What the EU–India FTA Means for Italian Companies
From headline to price list
The tariff annexes of the EU–India Free Trade Agreement published on September 11th 2026 turn a political headline into a price list. Read line by line, India's schedule removes duties on 86% of its 12,650 tariff lines, and on 48% of them on the very day the agreement enters into force. For Italy's manufacturing core — machinery, fashion, design, food — the result is a market that opens predictably, sector by sector, over the next decade.
The timing makes this a planning question, not an academic one. Negotiations closed in New Delhi on 27 January 2026. On 11 September the European Commission asked the Council to authorise signature and conclusion; signature is currently expected in December, with the European Parliament's consent, India's ratification and entry into force most likely in early 2027. Companies that read the schedules now will price their 2027 offers with the new rates in mind.
What follows is an IICCI reading of Appendices 2-A-1 and 2-A-2 and the related annexes, written for Italian exporters and investors.
The overall picture
India's average base duty across all lines is 17.1%. By the end of the transition, 86% of lines reach zero, 5% receive partial cuts or quotas and 8% stay on the exclusion list. The split between industry and agriculture is sharp. Industrial goods (HS 25–97) start from an average of 13.1% and are eliminated on 91% of lines, 53% on day one. Agri-food (HS 01–24) starts from 40.3%; only 17% of lines open on day one and 34% remain excluded.
Two technical points shape every calculation:
The base rate is the whole duty stack. India's schedule adds Basic Customs Duty (BCD), the agriculture cess (AIDC), the health cess and the Social Welfare Surcharge. A typical machine pays 7.5% BCD plus 0.75% SWS, i.e. 8.3%; wine pays 50% BCD plus 100% AIDC, i.e. 150%. Cuts apply to the whole stack, so the real saving is larger than the BCD alone suggests.
Time is part of the price. Year 1 runs from entry into force to 31 December, and each further cut falls on 1 January. Lines in categories E5, E7 and E10 are eliminated in 6, 8 and 11 equal annual cuts, becoming duty-free from Year 6, 8 and 11 respectively. On a machine at 8.3%, the E7 path means 7.3% in Year 1, about 4.2% in Year 4 and zero in Year 8.
Sector by sector
Machinery: near-total liberalisation, mostly by Year 8
Chapter 84, Italy's largest export to India, is 99% liberalised. Of its 1,074 lines, 31% go to zero on day one and 55% follow the E7 path. Agricultural machinery is free immediately, as are about half of textile-machinery lines and 40% of machine-tool lines. Forging and stamping presses and much bakery, pasta and confectionery machinery reach zero by Year 6. Pumps, compressors, valves, packaging and bottling lines, plastics machinery, moulds and lifting equipment arrive at zero in Year 8. Engines and engine parts are the slow lane, with Year 11.
Food and wine: selective, but generous where Italy is strongest
Olive oil, pasta, chocolate, biscuits, canned tomatoes and preserved vegetables, today taxed at 33–40%, become duty-free on day one or by Year 6. Egg and stuffed pasta, pastries, preserved mushrooms and truffles and vinegar, balsamic included, are free from day one. Sauces, jams and confectionery follow by Year 8, while prosciutto, speck and bresaola take until Year 11. Salami falls from 110% to 50%.
Wine is the showcase. The 150% base rate halves to 75% on day one and settles at 20% from Year 8 for wine landing at €10 or more per bottle, and at 30% for the €2.5–10 band; below €2.5 there is no concession. Spirits move from 150% to 40%, beer from 110% to 50%. The limits are equally clear: cheese and almost all dairy, beef and most fruit juices remain excluded, while apples, kiwifruit, pears and pork move only within quotas.
Fashion, design and lifestyle: deep cuts, mostly over eight years
Textiles and apparel open completely on day one. Footwear drops from 38.5% to zero by Year 8, handbags and leather goods from 16.5%, and most furniture from 27.5%, while seating and LED lighting are largely free from day one. Worked marble (up to 40%) and ceramic tiles open within five years, eyewear by Year 8, cosmetics and perfumes by Year 8 to 11. Jewellery is the exception: its 22% duty falls only to 17%, and imitation jewellery stays excluded.
Pharma, chemicals and industrial inputs: broad and fast
Chemicals (average 9.6%) are free on 65% of lines from day one and 99% eventually. Pharmaceuticals (11%) reach zero by Year 6 or 8, plastics and rubber mostly by Year 8, and steel articles are free on 47% of lines immediately. Medical instruments are slower, mostly Year 11, as are yachts (27.5%); aircraft reach zero by Year 6.
Automotive: the most engineered chapter
India grants European petrol, diesel and hybrid cars a quota of 100,000 units a year, rising to 160,000 from Year 10. In-quota duty falls to 10% by Year 5, from 35% for cars between €15,000 and €35,000 CIF and from 30% above that. Cars below €15,000 get nothing, which keeps India's mass market protected. Out-of-quota duty falls from 110% and 66% to 35% and 30% by Year 10. Electric vehicles join the scheme only from Year 5, trucks obtain 5,000–10,000 units at 8.8%, and components follow a ten-year path to zero.
