Europe Wants More Than Tariffs: Why The EU Is Pushing An India Investment Pact Next

Brussels Looks Beyond The Trade Party

After nearly two decades of on-off talks, India and the EU have finalized a landmark free trade agreement that will slash tariffs and deepen market access on both sides, covering roughly a quarter of global GDP and up to a third of world trade. Even as leaders hail the FTA as historic, Brussels is already pushing to wrap up a parallel Investment Protection Agreement to protect European investors and anchor India as a long-term strategic manufacturing and services hub.

What The EU Really Wants

The proposed EU-India Investment Protection Agreement is designed to give companies clear rules on non-discrimination, protection against expropriation without compensation, fair and equitable treatment, and free transfer of returns, while still acknowledging India’s right to regulate in public interest. It would also introduce a modern dispute settlement system, moving away from ad-hoc arbitration to a more institutionalized, rules-based framework.

Deal Dynamics Highlights

1. EU-India FTA concluded in January 2026 after nearly 20 years of negotiations.
2. Trade deal expected to eliminate or cut tariffs on over 96% of EU goods exports to India, saving European firms about €4 billion annually in duties.
3. EU exports to India could potentially double by 2032, with big gains in machinery, chemicals, pharmaceuticals, autos, and beverages.
4. India gets improved access for textiles, gems and jewellery, leather, agri and services into its largest trading partner market.
5. Investment pact talks run in parallel, targeting stronger guarantees and a predictable regime for investors on both sides.
6. Geographical Indications agreement in the pipeline to protect products like European wines and Indian regional specialties.

Why This Matters For India’s Next Decade

For India, pairing the trade deal with an investment pact could unlock deeper European capital into manufacturing, green energy, infrastructure, and high-tech, complementing recent big-ticket agreements such as its EFTA deal. But New Delhi will be keen to avoid any clauses that resemble old-style investor-state dispute settlement, especially after past disputes and its broader rethink of bilateral investment treaties. How negotiators square “maximum investor comfort” with “maximum policy space” will shape not only India-EU economic ties, but also how Delhi structures future trade-and-investment packages with other partners.