Ernst & Young (E&Y) chief policy advisor DK Srivastava EY stated on January 28 that the India EU Free Trade Agreement (FTA) will be dynamic in character and that its benefits will only become apparent if the government and the business sector take advantage of the India EU trade deal opportunities it generates.
After more than 20 years of negotiations, India and the EU reached a European Union India trade agreement a day earlier that reduced tariffs on the majority of commodities in an effort to increase commerce and strengthen the India EU commerce agreement.
“I think the India EU FTA 2026 with the EU has a lot of potential. In a conversation with Moneycontrol, Srivastava stated, “It will be dynamic and changing, which will not happen by itself.” “The government and the commercial sector will need to seize the opportunities that will arise to benefit from India EU tariff reduction and expand India EU market access,” he added.
India EU Free Trade Agreement (FTA) 2026: Opportunities & Strategic Benefits
India has an opportunity to further integrate with European markets thanks to the India EU Free Trade Agreement (FTA) deal. According to DK Srivastava EY, in order to convert India EU market access into actual economic benefits, trade agreements must be supported by concerted policy action, investment choices, and industry readiness.
Before it can be put into effect, the India EU FTA 2026 will now go through a number of stages. The final wording will go through a process known as “legal cleaning.” To make sure the final European Union India trade agreement document complies with both domestic and international regulations, legal experts from both sides will review it.
Both the European Parliament and individual nations must ratify it—a procedure that usually takes a year or longer.
Defense & Strategic Partnerships
In addition to the economic agreement, India and the EU committed to increased communication on strategic connections as well as a security and defense partnership. Defense production in India EU trade relations, especially through joint ventures, is one of the sectors with a lot of potential, he said.
Given the strategic agreement on defense co-development and co-production under the India EU trade deal, Srivastava sees enormous potential. That location will have the greatest potential, according to him.
🚀 India-EU FTA Key Highlights
- Date: January 27, 2026 (Agreement Reached)
- Scope: Tariff reductions on majority of commodities
- Strategic Focus: Defense, AI, data centers, joint ventures
- Goal: Expand India EU market access & international trade
- Key Advisory: DK Srivastava EY emphasizes strategic execution
These collaborations might assist Indian businesses in expanding their manufacturing capacities and connecting with international markets as part of the India EU Free Trade Agreement (FTA) 2026. According to DK Srivastava EY, “India can start a number of joint ventures in all of these areas so that we can give the benefit of economies of scale and access not just our big local market but also the EU market and the international market as a whole.”
He claims that the success of the India EU trade deal will rely on how strategically India takes advantage of the chances that present themselves. He stated, “It is a dynamic scenario, and it depends on how we play it.”
Union Budget & Strategic Industries
According to Srivastava, the Union Budget would be crucial in deciding how well India can take advantage of prospects in industries that demand large upfront investments and rely heavily on technology.
“In order to promote co-production and co-development in defense initiatives and sophisticated technology areas like artificial intelligence and data centers, the Union Budget should allocate bigger sums,” he stated.
In these fields, technological skill would be crucial. According to him, attracting private investment would require predictable governmental support and sufficient financial allocations.
Finance Commission & Fiscal Balance
Regarding the 16th Finance Commission, Srivastava stated that India needs a balanced fiscal transfer mechanism that sustains the federal government and the states in the long run without causing structural strain, ensuring that benefits from the India EU FTA reach all levels.
“We look for a system of fiscal transfers so that it leaves both the Center and the states’ finances in good financial condition in the long run,” he stated. “Transfers from the Center to states that are either excessive or inadequate are problematic,” especially as India implements policies linked to the India EU Free Trade Agreement (FTA) 2026 and broader India EU trade deal benefits.
Although the 16th Finance Commission has finished its work and given President Droupadi Murmu its report, the recommendations will not be made public until they are presented to Parliament, which will happen at the same time that the Union Budget is presented.
According to DK Srivastava EY, “the Finance Commission is expected to establish that kind of equilibrium to leave both tiers in acceptable fiscal balance,” ensuring that revenues from trade and India EU market access support both federal and state levels.
Srivastava advocated for more robust equalization in order to alleviate state-to-state discrepancies regarding horizontal devolution. “We look at a system with the content of equalization in total transfers on the horizontal side, inter-state distribution among states, so that justice may be done to lower-income states and mineral-rich states that have suffered so far,” he stated, linking fiscal fairness to the long-term success of the India EU trade deal.
According to Srivastava, these states ought to benefit from India’s growing economy as well. He advocated for a more equal distribution system that guarantees neither the federal government nor the states suffer financially while India leverages opportunities from the EU market and international trade.
💡 Key Policy & Economic Implications
- Balanced Transfers: Center & states remain fiscally healthy
- Focus: Benefits for lower-income & mineral-rich states
- Private Investment: Encouraged via policy predictability
- Tech & Defense: AI, data centers, co-production
- Strategic Outcome: Stronger India EU market integration
Frequently Asked Questions
1. Why is the free trade agreement between the EU and India “dynamic”?
The benefits of the India EU Free Trade Agreement (FTA) 2026 will change over time depending on how aggressively the public and private sectors react. Real advantages will depend on investment, industry preparedness, and policy cooperation; India EU market access alone is insufficient.
2. Which industries stand to gain the most from the free trade agreement between India and the EU?
Export-oriented manufacturing, sophisticated technology industries like artificial intelligence and data centers, and defense manufacturing under the India EU trade deal are important benefits. Significant scale advantages are anticipated through joint partnerships and co-production activities.
3. What makes private sector involvement essential to the FTA’s success?
Economic growth is not always a result of trade agreements. To effectively benefit from India EU tariff reduction and increased EU market access, private companies must invest, innovate, and integrate into European value chains.
4. How would the Union Budget affect the results of the FTA?
Support from the Union Budget will be essential, particularly for industries that rely heavily on capital and technology. Increased funding and steady policy support can encourage private investment in digital infrastructure, innovative manufacturing, and defense initiatives under the India EU trade deal.
5. How does the Finance Commission contribute to the FTA’s growth?
To prevent long-term financial strain, the federal government and the states must have a balanced system of fiscal transfers. Increased trade and economic growth from the India EU Free Trade Agreement (FTA) 2026 can also help lower-income and mineral-rich states with stronger equalization in horizontal devolution.
Conclusion
Although the India EU trade deal between India and the EU is a significant strategic step, its success will rely more on execution than desire. The benefits of the agreement will only become apparent if the public and business sectors aggressively take advantage of new opportunities through investment, policy coordination, and technological capabilities, as DK Srivastava EY emphasizes.
India has a unique chance to expand its manufacturing base and strengthen its position in European and international markets because of defense co-production, cutting-edge technology, and global value-chain integration under the India EU Free Trade Agreement (FTA) 2026. The Finance Commission’s recommended balanced budgetary framework and a supporting Union Budget will be important facilitators.
In the end, the India EU FTA is a platform rather than an end goal; the extent of India’s potential economic and strategic rewards will depend on how well it handles this dynamic opportunity in the EU market.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute professional financial, legal, or investment advice. Readers should consult with a qualified professional before making any decisions based on the content.
