What the landmark trade deal means for European companies already operating in India
Why This Deal Matters Now
For many European companies-especially family-owned industrial groups and mid-sized SMEs-India has evolved from a promising export market into a strategic operational base.
Over the past two decades, hundreds of European firms have established manufacturing plants, engineering centres, subsidiaries, and joint ventures across India.
The proposed EU Free Trade Agreement with India—often described as the “mother of all trade deals”—could accelerate this transformation.
By reducing tariffs, expanding market access, and improving regulatory cooperation, the agreement could save European companies up to €4 billion annually in duties while potentially doubling EU exports to India by 2032.
For companies already operating in India, the real opportunity lies not just in exports, but in scaling operations, strengthening supply chains, and expanding market reach.
Fast Lane Growth: Automotive
India’s automotive market has historically been protected by import tariffs of up to 110%, limiting access for European premium brands.
Under the EU Free Trade Agreement, tariffs could gradually decline to around 10% within a quota of 250,000 vehicles annually.
This creates significant strategic opportunities for manufacturers such as Volkswagen, BMW, Mercedes-Benz Group, and Renault.
Beyond vehicle imports, the agreement also aims to eliminate tariffs on automotive components over time, reducing costs for local assembly and manufacturing operations.
For European companies already producing in India, this could strengthen India’s role as a regional production and export hub.
Engineering India’s Next Industrial Leap: Machinery
Industrial machinery already represents the EU’s largest export category to India, valued at more than €16 billion annually. Currently, tariffs can reach up to 44%, making advanced equipment expensive for Indian manufacturers.
The EU Free Trade Agreement could eliminate most of these tariffs, giving European machinery suppliers a major competitive advantage. For European SMEs specializing in machine tools, industrial automation, robotics, and precision engineering, India’s industrial expansion creates strong demand for advanced production technologies.
Government initiatives such as Production Linked Incentive (PLI) programs and the shift toward Industry 4.0 manufacturing are accelerating this demand.
Innovation at Scale: Chemicals & Pharma
The EU Free Trade Agreement is expected to eliminate tariffs of approximately:
- 22% on chemicals
- 11% on pharmaceutical products
India already plays a central role in global pharmaceutical supply chains as the largest producer of generic medicines worldwide.
For European chemical and pharmaceutical companies, the agreement opens opportunities across:
- Specialty chemicals
- Active pharmaceutical ingredients (APIs)
- Medical devices
- Collaborative R&D
European firms increasingly combine European innovation with India’s large-scale manufacturing capabilities, creating globally competitive production ecosystems.
A Premium Market Emerges: Wine & Spirits
India currently applies some of the highest import duties globally—up to 150%—on wines and spirits.
The EU Free Trade Agreement proposes substantial reductions:
- Wine tariffs reduced to 20–30%
- Spirits tariffs reduced to around 40%
- Beer tariffs reduced to around 50%
For producers from France, Italy, and Spain, this could transform India from a niche luxury market into a rapidly expanding premium consumption market.
India’s urban middle and upper classes are increasingly embracing international wines, craft beers, and premium spirits, particularly in major metropolitan centres.
Opening New Channels: Financial & Maritime Services
Beyond goods trade, the agreement also proposes India’s most ambitious services liberalization to date, covering more than 140 service subsectors.
European companies could gain expanded access to sectors including:
- Banking and financial services
- Insurance
- Digital payments and fintech
- Maritime logistics and port operations
India’s ongoing infrastructure expansion and digital financial ecosystem create strong opportunities for European service providers with global expertise.
Turning Opportunity into Growth
For European SMEs and family-owned companies already operating in India, the EU Free Trade Agreement represents more than a policy milestone—it represents a strategic growth opportunity.
However, capturing this opportunity requires local expertise, strong partnerships, and effective execution on the ground.
This is where Maier+Vidorno Altios plays a critical role.
Since 2000, M+V Altios has supported more than 800 international companies—many of them European SMEs and family-owned industrial firms—in successfully establishing and expanding their operations in India.
The firm supports companies through:
- Market entry and expansion strategy
- Partner search and joint venture development
- Subsidiary establishment and operational support
- Business development and sales acceleration
As trade between Europe and India enters a new phase, companies that combine European technology and innovation with India’s scale and growth potential will be best positioned to succeed.
The EU Free Trade Agreement may open the door—but strategic execution will determine who truly benefits from it.
