IN Brief:
- The European Commission has submitted proposals for signature and conclusion of the EU–India free trade agreement to the Council.
- The agreement would eliminate or reduce tariffs on more than 96% of EU goods exports to India.
- Preferential tariffs cannot take effect until the remaining legal procedures have been completed and the agreement enters into force.
The European Commission has submitted proposals to the Council for the signature and conclusion of the EU–India free trade agreement, moving the deal from completed negotiations into the European Union’s formal approval process.
Negotiations concluded on 27 January 2026. The Commission says the agreement will eliminate or reduce tariffs on more than 96% of EU goods exports to India and save around €4 billion a year in duties on European products once the agreed measures are in force.
The current submission does not activate those tariff reductions. The Council must first authorise signature, while the agreement must complete the remaining legal procedures on both sides before it becomes binding and enters into force. Companies trading between the two markets therefore remain subject to the rules and tariff treatment currently applicable until that process is complete.
The commercial scale is substantial. EU–India trade in goods was worth €120 billion in 2024, with India accounting for 11.5% of its goods trade with the world. Services trade between the EU and India reached €59.7 billion in 2023, up from €30.4 billion in 2020.
The proposed tariff changes cover a broad industrial base. Commission material indicates that future reductions affect machinery and electrical equipment, chemicals, iron and steel, pharmaceuticals, plastics, aircraft, medical equipment, and other product groups, with implementation schedules varying by category.
That variation means the headline percentage cannot be applied uniformly to individual supply contracts. Some tariffs would fall to zero at entry into force, while others are staged over several years. Buyers and exporters will need to work from the product-specific schedule rather than assume the full agreement takes effect on one date.
Rules of origin add another operational requirement. The agreement provides that only goods meeting the agreed origin criteria can use its tariff preferences. Commission guidance says the system will use business self-certification, with proof of origin supplied through statements that customs authorities can verify.
For procurement and sourcing teams, origin therefore becomes part of supplier data rather than a question left solely to a customs broker after goods have shipped. Companies using components or materials from several countries will need to establish whether finished products meet the relevant rule before pricing a preferential tariff into a purchase decision.
The customs chapter is intended to simplify legitimate trade through measures including transparency, advance rulings, simplified procedures, and expedited release. It also provides a basis for deeper customs cooperation, including supply-chain security and data exchange.
Those provisions can reduce administrative friction, but implementation still depends on companies maintaining accurate classifications, origin documentation, and shipment records. Preferential access is valuable only when the documentation required to claim it can be produced consistently across suppliers, freight forwarders, brokers, and internal systems.
The agreement’s progression also gives companies more certainty for scenario planning. Earlier analysis of the completed negotiations identified landed cost and supplier configuration as areas requiring attention before the agreement took effect. The September submission narrows the gap between negotiation and implementation without removing the need to distinguish prospective tariff treatment from current legal reality.
Lower tariffs can alter sourcing economics without determining them. Freight rates, inventory requirements, lead times, supplier capacity, quality control, working capital, and disruption exposure remain part of the total landed cost. A tariff reduction can strengthen a sourcing case that is already operationally sound, but it does not compensate automatically for weak supplier performance or unreliable logistics.
The Commission’s own tariff examples show why modelling is likely to be product specific. Machinery and electrical equipment currently exported from the EU to India face tariffs reaching 44% on some products, while the agreement would move almost all of the covered products towards zero tariffs over schedules extending as far as ten years. Chemicals, plastics, steel, pharmaceuticals, and medical equipment follow different staging patterns.
That creates a transition period in which procurement teams may be managing current tariff rates, future staged reductions, and contract durations at the same time. Long-term sourcing agreements signed before entry into force may need to specify how tariff savings are treated once preferences become available, particularly where buyer and supplier share responsibility for customs documentation.
The published treaty texts remain subject to the legal process and become binding only after the required internal procedures are complete. The next milestones are therefore institutional: Council authorisation, signature, the remaining EU approval steps, and completion of India’s internal process.
For supply chains, the September submission provides a firmer basis for preparation without providing a start date for preferential trade. The companies best positioned to use the agreement when it becomes effective will be those that have already mapped tariff classifications, origin evidence, supplier exposure, and customs processes rather than waiting for the first preferential shipment to test whether the paperwork works.
