The recently concluded India-EU Free Trade Agreement (FTA) is poised to significantly impact the healthcare sector in India, potentially lowering the costs of novel drugs and medical equipment for Indian patients. The agreement, finalized on January 27, 2026, after two decades of negotiations, is expected to streamline trade, reduce tariffs, and boost economic ties between India and the European Union.
One of the most significant benefits of the FTA is the expected reduction in tariffs on high-value healthcare and precision equipment imported from the EU. Tariffs on 90% of European optical, medical, and surgical equipment will be eliminated. This includes medical devices and surgical instruments, diagnostic equipment, imaging machines, and lab tools, as well as optical instruments and ophthalmic equipment. The current import duties of up to 11-15% on many of these products will be reduced to zero or near-zero levels over time, which will lower procurement costs for hospitals and clinics.
The removal of tariffs is also expected to enhance trade and support greater access to innovative medicines for Indian patients. The FTA will largely scrap tariffs of up to 44% on machinery, 22% on chemicals, and 11% on pharmaceuticals. Reduced regulatory friction and tariff relief could further decrease the costs of essential drugs, strengthening India's role as a low-cost pharmaceutical supplier. This aligns with the European research-based pharmaceutical industry's commitment to improving access to medicines in India through various initiatives.
Experts believe that the FTA will create opportunities for seamless flow of goods, services, and people, ultimately growing the business and trade between India and the EU. Dr. Sharvil Patel, Managing Director of Zydus Lifesciences and Vice President of the Indian Pharmaceutical Alliance, stated that the deal provides an opportunity to create access to affordable healthcare, benefiting patients across India and Europe.
The agreement is expected to have a significant positive impact on the Indian agricultural and processed food sector. Preferential market access for agricultural products like tea, coffee, spices, grapes, and processed food products will make them more competitive in the EU, strengthening farmers' incomes and elevating the global competitiveness of Indian agricultural products.
In addition to reducing costs and improving access to medicines and medical equipment, the FTA is also expected to boost Indian traditional medicine services. AYUSH practitioners will be able to provide their services in EU member states where regulations do not exist, using their Indian professional qualifications. The FTA also provides certainty for the establishment of AYUSH wellness centers and clinics in the EU.
Overall, the India-EU FTA is poised to bring significant benefits to the Indian healthcare sector. By reducing tariffs and streamlining trade, the agreement is expected to lower the costs of novel drugs and medical equipment, improve access to healthcare, and boost the competitiveness of Indian pharmaceutical and medical device industries. While the agreement still needs to undergo legal vetting and ratification by the European Parliament, it is expected to be implemented within calendar year 2026, marking a new era of collaboration and shared prosperity between India and the European Union.
