EU–India Free Trade Agreement: Why ESG due diligence is India’s gateway to European markets
As India and the European Commission have concluded negotiations on a landmark Free Trade Agreement (FTA), the conversation is dominated by tariff reductions and market access. Yet, behind the headlines lies the real opportunity for Indian businesses: embedding sustainability and ESG due diligence will be critical to secure and expand access to European markets.
The EU-India trade relationship: A moment of opportunity
The EU has emerged as one of India’s most reliable trading partners, with bilateral trade soaring from $76.3 billion in 2020 to $135.5 billion in 2024. Indian exports to the EU alone have doubled in five years, highlighting the resilience and competitiveness of Indian businesses. The FTA promises to amplify this trajectory, eliminating and reducing tariffs in most sectors, like textiles.
But preferential tariffs are only part of the story. Every recent EU trade agreement includes a dedicated chapter on sustainable development. For Indian businesses, it is a strategic inflection point. Compliance with sustainability requirements will determine who thrives and who is left behind.
ESG due diligence: From compliance to competitive advantage
The EU’s regulatory landscape is evolving rapidly. Directives such as the Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD), the Forced Labour Regulation (FLR), and the Deforestation Regulation (EUDR) are setting new benchmarks for global trade.
Therefore, for Indian businesses seeking to export to EU countries, non-compliance risks are real. Market bans for goods linked to forced labour or deforestation will soon be enforced. In contrast, companies that embed ESG into their operations will gain trust, secure long-term contracts, and position themselves as reliable partners in the EU market.
Why sustainability is a strategic lever for growth
The Indian industry is already moving in the right direction. Reporting frameworks mandating ESG performance such as the Business Responsibility and Sustainability Reporting (BRSR) framework and the government’s climate commitments provide a strong foundation. Many Indian businesses are leading the way by integrating ESG into their corporate strategy, investing in clean technologies, and embracing circular economy models.
The FTA amplifies this momentum. By integrating sustainability into trade negotiations, India signals that it aims to compete not just on cost, but on environmental stewardship, and social impact—the new drivers of global competitiveness. This is an opportunity to reposition India as a hub for sustainable manufacturing and services, attracting responsible investment and buyers.
Start preparing today for the FTA
The path ahead is clear: Indian businesses must act now to build transparent, traceable, and responsible supply chains. This means investing in emissions accounting, social compliance, and governance frameworks that meet EU expectations.
At amfori, we believe sustainability is a strategic advantage. Our Mumbai office stands ready to support Indian companies with practical tools, data-driven insights, and collaborative platforms to navigate this transition.
Explore our comprehensive guide “Unlocking market access through sustainability: A guide for Indian businesses”, a joint publication with the Confederation of Indian Industry (CII). Download the guide and take the next step towards future-proofing your business and navigating ESG due diligence with confidence.
