According to an analysis by ING Economics, the free trade agreement between India and the European Union could mark a turning point in New Delhi’s trade strategy. This move would grant India nearly full access to one of the world’s largest markets amid a reshaping of global supply chains.

ING estimates that the agreement provides India with preferential access to 97% of EU tariff lines, which covers approximately 99.5% of bilateral trade turnover. A significant portion of the tariffs is set to be eliminated immediately.

The scale and depth of the deal have prompted some analysts to call it the “mother of all deals,” pointing to its potential to enhance India’s export competitiveness. The pact comes at a time when Asian economies are intensifying their efforts to diversify exports away from the United States. This shift has already fueled regional trade growth over the past year.

The EU is already India’s second-largest export market, accounting for around 17% of total exports, behind the US with a 21% share. Since the onset of the pandemic, the EU’s share has increased by roughly 3 percentage points. The structure of Indian exports to the EU and the US is largely similar, although petroleum products play a more prominent role in shipments to Europe.

ING points out that while US tariffs remain high, the agreement will allow India to redirect its exports toward the EU without significantly altering their structure. More than 60% of Indian exports to the EU are concentrated in a limited number of categories, including petroleum products, pharmaceuticals, electronics, minerals, auto parts, and textiles.

The elimination of tariffs on a wide range of goods is expected to particularly support labor‑intensive sectors such as seafood, leather and footwear, apparel, handicrafts, precious stones and jewelry, plastics, as well as toys. These sectors, which make up about 2% of India’s GDP in export terms, have been disproportionately affected by US trade restrictions.

According to ING, it is within these segments that India competes directly with China, Bangladesh, and Vietnam, and easing barriers from the EU could contribute to job growth in major employment-generating sectors.

The agreement maintains restrictions in politically sensitive areas. India has protected its agricultural and dairy sectors by agreeing to more limited tariff reductions in categories such as food, beverages, and automobiles. In ING’s view, this balance allows for increased market access without compromising domestic interests.

The pact may also influence investment flows. The EU accounts for approximately 15% of foreign direct investment in India, with the largest investors being the Netherlands, Germany, Belgium, and France. Historically, EU investments have been concentrated in the services sector, including IT and software, but deeper integration could revive capital inflows into industries such as automotive, chemicals, and construction.

The services sector also plays a critical role in the agreement. India already exports services to the EU worth about 1% of its GDP, maintaining a surplus of around 0.2%. The agreement encompasses broader and deeper commitments across 144 service sub‑sectors, from IT and professional services to education and business services, creating a more predictable environment for Indian providers.

According to ING, the agreement represents a significant milestone in India’s trade diversification strategy and the evolving export landscape of Asia.