At a glance: imports into India from the EU
Product (HS) | Base rate today | Treatment | Duty-free or final rate by |
Industrial machinery (84) | 8.3% | 31% of lines day one, 55% E7 | Year 1 / Year 8 |
Machine tools (8457–8462) | 8.3% | 40% day one, 40% E7, 16% E5 | Year 1 to Year 8 |
Electrical machinery (85) | 10.1% | 28% day one, mostly E5/E7; 8% excluded | Year 1 to Year 11 |
Pharmaceuticals (3004) | 11% | E5 / E7 | Year 6 / Year 8 |
Cosmetics and perfumes (3303–3304) | 22% | E7, perfumes partly E10 | Year 8 / Year 11 |
Textiles and apparel (50–63) | 14.2% (apparel 22%) | 99% day one | Year 1 |
Footwear (64) | 38.5% | E7 | Year 8 |
Handbags and leather goods (4202) | 16.5% | E7 | Year 8 |
Furniture (9403) | 27.5% | 63% E7, 25% day one | Year 1 / Year 8 |
Worked marble (6802), ceramic tiles (6907) | 11–40% / 16.5% | Day one or E5 | Year 1 / Year 6 |
Jewellery (7113) | 22% | Partial cut | 17% from Year 6 |
Olive oil (1509) | 38.5–40% | Day one or E5 | Year 1 / Year 6 |
Pasta, chocolate, bakery (1902, 1806, 1905) | 33% | Mostly E5, some day one | Year 6 |
Cured meats (0210) | 33% | E10 | Year 11 |
Cheese and dairy (04) | 33–40% | Excluded | — |
Wine ≥ €10 per bottle (2204) | 150% | 75% on day one, then annual cuts | 20% from Year 8 |
Wine €2.5–10 per bottle | 150% | 75% on day one, then annual cuts | 30% from Year 8 |
Spirits (2208) | 150% | 75% on day one, then annual cuts | 40% from Year 8 |
Cars €15,000–35,000 CIF | 110% | Quota 100,000→160,000 units, 35%→10% | 10% from Year 5 |
Cars over €35,000 CIF | 110% | Same quota, 30%→10% | 10% from Year 5 |
Auto parts (8708) | 16.5% | E10 | Year 11 |
Base rate = BCD + AIDC + health cess + SWS, as stated in Appendix 2-A-2. Shares are of 8-digit tariff lines; Year 1 runs from entry into force to 31 December.
The EU side: a two-way road
The EU's offer is broader and faster. Of its 9,681 lines, 71% are duty-free on day one and only 3% are excluded, mainly dairy, beef and poultry, cereals and sugar. Textiles, apparel, footwear and leather, India's priority sectors, are 100% free from day one, as are 91% of machinery and electrical lines. Steel runs through the quota system of the new EU Steel Regulation, with 1.64 million tonnes a year earmarked for India. Indian cars obtain a quota of 250,000 units, rising to 400,000, with in-quota duty falling from 8% to zero by Year 5.
For Italian companies the asymmetry cuts both ways. At home, Indian producers in textiles, footwear and leather will compete in the Single Market without duty from the first day. In supply chains, Italian groups that source components in India, or produce there, gain a duty-free route back into Europe, provided their goods meet the rules of origin. Some of the most interesting traffic on this road will be Italian companies driving in both directions.
Zero duty has to be earned
Every preference depends on the product-specific rules of origin in Annex 3-B. For machinery, the test is a change of tariff heading, or no more than 50% non-originating materials on the ex-works price, or at least 55% value content on the FOB price. Vehicles follow a similar 50/55 rule, with ten-year transitional rules for electric and plug-in models. Apparel must pass a double-transformation test, and pharmaceuticals qualify through a change of sub-heading, a chemical reaction or value-content thresholds. Goods that cannot prove origin pay the full duty, however low the schedule says it should be.
Two further caveats matter. Base rates are a legal reference, and India has revised several duties in recent budgets, so savings should be computed against the duty actually paid at the border. And tariffs are only half of the border: technical requirements such as BIS certification under the Quality Control Orders remain fully in place.
Before entry into force
The months between signature and entry into force are the cheapest time to prepare:
Map your main export codes to India's 8-digit lines, noting base rate, staging category and current applied rate.
Model the duty saving year by year and build it into multi-year offers and contracts.
Check origin against Annex 3-B and prepare the documentation to claim the preference from day one.
For quota products such as cars, apples, kiwifruit, pears and pork, plan allocation and timing early.
If you source from or produce in India, run the same exercise on the EU schedule.
The schedules are long. The opportunity, for those who read them, is longer.
Sources
EU–India FTA: Appendix 2-A-1 (tariff schedule of the EU), Appendix 2-A-2 (tariff schedule of India), Annex 2-A (schedules of tariff commitments), Annex 2-B (steel quotas), Annex 3-B (product-specific rules of origin). Shares and averages are IICCI elaborations on every 8-digit tariff line.
Conventus Law, The India–EU FTA moves toward finalisation — timeline to signature and entry into force.
EU Commission submits EU–India trade deal for Council signature — the 11 September 2026 proposal.
Claudio Maffioletti
CEO & Secretary General - The Indo-Italian Chamber of Commerce and Industry
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