After decades of discussions, India and the European Union have agreed to a landmark deal aimed at eliminating tariffs and taxes, integrating supply chains, and strengthening manufacturing capabilities across both regions.
Financial services is a key pillar of the Free Trade Agreement (FTA). As part of the deal, the two economies are working toward payments interoperability, including real-time, cross-border payments and remittances.
The overarching goal is to build a stable, long-term economic integration that benefits both sides. According to the Associated Press, trade between India and EU was relatively flat from 2024 to 2025, hovering around $136.5 billion. After the FTA, the two regions hope to boost trade to approximately $200 billion by 2030.
Calling for Stronger Infrastructure
Beyond the immediate opportunities for payments providers in both markets, the agreement allows each region to leverage the other’s strengths—most notably India’s leadership in real-time payments through its Unified Payments Interface (UPI).
The FTA builds on a prior agreement by the European Central Bank (ECB) to link its TARGET Instant Payment Settlement service with UPI. The newly inked deal also calls for broader collaboration on fintech initiatives, spanning compliance, artificial intelligence, and potentially even central bank digital currencies (CBDCs).
The digital euro has been debated for years, as EU member states weigh efficiency gains against potential privacy concerns. Recently, however, momentum has shifted, with the digital euro increasingly positioned as a cornerstone of EU payments autonomy.
ECB Executive Board Member Piero Cipollone has emphasized the need for a payments infrastructure built entirely on European technology. These calls have intensified amid the surging popularity of U.S. dollar-backed stablecoins and the expanding reach of Visa and Mastercard’s cross-border payments networks.
Responding to Entrenchment
Against this backdrop—alongside the continued entrenchment of U.S. technology and currency, and a more assertive U.S. trade stance in recent months—the FTA represents both a strategic response and opportunity. The agreement could have significant economic implications for nearly two billion people.
According to Indian Prime Minister Narendra Modi, trade between the two economies already accounts for roughly a quarter of the global gross domestic product and around a third of global trade.
