What does the India-EU FTA entail? Contents, timing, and impact on Italian businesses.

The Free Trade Agreement between the European Union and India is much more than a tariff reduction: it is a multi-level framework encompassing goods, services, intellectual property, public procurement, sustainability, technical standards, and digitalization. It is the result of a long negotiation process, decisively relaunched in 2022 and concluded. officially the 27th January 2026 , with the aim of making economic relations between the two areas more predictable, accessible and regulated .

A broad sector coverage

The agreement covers over 96% of EU exports and approximately 99% of Indian exports , in value terms. Trade flows will be progressively liberalized in the following areas:

• Industrial goods : from mechanics to chemicals, from pharmaceuticals to textiles.

• Services: with gradual openings in the financial, telecommunications, and regulated professions sectors.

• Certifications and rules of origin: with the aim of harmonizing technical standards and strengthening production traceability.

• Customs and digital trade: towards greater interoperability and regulatory cooperation.

The exclusions

Some sectors remain excluded or treated with particular caution, such as:

• Basic agricultural products, the subject of sensitivity on both the European and Indian sides.

• Topics such as the CBAM (Carbon Border Adjustment Mechanism) and data protection, which follow parallel tables.

Implementation times

The FTA will likely enter into force in early 2027 , subject to ratification by the European Parliament, member states, and the Indian authorities. Its full implementation will be gradual , with timeframes ranging from 5 to 10 years depending on the sector, to allow for gradual adaptation by businesses and institutions.

In summary, the agreement establishes a stable, multilateral framework in which trade liberalization, regulatory cooperation, and industrial vision converge towards a shared goal: to structurally strengthen the economic relationship between the European Union and India.

This article is intended to offer a technical yet operational interpretation of the agreement, with a concrete look at the opportunities and actions that companies can begin planning now. For further information, the full PDF document with a technical analysis of the agreement is available: 👉

Where are the tariff benefits concentrated?

The economic heart of the India–EU FTA is the reduction or elimination of customs duties on a large portion of bilateral trade. It is estimated that the trade value covered exceeds 96% for European exports and 99% for Indian exports , making the agreement one of the most far-reaching in terms of tariff liberalization ever concluded by the European Union.

The sectors with the greatest benefit for European exports

For Italian companies, in particular, the agreement unlocks potential in sectors where Indian tariffs have historically been high. Some significant examples:

• Machinery : tariffs up to 22%, now eliminated

• Pharmaceuticals : tariffs up to 11%, now eliminated

• Chemistry : up to 17%, now full liberalization

• Textiles and footwear : tariffs up to 45%, now eliminated

• Processed food : total or partial liberalization

• Olive oil : tariffs up to 150%, reduced in the final phase

These sectors represent typical excellences of Made in Italy , and now benefit from much more competitive access conditions than in the past.

Gradual liberalization and quotas for sensitive products

Some categories will instead benefit from progressive reductions :

• Wine and spirits : currently subject to duties of up to 150%, progressively reduced to 30% or less, with the introduction of annual quotas

• Cars : tariffs up to 110%, with gradual reduction in the medium-long term

• Selected agricultural products : partial opening, subject to safeguards

Sectors excluded or still to be negotiated

Basic agricultural products are currently excluded, as are some highly sensitive sectors. For sectors not explicitly mentioned (furniture, cosmetics, materials), general reduction rules will apply, the details of which will be defined in the agreement's technical annexes.

The scope of the tariff reductions is such that it will radically alter the costs of accessing the Indian market for many Italian companies. Not only are new competitive opportunities opening up, but it's also becoming necessary to revise business models , pricing policies, and distribution strategies to adapt to the new scenario.

Compliance and regulation: the new frontiers of competitiveness

While duties and tariffs represent the most immediate aspect of the FTA, the real competitive frontier lies in regulatory compliance . The agreement does not eliminate the technical complexity of trade, but channels it into a more predictable and, above all, more demanding framework.

Standards, certifications, and traceability: the new normal

Access to FTA benefits will be subject to a series of technical conditions, including:

• Compliance with the rules of origin , with accurate and verifiable documentation

• Compliance with European technical standards , in areas such as safety, environment, health

• Product certifications and markings , in line with EU regulations

All these elements will be detailed in the agreement's technical annexes , but it is already clear today that the FTA rewards structured, transparent, and quality-oriented operators.

CBAM, REACH, MOCA, BIS: tools or obstacles?

