Nowhere is this balancing act clearer than in the automotive chapter. Instead of scrapping duties, India negotiated a Tariff-Rate Quota (TRQ), allowing 100,000 fully built vehicles at reduced tariffs in year one, rising to 160,000 by year ten. Crucially, tariff reductions are barred for vehicles with a Cost, Insurance and Freight (CIF) value below 15,000 euros. So the mass-market segment, where most Indians actually buy cars, stays protected behind India’s standard 100 to 110 per cent tariff walls. For vehicles between 15,000 and 35,000 euros, in-quota duty drops from 110 per cent to 35 per cent in year one, sliding to 10 per cent by year five. Luxury vehicles above 35,000 euros follow the same timeline. This protects domestic volume of manufacturers like Tata, Mahindra and Maruti Suzuki from low-cost competition while giving European luxury brands like BMW, Mercedes-Benz and Audi room to grow in the premium segment. A similar defensive strategy has been followed in the wine and spirits sector. This shields India’s growing domestic viticulture industry in regions like Nashik from cheap bulk imports, while affluent consumers gain access to high-end European labels.
The priority given to protecting local livelihoods is clearest in agriculture. Indian negotiators held a hard line on core agricultural commodities. Premium items like apples, kiwifruit, pears and peaches got modest, tightly controlled quotas rather than open access and European pork was capped at 2000 tonnes per year. Sensitive staples like rice, wheat and sugar were removed from the table entirely, keeping India’s rural economy insulated from market shocks and setting a template for future trade pacts.
De-linking and parallel tracks
As talks neared their deadline, several complex chapters threatened to sink the deal, so negotiators de-linked them, parking these issues on separate tracks so the main agreement could move forward. Two major components were separated from the primary FTA text. One, a standalone investment protection agreement to govern investor-state dispute settlement and legal safeguards for foreign corporate assets. The second on the separate Geographical Indications (GI) agreement to protect regional product names such as Champagne and Parmigiano-Reggiano from Europe, and Basmati rice and Darjeeling tea from India.
Both sides have committed to completing these discussions in the coming years. This step-by-step approach is practical but requires Indian services firms to stay vigilant. For nearly two decades, a primary goal has been securing firm commitments on Mode 4 services- the cross-border mobility of skilled IT engineers, managers and professionals into the EU. Since the treaty was decoupled from the investment and services tracks, what has emerged is a broad mobility framework. Indian service firms will need to watch these parallel negotiations closely.
The road to practical ratification
A successfully concluded negotiation is an impressive milestone, but not the final legal step. The formal timeline is currently unfolding across two parallel tracks:
• The European track: In September 2026, the European Commission submitted its formal legislative proposal to the Council of the EU, requesting authorisation to sign. Officials expect the Council to grant this by December 2026, after which the text moves to the European Parliament for a formal vote of consent.
• The Indian track: In tandem, New Delhi is routing the massive multi-chapter text through its own domestic ratification and cabinet approval channels.
Given the speed of these parallel tracks, most trade experts project the agreement will take effect during the first half of 2027. Notably, Indian trade officials say the “legal scrubbing”- for clarity across languages- was completed at one of the fastest paces on record for a major Indian trade file. This momentum contrasts with the EU’s other trade files, such as the long-stalled EU-Mercosur agreement, still facing political infighting in Europe.
Average tariffs and inverted realities
To set realistic expectations for the export growth, policymakers must look at the structural gap in tariff baselines between the two markets. India’s trade-weighted average tariff currently sits at approximately 12.6 per cent, with several sensitive sectors tracking higher. In contrast, many of India’s recent FTA partners- including Singapore, Japan, Australia, and the UAE- maintain baseline tariffs that hover close to zero. When India cuts duties for a partner, that partner’s exporters gain a major edge as pricing drops from 12.6 per cent straight to zero. When an Indian exporter gains access to a market where the baseline tariff was already 1 or 2 per cent, the gain is naturally smaller. This is a reason to keep export projections realistic.
A critical risk in expanding India’s FTA network is the inverted tariff structure. Finished goods enter at lower duties, while domestic manufacturers pay more for imported raw materials and components. This can make foreign products cheaper than locally manufactured alternatives. India’s trade deficit with ASEAN grew roughly 381 per cent between 2007–09 and 2023–25, reflecting multiple factors.
These structural challenges do not take away from the agreement’s strategic importance. The India-EU FTA is a remarkably balanced piece of economic diplomacy and one of the most intelligently designed trade frameworks India has signed.