

Progressive elimination of tariffs

One of the centerpieces of the pact is the reduction or elimination of import duties on a very important part of the trade in goods between the EU and India. According to official figures shared by the European Commission and corroborated by international media, more than 90% of the value of trade in goods will be covered by eliminated or progressively reduced tariffs, with estimated savings of up to 4 billion euros per year in duties for European exports.

This package will affect industrial and manufactured products that are currently subject to high tariffs, such as machinery, chemicals and pharmaceuticals, which could move to zero tariffs after a series of stages of tariff elimination.

The liberalization also provides for tariff reductions on agricultural and food products, although with exceptions and specific treatment in some sensitive cases for both parties.

 

Improved market access with conditions

Although the reduction of tariffs is a shared objective, market opening will not be automatic for all goods. The agreement provides that only those goods that comply with the defined rules of origin will be able to benefit from tariff preferences.

This means that goods must prove that they originate in India, or contain a minimum percentage of value processed in that country, to qualify for the reduced rates.

This approach seeks to prevent third country products from entering the EU via India (or vice versa) simply to take advantage of low tariffs without substantial transformation in the exporting country, which has direct implications on customs processes, import documentation and international logistics.

In summary, the combination of tariff phase-out and market access conditions based on strict rules of origin poses a scenario in which European companies must not only anticipate cost reductions, but prepare their supply chains and document compliance to maximize the benefits of the agreement when it enters into force.

 

Rules of origin: the key requirement to benefit from reduced tariffs

Beyond lower tariffs, the technical element that will determine whether a company is actually eligible for the benefits of the agreement will be compliance with the rules of origin. In all EU trade agreements, these rules are essential to avoid trade diversion and to ensure that the benefits apply only to goods that actually originate in the signatory countries.

In the case of the EU-India agreement, the rules of origin will define when a product can be considered as “originating” in India and therefore eligible to enter the European Union at preferential tariffs at the time the treaty is in force. These provisions form a central part of the negotiated text and will be subject to controls and verifications by the customs authorities.

 

What they are and why they are decisive

The rules or rules of origin establish the criteria that a product must meet to be considered originating in a partner country. It is not enough for the goods to be shipped from India: they must have been wholly obtained there or have undergone sufficient transformation, in accordance with specific requirements per tariff heading to be set by the agreement.

These criteria may include, for example, changes in tariff classification, ceilings on non-originating materials or local value-added requirements.

Its function is to prevent products manufactured mainly in third countries from using India as a simple platform for re-export to the EU to benefit from reduced tariffs.

Rules of origin are therefore directly linked to supply chain management and the production structure of suppliers.

 

Practical implications for importers

For European companies importing from India, the rules of origin will entail new documentary and internal control requirements.

Importers should ensure that their suppliers are able to issue valid proofs of origin under the system to be established by the agreement, which is expected to be based on declarations of origin and possible inter-authority verification mechanisms.

From a customs point of view, this means that an incorrect or insufficiently supported declaration may result in the loss of the preferential tariff, retroactive payment of duties and, in some cases, penalties.

Therefore, the correct management of origin will not only be a formal procedure, but a strategic element that will affect costs, dispatch times and exposure to regulatory risks within the framework of the future EU-India agreement.

 

What remains unchanged: EU regulatory requirements are still binding

The fact that the EU-India Free Trade Agreement promises tariff reductions and improved market access does not mean that the rules and standards governing the entry and marketing of products on the European market will be eliminated.

The EU authorities have been clear: even when the agreement enters into force, products imported from India will still have to comply with all existing EU regulatory requirements before being shipped or marketed.

From the perspective of international logistics, this implies that the elimination of trade barriers does not replace or relax the technical, health or safety conformity requirements that apply at the community and sectoral levels.

In other words: the tariff preference does not override the obligation to comply with EU internal market rules.

 

What import requirements still apply

Regardless of the planned tariff reductions, any goods entering the EU from India, whether tariff-preferential or not, must meet the production and market standards in force in the European Union. Among the main requirements that will continue to apply are:

Technical and safety standards: Many products, such as machinery, toys, electrical and electronic equipment or medical devices, must meet specific technical standards and, in many cases, bear CE marking demonstrating compliance with applicable directives and regulations. CE marking indicates that the product complies with essential health and safety requirements, but does not replace other specific regulatory controls, if any.

Sanitary and phytosanitary (SPS) regulations: Food, agricultural and animal products will continue to be subject to the Community’s strict controls on food safety, animal and plant health. These regulations are not modified by the trade agreement and compliance with them is mandatory for import and marketing authorization.

