Global trade is fragmenting into regional blocs and “trusted corridors,” and that’s changing what internationalisation looks like in practice. One of the clearest signals is the emerging EU–India free trade agreement (FTA), announced in January 2026 after a long negotiating cycle and expected to take roughly a year to ratify. If implemented as outlined, it would create one of the largest trade zones globally – large enough that even companies not directly exporting to India or the EU will feel second-order effects through pricing, sourcing, and competitive dynamics.
But the real story is not “tariffs go down.” It’s that the agreement could reset the economics of cross-border growth at the same moment that many companies are redesigning supply chains for resilience. In that environment, early movers can lock in share, shape category standards, and secure strategic partners – while late movers spend the first 18 months reacting to rivals.
What changes – and where the value pools sit
At a high level, the deal is designed to reduce barriers on both sides, with India eliminating or reducing tariffs on about 96.6% of EU exports (by value) over time, while the EU offers immediate zero-tariff access for a set of labour-intensive Indian exports such as textiles, apparel, leather, and footwear. For many categories, the headline opportunity is straightforward: lower landing cost widens the addressable market, improves pricing flexibility, and can make previously “too expensive” product tiers viable.
The biggest sector headlines are likely to be uneven:
- Automotive looks like an outsized beneficiary on paper, with tariffs potentially moving from 110% down to 10% for a defined quota (about 250,000 vehicles annually) under a phased schedule. A notable caveat: those reductions are not expected to apply to electric vehicles for the first five years, which will shape how OEMs sequence portfolio moves.
- Chemicals and textiles are positioned for faster uplift in parts of the schedule where duties are removed earlier, which can translate into faster commercial wins – especially for firms with ready distribution and compliance infrastructure.
- Services may be the most structurally important piece over time. The agreement’s direction suggests wider access for India’s services exports and more predictable professional mobility across EU member states, including improved rights for dependents in intra-company transfers. That matters because services trade is increasingly where “hidden barriers” (recognition, mobility, compliance) shape who can scale.
The catch: the FTA is a tariff story and a “non-tariff execution” story
Tariff reductions create opportunity, but they don’t guarantee capture. In cross-border expansions, value usually leaks in four places:
- Rules of origin and documentation. Preferential tariffs typically apply only if goods meet origin thresholds and can be proven with clean documentation. Companies often underestimate “preference leakage” – the lost benefit from products that could qualify but don’t, because sourcing, manufacturing steps, or paperwork don’t line up.
- Conformity assessment, quality, and certification. Access is not only about the border. For many products, the practical gate is whether testing, quality systems, and certifications meet local requirements at scale, on time, with predictable cost.
- Operating model speed. In fast-moving categories, the winners are the firms that can quote, ship, clear, invoice, and service reliably – while competitors are still building compliance workflows. Market share often shifts before the tariff schedule is fully implemented.
- Sustainability as a trade requirement. The EU’s Carbon Border Adjustment Mechanism (CBAM) came into force in January 2026, and the current shape of the deal offers no relief from carbon costs on energy-intensive imports (e.g., steel and aluminium). This turns emissions data, auditability, and low-carbon pathways into commercial capabilities – not just reporting topics.
A practical internationalisation playbook for 2026–2027
The most effective approach is to treat the EU–India corridor as a transformation of your commercial and supply chain system, not a one-off trade project. A pragmatic plan typically has three horizons.
Horizon 1: Identify “quick wins” without overbuilding (next 60–90 days)
Start with a portfolio lens. The goal is to isolate the products and services where tariff changes and access improvements create an immediate advantage – and where you can actually execute.
A focused diagnostic usually includes:
- A product-by-product view of current landed cost and where tariff changes move the competitive line
- A short list of priority categories where you can win share quickly (often those with early duty elimination or clear demand pull)
- A view of route-to-market readiness: distributors, after-sales capability, localisation requirements, and customer financing terms
Horizon 2: Build the “trade operating model” (next 3–9 months)
This is where most value is won or lost. Companies that build a repeatable trade engine tend to outperform those who treat each shipment as an exception.
Key build items:
- Rules-of-origin readiness: redesign sourcing/manufacturing where needed, and industrialise documentation so qualifying products actually qualify
- Trade compliance cadence: an internal rhythm that tracks ratification milestones, provisional application, and category-specific implementation timing
- Standards and certification throughput: quality systems, testing pathways, and supplier requirements that prevent bottlenecks
- Commercial terms redesign: pricing architecture, Incoterms, and pass-through clauses that reflect the new baseline economics
Horizon 3: Reconfigure the footprint for resilience (next 9–18 months)
Tariffs change incentives; geopolitics changes constraints. The companies that win long-term treat this corridor as a reason to rethink supply chains and regional hubs.
What this often looks like:
- Building dual sourcing and multi-node manufacturing strategies that can serve both EU and India with fewer single points of failure
- Strengthening tier-1 and tier-2 supplier ecosystems to meet EU-grade delivery expectations
- Using regional hubs to improve service levels and reduce lead times – especially for complex products and regulated categories
Where CEE fits into the EU–India corridor
For many businesses, Central & Eastern Europe can be a practical lever inside this shift – not as a slogan, but as an operating choice. Companies manufacturing or assembling within the EU often use CEE to balance capability, scalability, and proximity to EU customers and logistics corridors. Under a corridor-driven trade strategy, that matters in two ways:
- EU export competitiveness to India can improve if manufacturing footprints reduce cost without compromising quality and compliance.
- Rules-of-origin optimisation can become a design constraint: where value is added, which inputs are sourced from where, and how documentation is managed can determine whether tariff benefits are realised.
This is where internationalisation becomes an operating-model problem: the “right” footprint is the one that maximises eligibility, reliability, and speed – not simply the one with the lowest unit cost.
CEO and GC agenda: the decisions that can’t wait
Even with ratification still underway, there are choices leadership teams can make now that create durable advantage:
- Pick your strategic posture: Are you using the corridor to win growth (share capture), to de-risk supply chains (resilience), or both?
- Set trigger points: Define what must be true for major investments (e.g., category-specific implementation clarity, partner commitments, certification throughput readiness).
- Treat CBAM readiness as a growth enabler: emissions measurement, traceability, and low-carbon pathways will increasingly determine who can compete in energy-intensive value chains.
- Build a cross-functional command centre: trade, legal, supply chain, finance, and commercial teams need one shared view of exposure, timing, and execution priorities.
Bottom line
The EU–India FTA has the potential to unlock a major new phase of cross-border growth, but it will reward companies that do the unglamorous work: origin compliance, certification throughput, supply chain redesign, and sustainability-grade traceability. The best internationalisers will treat this corridor as a system build – moving early enough to shape the market, but disciplined enough to avoid building the wrong capability before the rules are fully locked.