Contrary to a defensive view, European regulatory instruments—such as the CBAM (carbon border tax), the REACH regulation for chemicals, the MOCA standards for food contact materials, and Indian BIS certifications —will not disappear with the agreement. Indeed, they will become an integral part of the competitive landscape.

For Italian companies, this means:

• Investments in traceability , quality and sustainability of the supply chain

• Integration between export department, technical office and quality control

• Greater attention to documentation and internal audits

Selectivity as a lever of competitiveness

This regulatory framework doesn't streamline trade in a linear way , but rather selects those poised for growth. The FTA enables, but doesn't guarantee. Operators capable of anticipating regulatory requirements will be rewarded , while opportunistic or improvised approaches will be penalized.

In this sense, compliance becomes a strategic lever, not a passive obligation : those who know how to manage it with method and vision will be able to obtain a lasting competitive advantage—in India, Europe, and global markets.

How to prepare for the entry into force?

The agreement will not enter into force before 2027 , but companies that act early will have a significant strategic advantage. The 2026–2027 period represents an ideal operational window to review their strategies in India and anticipate the impact of the FTA.

Existing businesses: adapting models and margins

Italian companies already active on the Indian market will have to:

• Review pricing policies , taking into account tariff reductions and adaptation to new standards.

• Evaluate competitive repositioning in segments that will become more accessible or more exposed to international competition.

• Strengthen your local presence through subsidiaries, partners, or factories to benefit from the rule of origin.

New entrants: plan your strategy before your competitors

For those considering India as an expansion market, timing is crucial. At this stage, companies can:

• Analyze which products will be liberalized , with what timing and under what technical conditions.

• Design a coherent entry model : direct export? Local partner? Production plant?

• Build a compliant supply chain , with suppliers already prepared with the required documentation.

5 key actions to activate immediately

1. Map your customs codes (HS codes) to check their position in the agreement

2. Conduct an internal audit on rules of origin, classification and certifications

3. Analyzing Indian competition to assess competitive differentials

4. Evaluate localization or joint venture solutions

5. Train staff on compliance, logistics, and technical requirements

Success in the new trade framework will not only depend on "knowing how to export," but also on knowing how to profoundly adapt one's industrial and commercial strategy . Companies that act now—with vision and method—will be the first to reap the structural benefits of the agreement.

Strategic opportunities for Italy

The FTA between India and the European Union is not just a trade agreement: it is a geopolitical and industrial opportunity for Italy's positioning at the heart of the 21st century global economy.

Italy has a positive perception in India , linked to its manufacturing quality, industrial design, innovation in SMEs, and an entrepreneurial culture similar to India's. But to transform this intangible capital into structural relationships , a leap in scale is needed.

From export to industrial presence

The agreement creates the conditions for:

• go beyond occasional exports , focusing on direct presence, joint ventures, technology transfer;

• enhance the complementarity between highly specialized Italian SMEs and the vast Indian manufacturing fabric;

• Integrate Indian suppliers into Italian supply chains, improving costs, scalability, and resilience.

The role of the Italian Chamber of Commerce in India

The IICCI is positioned as a strategic partner to accompany Italian companies along this path, offering:

• guidance on the contents of the agreement and support in product mapping;

• industrial matchmaking between Italian and Indian companies;

• legal, regulatory, and logistical support for compliance and market entry;

• training, advocacy, and integrated promotion initiatives in synergy with Italian and EU institutions.

A new economic space, a new industrial diplomacy

In a world marked by geopolitical realignments, India represents a non-aligned strategic partner , credible for Europe on both an industrial and democratic level. Italy can play a distinctive role as a bridge between technology, SMEs, sustainability, and advanced manufacturing.

Success will depend on our ability to:

• move coherently as a country system,

• networking excellence and know-how,

• to offer reliable, high-value-added industrial solutions.

Conclusion

The Free Trade Agreement between India and the European Union should be viewed as a structural enabler and not merely a trade simplification. It doesn't just reduce tariffs: it raises the bar of competitiveness , requiring quality, traceability, and industrial vision.

For India, it is a means to strengthen its productive base , attract long-term investments and gain centrality in the global economic system. For Europe – and for Italy in particular – it is a concrete opportunity to reposition itself in one of the most dynamic areas of the world , with stable tools and tangible economic advantages.

The success of this agreement will not be automatic: it will depend on timing, preparation, and the ability to act first . The time to start is now.