Chemical regulations: Imports containing substances regulated under the European framework, such as REACH or hazardous substances regulations, must comply with their specific assessment, registration and documentation obligations.

 

Practical impacts on customs and international logistics

For customs and international logistics departments, this means that the entry into force of the agreement does not eliminate the need for:

Submit and verify compliance documentation: before goods can pass customs control and enter the EU market, operators must provide evidence that the products comply with the applicable standards.

Ensure traceability and regulatory compliance: especially in sectors such as cosmetics, electronics, machinery and industrial products, where testing, labeling and certification requirements are binding.

Coordinate with specialized agents: inspection services, laboratory tests or the existence of an authorized representative in the EU (when necessary, e.g. under the General Product Safety Regulation) remain mandatory steps.

While the forthcoming EU-India agreement promises lower tariffs and more open trade, it does not change or replace the EU’s internal market regulatory standards. Companies importing from India will still need to comply with the full range of EU technical, safety and compliance requirements and prepare their strategies to take advantage of tariff benefits when the pact comes into force.

 

Sectors likely to see the greatest impact on their imports from India

The future implementation of the EU-India agreement will not affect all trade flows equally. The impact will be more visible in those sectors where India is already a relevant supplier for the European market and where current tariffs, rules of origin and logistics costs have a significant weight on the final price.

The European institutions have pointed out that the planned liberalization covers a very large part of trade in goods, which opens the door to strategic changes in the supply of certain industries.

From an import perspective, this implies that some sectors could experience more notable cost reductions, while in others the effect will be more limited or depend to a greater extent on compliance with technical and regulatory requirements.

 

Consumer products with intensive supply chains

In consumer goods, India is an established supplier to the European market in categories where tariffs and cost competitiveness play a key role.

Among the most exposed sectors are:

Textiles and apparel: India is one of the world’s largest producers of garments and fabrics. The progressive reduction of tariffs can strengthen its position vis-à-vis other Asian origins, provided that EU rules of origin and labeling and safety requirements are met.

Footwear: As in textiles, margins tend to be sensitive to import duties. A drop in tariffs can change sourcing decisions and import volumes.

Cosmetics and personal care: Although cosmetic products are subject to strict European regulation in terms of safety and ingredients, the reduction of tariffs may influence the entry cost of certain categories manufactured in India.

In these sectors, the combination of lower tariffs and optimized international logistics can generate competitive advantages, but will also require more rigorous management of origin documentation and regulatory compliance.

 

Industrial and technical products

The agreement also has relevant implications for industries with more complex supply chains and higher technical content.

Particularly noteworthy are:

Machinery and industrial components: The reduction of tariffs on certain equipment and parts may make it cheaper to import subassemblies or complete machinery, with a direct impact on European manufacturing industries that integrate Indian components in their production processes.

Chemicals: India is a major player in the production of certain intermediate and specialty chemicals. Tariff preferences could favor their entry into the EU, although European chemical and safety standards will continue to apply rigorously.

Other processed industrial goods: Sectors such as light metallurgy, technical parts or intermediate goods can benefit from a more favorable tariff environment, which influences the configuration of the supply chain and the planning of international purchases.

In all these cases, the real effect will depend not only on the lowering of tariffs, but also on the ability of suppliers to demonstrate preferential origin and on the coordination between purchasing, customs and logistics departments to adapt flows to the new conditions when the agreement comes into force.

 

Expected impact on customs and international logistics

In addition to changes in tariffs, the EU-India agreement incorporates commitments aimed at facilitating trade and making border procedures more predictable. These types of provisions, which are common in the EU’s new generation of trade agreements, directly influence customs operations, document management and international logistics planning, especially for companies with regular import flows from India.

However, these benefits will only materialize once the agreement is in force. Until then, customs procedures continue to be governed by current EU regulations and existing bilateral frameworks.

 

Changes in customs operations

The negotiated text includes chapters on trade facilitation and customs cooperation, which aim to improve the transparency, predictability and efficiency of border processes. Among the elements that the EU usually incorporates in such agreements are commitments on publication of standards, exchange of information, advance rulings and risk management.

For European importers, this may translate in the medium term into:

-greater clarity on tariff classification and origin criteria

-more structured procedures for requesting advance rulings

-Enhanced cooperation between customs authorities on both sides.

However, these developments do not eliminate controls. Customs will continue to verify compliance with rules of origin, the correct declaration of customs value and compliance with the European regulations applicable to each product.

 

Effects on the supply chain

From a supply chain perspective, an environment with lower tariffs and more harmonized customs procedures can influence strategic sourcing decisions. India could gain weight as an origin for certain goods if the combination of production cost, transport and preferential tariff is more competitive with other markets.

