A $24 trillion FTA, with 99.5% of exports gaining preferential access
According to India's Press Information Bureau (PIB), India and the EU announced the conclusion of FTA (free trade agreement) negotiations on January 27, 2026. The two economies' combined market reaches about $24 trillion, opening access to a market of 2 billion consumers. India-EU goods trade in 2024-25 totaled about $136.5 billion (India's exports to the EU were about $75.8 billion), and total trade including services exceeds $200 billion annually.
Under the FTA, India secures preferential access to 99.5% of trade value and 97% of tariff lines in the European market. Of that, 70.4% of tariff lines (90.7% of India's exports) will see immediate tariff elimination, covering textiles, leather, footwear, tea, coffee, and jewelry, among others. The remaining lines are phased: 20.3% of lines (2.9% of trade value) move to zero tariffs over 3-5 years, while 6.1% of lines get preferential reduced rates. The FTA text explicitly names MSME integration into European value chains as a policy goal.
Media reports: a dedicated CBAM annexure — verification, approval, capacity building
The EU's Carbon Border Adjustment Mechanism (CBAM) formally took effect on January 1, 2026, and full-scale levy collection on exporters of steel, aluminum, cement, and other carbon-intensive products begins in January 2027. Several Indian business outlets reported remarks on this by Darpan Jain, Additional Secretary at India's Ministry of Commerce, made at an Indo-German Chamber of Commerce (IGCC) industry dialogue on July 30, 2026.
According to these reports, Jain said the FTA text includes a dedicated annexure specific to CBAM, and that CBAM had consumed "a lot of negotiating capital" across the FTA talks. The annexure is reportedly built on three pillars: (1) cooperation with the EU on methods for verifying embedded carbon in products, (2) procedures for the EU to approve Indian verification bodies, and (3) capacity-building support for SMEs lacking CBAM readiness. Jain reportedly cited three specific SME concerns: securing EU-accredited verifiers, accurately calculating embedded carbon, and getting verification bodies approved by the EU. The reports also describe a provision under which any future flexibility the EU grants under CBAM would automatically extend to India, and a provision letting India offset its domestic carbon price against its CBAM liability in the EU. These CBAM-annexure specifics are based on media reporting; the annexure text itself and an official Commerce Ministry statement were not independently confirmed as of this writing.
Conclusion and market size
Concluded January 27, 2026. Combined market of $24 trillion; 99.5% of trade value gains preferential access (per PIB).
Phased tariff elimination
70.4% of lines eliminated immediately, 20.3% phased over 3-5 years, 6.1% get preferential rates (per PIB).
CBAM annexure (per reports)
Three pillars: EU approval of verification bodies, embedded-carbon calculation, and SME support. Annexure text not independently confirmed.
The practical implication for Indian companies is clear. Steel and aluminum exporters need to build out embedded-carbon accounting and secure EU-approved verifiers ahead of full levy collection in January 2027. The annexure's detailed operating rules remain the key thing to watch.