India-EU FTA credit positive for India, as the landmark trade pact is set to strengthen manufacturing, attract foreign investment, and improve export competitiveness, according to Moody’s Ratings. India and the European Union announced the conclusion of the long-pending Free Trade Agreement on January 28, 2026.
The agreement will allow 93% of Indian exports to enter the EU with zero duty, giving Indian businesses access to a market of nearly two billion consumers. The India-EU FTA credit positive for India outlook reflects improved market access and reduced trade barriers for labour-intensive sectors.
Moody’s noted that the pact supports India’s strategy to diversify trade partnerships while building domestic manufacturing capacity. Lower tariffs will also help Indian exporters remain competitive in sectors such as textiles, leather, gems and jewellery, furniture, toys, and marine products.
Currently, EU tariffs on Indian goods average 3.8%. Under the deal, these will fall sharply to around 0.1%, significantly easing export costs. In many high-duty sectors, the EU will fully eliminate tariffs for Indian products.
Meanwhile, India will gradually offer duty-free access to over 90% of EU goods over a ten-year period. European automakers, wine producers, and food exporters will benefit from phased tariff reductions.
Moody’s added that the agreement’s full benefits depend on regulatory reforms and improved ease of doing business. Once implemented, the pact will likely enhance India’s global trade standing and long-term credit profile.
