Does it brighten prospects for India’s agricultural exports?

The agri-food negotiation was complex, covering multiple chapters—including tariffs and non-tariff measures like sanitary, phytosanitary and technical barriers to trade, apart from labour and environmental standards. Given its Green Deal objectives, the EU added a chapter on ‘Sustainable Food Systems,’ which was missing in its earlier trade agreements with countries like Vietnam.

It would have been a big miss had agri-food trade been left out of the FTA. The EU is India’s second-largest market (after the US), accounting for over 10% of our agri-exports. In 2024–25, India exported $5.25 billion of agri-products to the EU, accounting for around 7% of our total exports to the bloc. The top 10 commodities accounting for over 80% of exports to the EU include marine products, coffee, spices and rice.

We have a positive agri-trade balance with the EU, but there is scope to raise our exports as India ranks 11th among its import destinations, making up only 2.3% of its agri-imports.

Some of our exports face high tariffs in the EU. If its duties on marine exports, ranging between 4% and 26%, are eliminated, Indian exporters of items like shrimp would be at par with those from Vietnam and Ecuador, which face zero duty. This may increase agri-exports to the EU.

Our rising per-capita income and food demand make India an attractive destination for EU companies, which are unable to access the market due to high tariffs (an average of 36% with a rate as high as 150% for wines). While the EU has published a list of products (wines, olive oil, non-alcoholic beverages, bakery and confectionery items, etc) on which it secured phased tariff cuts, India is yet to come out with similar details. Tariff-rate quotas for imports of produce like fruits will safeguard Indian farmers.

The EU uses its Green Deal as well as high food safety, labour and environmental standards as tools for protection, while India looks at market access from an angle of the livelihood of small-scale farmers. The EU’s food-safety regulations are more stringent than international rules like those under the Codex Alimentarius.

Despite India being a large producer of dairy and dairy products, most of these cannot be exported to the EU due to lack of traceability and stiff requirements calling for hormone-free and pasture-fed certifications. We export only a few items like ghee. On its part, India did not reduce dairy tariffs (such as on fresh and skimmed milk), but duty reduction for confectionery and bakery items will benefit some EU exporters. Specialized cheese from EU member states may continue to face a high tariff in India.

Although rice is among India’s top three agri-export items, it has been kept on the EU’s sensitive list. Rice has been under an EU scanner for food safety, stubble burning and child labour reasons. Between January 2020 and 2025, 136 notifications were issued on the EU’s Rapid Alert System for Food and Feed over Indian rice exports, of which 77 were due to the presence of tricyclazole. Our rice exports have thus been facing food-safety-related rejections.

In December 2025, the European Council and Parliament came up with an automatic safeguard mechanism (a tariff-rate quota) for rice imports, which will be effective from 1 January 2027. This regulation, primarily designed to protect the EU’s own rice producers, adversely impacts countries like India and Pakistan, but excludes FTA partners like Vietnam, which seems to have some leeway under its deal that features a zero-duty quota of 80,000 tonnes per year for select rice categories.

Until the India-EU FTA is placed in the public domain, it is difficult to understand how non-tariff barriers and labour and environmental standards have been addressed. While the EU may not have relented on its domestic regulations, there may be options for mutual recognition of rules and cooperation over the same. Both sides have reserved the right to implement future regulations.

In 2024, the EU came up with a comprehensive Corporate Sustainability Due Diligence Directive (EUCS3D), which requires EU companies to put in place a system of due diligence across their supply chains, identify environmental and labour risks, and mitigate them. The penalty for non-compliance is up to 5% of their global turnover. The cost of meeting these requirements, coupled with capacity and knowledge gaps, can be a challenge for our farmers and small units.

An ongoing survey by the authors found that planters in sectors like tea and coffee face rising costs of production but are unable to claim carbon credits. Farmers and small businesses are more likely to adopt green methods if they receive financial benefits or carbon credits.

While the FTA offers us some respite in a world of volatile trade, it may not guarantee higher exports unless exporters focus on five key aspects: one, traceability from farms to ports; two, reduction in pesticide and insecticide use to comply with EU norms; three, regular labour and environmental audits to identify and mitigate risks in their supply chains; four, greenhouse gas emission reduction; and five, supply-chain capacity creation to meet EUCS3D requirements.

These are the authors’ personal views.

The authors are, respectively, professor, and research assistant, ICRIER.