The EU and India have concluded negotiations on a free trade agreement covering 2 billion people. This agreement represents the largest FTA ever concluded by either side. In addition, a security and defence partnership agreement has also been signed between the EU and India. For the EU—facing competition from China and increasingly strained relations with the United States—developing multidimensional relations with India, the world’s fourth-largest economy, is of great importance in terms of geostrategic balances. The FTA will be signed following approval by the EU Council and then submitted to the European Parliament for approval.

Türkiye’s Customs Union Gains Are at Risk

İKV Chairperson Ayhan Zeytinoğlu made important statements regarding the EU–India FTA. Noting that the agreement will have negative consequences for Türkiye’s customs union gains, Zeytinoğlu warned that following the Mercosur Agreement, this FTA concluded with India will significantly undermine Türkiye’s advantages in the EU market. Chairman Zeytinoğlu stated: “India is the world’s tenth-largest exporter with exports of USD 773 billion. The EU and India currently conduct over €180 billion in trade in goods and services. While the EU is India’s largest trading partner, India is the EU’s ninth-largest trading partner. Over the past ten years, merchandise trade between the two sides has increased by 90%, and the new FTA will further expand this trade. The EU imports machinery and equipment, chemicals, base metals, mineral products, and textiles from India, while exporting machinery and equipment, transport vehicles, and chemicals. EU investments in India reached €140 billion in 2023. Approximately 6,000 EU companies are established in India. India’s increased exports to the EU market by benefiting from tariff reductions will intensify competition for Türkiye in critical sectors such as machinery, automotive, chemicals, and textiles, leading to a loss of market share.”

Chairperson Zeytinoğlu assessed the content of the agreement as follows: “The EU will eliminate tariffs on 90% of products imported from India. Tariff concessions will be granted for nearly 100% of bilateral trade. Tariffs will be eliminated on products exported by India to the EU such as seafood, chemicals, plastics and rubber, leather and footwear, textiles, apparel, base metals, semi-precious stones, and jewellery. Tariffs on automobiles will be gradually reduced to 10%, with an annual quota of 250,000 vehicles. Tariffs on automotive parts will be completely eliminated within five to ten years. Customs duties of up to 44% on machinery, 22% on chemicals, and 11% on pharmaceuticals will also be largely removed. India will immediately eliminate tariffs on 30% of products imported from the EU. Tariffs on 90% of EU exports will be eliminated or significantly reduced. The EU will provide financial and technical support to India to ensure compliance with CBAM rules for steel exports to the EU. While the EU will open 144 services sectors to India, India will open 102 subsectors, including financial services, maritime transport, and telecommunications. Sensitive European agricultural sectors such as beef, poultry, dairy products, rice, and sugar have been excluded from liberalisation under the agreement. The agreement has not yet been signed. Following the publication of the draft text, it will be submitted to the Council for approval after legal scrubbing. After Council approval, the agreement will be signed. Approval by both the European Parliament and the Indian Parliament is also required. During this period, Türkiye must intensify its efforts to correct the imbalance in the customs union. The issue of modernisation has now become extremely urgent. Türkiye needs to be included simultaneously in EU FTAs, and services, agriculture, and public procurement must be brought within the scope. Without it Türkiye will continue to suffer structural losses with every new EU FTA. The expansion of the EU’s global trade network without updating the customs union creates a systematic disadvantage for Türkiye.”