This may involve:

-review of logistics routes and ports of entry into the EU

-adjustments in purchase volumes and contracts with Indian suppliers

-Increased need for coordination between purchasing, logistics and customs departments to ensure that origin and conformity documentation correctly accompanies the goods.

Ultimately, the agreement not only has a tariff dimension, but also an operational one: it may change the way companies structure their international logistics, plan inventories and manage risks at the border once the new rules are fully applicable.

 

Why it is important to prepare now, even if the agreement is not yet implemented

Although the EU-India Free Trade Agreement has not yet entered into force, the close of negotiations marks the moment when many companies begin to work internally to adapt to the future trade framework. In agreements of this type, experience shows that companies that analyze their exposure to customs, tariffs, rules of origin and international logistics in advance are better positioned to take advantage of preferences from the first day of implementation.

Preparing in advance does not mean already implementing the agreement, which is not possible, but reviewing processes, documentation and supply chains to avoid delays, errors or loss of benefits when the new standards become operational.

 

Preliminary analysis that companies can perform

One of the first steps is to identify precisely which products are imported from India and under which tariff codes (HS) they are declared. From there, companies can simulate scenarios comparing current tariffs (MFN) with the preferential rates provided for in the agreement, once these are officially published. This exercise allows estimating the potential impact on costs and margins.

It is also key to analyze whether Indian suppliers will be able to comply with future rules of origin. This may require reviewing the origin of raw materials, transformation processes and value-added structures. If a product does not meet the required threshold, it will not be able to benefit from the tariff preference, even after the agreement enters into force.

 

Documentary and operational preparation

In addition to economic analysis, companies must strengthen their operational preparedness. This includes establishing internal procedures for collecting and retaining evidence of origin, coordinating with suppliers to issue valid origin declarations, and adapting customs management systems to correctly reflect preferential treatment where applicable.

From an international logistics standpoint, it is also worth reviewing transportation contracts, transit times and inventory strategies. A reduction in tariffs may increase the attractiveness of India as a source of supply, which could translate into higher import volumes and the need to adjust logistics planning and warehousing capacity.

Overall, this preparation phase allows companies to integrate the future agreement into their international trade strategy. The preparation phase allows companies to minimize customs risks and maximize the potential benefit when the tariff preferences are finally applicable.

 

How Across Logistics can help you prepare for the EU-India agreement

The future entry into force of the trade agreement between the EU and India not only poses changes in tariffs, but also in customs management, rules of origin and international logistics planning. In this scenario, having a specialized partner can make the difference between reacting late or getting ahead of the changes.

Across Logistics works with companies involved in international trade to adapt their supply chains to new regulatory frameworks, such as the one to be established by the EU-India agreement. Our approach combines technical analysis, operational insight and customs management expertise.

 

What can we do for your company?

From our International Trade and Customs Consulting team, we help importing companies to prepare in a structured way for this type of changes:

✔️ Product-by-product tariff impact assessment: We analyze your current tariff items and simulate the effect of future tariff reductions to estimate the real impact on import costs.

✔️ Rules of origin compliance planning: We review your supply chain to determine whether your products will qualify for preferences, identifying potential origin risks and documentation needs.

✔️ Regulatory and documentation assistance: We support you in reviewing regulatory requirements that will continue to apply in the EU and in preparing consistent documentary dossiers for customs.

✔️ Customs simulation; current versus future scenarios: We compare your current operations with the scenario after the agreement comes into force, evaluating changes in costs, processes and clearance times.

✔️ Mapping of risks and opportunities in your Indian supply chain: We identify critical points, dependencies and logistics optimization opportunities linked to your Indian suppliers.

 

🔔 Want to be the first to know when the agreement will come into force?

📩 Let’s talk. We’ll help you stay ahead of the curve.

 

 

 

Sources

1️⃣ European Commission – Press Corner
Official announcement on the closing of the EU-India agreement negotiations
https://ec.europa.eu/commission/presscorner/detail/en/ip_26_184

2️⃣ European Commission – Questions & Answers on the EU-India Free Trade Agreement
Explanatory document with details on tariffs, scope of the agreement and general operation.

https://ec.europa.eu/commission/presscorner/detail/en/qanda_26_185

3️⃣ European Commission – DG Trade: EU-India Agreements
Overview of the agreement and its status
https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india/eu-india-agreements_en

4️⃣ DG Trade – Chapter-by-chapter summary of the EU-India FTA
Technical summary by chapter: rules of origin, customs facilitation, SPS, TBT, etc.
https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india/eu-india-agreements/memo-eu-india-free-trade-agreement-chapter-chapter-summary_en