India and the EU look set to conclude negotiations on a long-pending Free Trade Agreement (FTA), with both sides politically aligned on the need for it. Earlier this week, the president of the European Commission, Ursula von der Leyen, said the EU is “on the cusp” of signing a historic trade agreement with India, which, she added, some call “the mother of all deals”. The renewed momentum was evident during German chancellor Friedrich Merz’s visit to India in January, which underlined Europe’s growing recognition of India not merely as a market, but as a long-term partner in global growth, technology, and resilience.
The signing of the FTA will be just the starting line for businesses on both sides. The real impact of the India–EU FTA will be shaped by how effectively it is implemented, how ambitiously industry engages with it, and how decisively both governments support collaboration beyond tariff reductions and legal frameworks.
The India–EU economic partnership works because of complementarity. Europe brings deep expertise in advanced engineering, clean technologies, precision manufacturing, and trusted regulatory systems. India brings scale, cost competitiveness, a large and skilled workforce, and one of the world’s fastest-growing domestic markets. The FTA has the potential to align these strengths far more systematically than has been possible so far.
This alignment is already visible on the ground. Across India, European companies are increasingly moving beyond sales and assembly operations to establish manufacturing, design, and engineering hubs. In Karnataka, for instance, an Italian precision engineering firm operates a highly advanced manufacturing facility staffed largely by Indian engineers. What began as a local production base has evolved into a global export hub, supplying sophisticated machines to markets across continents. The lesson is clear: When European technology and Indian capability are integrated effectively, the outcome is globally competitive.
Today, nearly 6,000 European companies operate in India, supporting millions of jobs across sectors such as clean energy, mobility, digital infrastructure, aerospace, advanced materials, and manufacturing. These are sectors where India and Europe share long-term priorities.
The FTA matters because it provides a framework to scale such collaboration. Predictable rules, smoother market access, and greater regulatory clarity can accelerate joint investments, technology partnerships, and research collaboration. It allows India not just to import European technology, but to co-create, manufacture locally, and export to global markets.
Europe’s strengths align closely with India’s development ambitions. European leadership in green hydrogen, wind energy, circular economy systems, and water technologies directly supports India’s climate and sustainability goals. Its capabilities in automation, machine tools, precision sensors, and specialty materials reinforce India’s push toward higher-value manufacturing. In emerging areas such as semiconductors, digital infrastructure, and mobility platforms, both partners are seeking similar outcomes: Resilient supply chains, trusted systems, and innovation-driven growth.
Another significant opportunity lies in broadening the geographic scope of the partnership. At present, India–EU trade and investment are concentrated in a limited number of Indian states and a handful of EU member countries. This leaves large parts of both economies underrepresented. Many European SMEs, particularly from Central and Eastern Europe, are actively seeking reliable global partners. At the same time, several Indian states are positioning themselves as manufacturing and services hubs with global ambitions. An effective FTA can help widen these corridors, connecting new Indian states with new European regions and integrating them into shared value chains. Such diversification is essential if the partnership is to deliver inclusive and sustainable growth.
Investments in logistics, digital public infrastructure, regulatory simplification, and faster approvals have strengthened India’s investment appeal. European companies increasingly acknowledge these improvements and are responding with deeper and longer-term commitments. Many now view India not just as a consumption market, but as an innovation and export base.
This shift (from operating in India to building with India) is one of the most encouraging developments of the past decade. The FTA can reinforce this transition by nudging companies toward long-term investments, deeper technology integration, and collaborative research.
Ultimately, the India–EU FTA should be seen not as an end in itself, but as a foundation. The real work will begin after the agreement is signed — aligning standards, easing the movement of goods and services, strengthening institutional mechanisms, and enabling SMEs on both sides to internationalise. As existing collaborations already demonstrate, when India and Europe build together, the results are not incremental, they are transformative.
Sanjay Tiwari is senior advisor and spokesperson, Federation of European Businesses in India (FEBI). The views expressed are personal
