Employer of RecordFebruary 3, 2026by Soham VaghelaMother of All Trade: India-EU FTA & What It Means for Global Business

In January 2026, India and the European Union closed a trade agreement that had been stuck in negotiations for nearly two decades. It was quickly called the “mother of all trade deals”, not because it cuts tariffs, but because it changes how companies can operate across India and Europe. This deal opens up a market of two billion people, highlighting its unprecedented scale and economic potential.

Until now, expansion between these regions has been constrained less by demand and more by execution friction. Fragmented visa regimes, country-by-country employment laws, double social security costs, and unclear rules for long-term talent deployment made it difficult for all but the largest enterprises to build real, on-the-ground teams. Most mid-sized companies stayed “export-only” by necessity, not by choice.

This agreement marks a shift. For the first time, India and the EU are not just opening markets, they are standardising services access and creating structured mobility pathways for cross-border teams. This tale of two giants coming together demonstrates how both economies, despite their differences, have chosen to collaborate and address global challenges jointly. That changes the expansion equation for IT firms, SaaS companies, manufacturers, and engineering businesses.

And this is not a distant story. 2026 is the preparation year. Early 2027 is when these rules begin to shape real decisions. Companies that move early will lock in talent, presence, and operational leverage before the market crowds.

India and the EU are making history with this landmark agreement. This article explains what the deal actually changes, what it means for different kinds of companies, and how to execute expansion safely in this new India–EU environment.

What makes this deal historic?

• Covers a combined market of nearly 2 billion people, effectively creating a free trade zone and about 25 % of global GDP.

• Tariff elimination/reduction covers ~99 % of Indian exports to the EU and ~97 % of EU exports to India in value terms.

• The deal is expected to double bilateral trade by 2032 with tariff savings of up to €4 billion annually, at a time when global economic uncertainties make such agreements especially significant.

After nearly two decades of stop-start negotiations, India and the European Union have agreed on a comprehensive Free Trade Agreement that goes far beyond tariff reductions. In fact, we have concluded the mother of all trade agreements, marking a historic milestone in global commerce.

From a business and operating-model perspective, the agreement introduces five structural changes.

1. It resets the tariff regime for most traded goods. The EU will eliminate tariffs on roughly 96–99% of Indian exports by value, while India will eliminate or reduce tariffs on around 93–99% of EU imports by value. This directly impacts sectors such as textiles, apparel, pharmaceuticals, chemicals, engineering goods, gems and jewellery, marine products, and auto components.
2. It opens services markets at scale. India receives binding market access commitments across 144 service subsectors, while the EU gains access to over 100 subsectors, covering IT and IT-enabled services, engineering, R&D, consulting, professional services, and digital services.
3. In a strategical manner, it creates a rules-based, treaty-backed framework for professional mobility. For the first time, companies have predictable legal pathways to move employees and project teams across India and Europe, not just sell products across borders. This means we have concluded the mother of all mobility frameworks between the two regions.
4. It lays the groundwork for reducing long-term assignment costs through future Social Security Agreements (SSAs), which can remove double social security contributions and materially improve the economics of multi-year deployments.
5. It establishes a clear implementation runway. The agreement is expected to come into force around early 2027, which makes 2026 a critical year for planning, piloting, and positioning rather than waiting. The signing of the deal is a formal step, solidifying this historic partnership and opening new avenues for trade and cooperation

Unlike traditional FTAs that focus mainly on goods, the India–EU FTA is a multi-layered economic cooperation framework covering goods, services, investment, and mobility. This agreement aims to establish a free trade zone between India and the EU, facilitating seamless trade and investment flows.

The scope of the agreement extends to various sectors between India and the European Union, including technology, manufacturing, and professional services.

In terms of commitments, India has agreed to deeper regulatory alignment and enhanced cooperation with the EU on standards, data protection, and sustainable development.

The agreement removes or reduces tariffs on the vast majority of traded goods, materially improving export competitiveness for multiple Indian sectors. For example, tariffs on engineering goods will be cut to as low as 2%, while duties on textiles & apparel will be cut to zero, making Indian products more attractive in the EU market.

As a result of these changes, market access for Indian exporters will be significantly enhanced and trade volumes will be expected to rise across key sectors. This is why manufacturing and export-oriented companies are paying close attention to the agreement.

This is where the FTA becomes strategically more significant than most past trade deals.

• The EU commits access across 144 services subsectors to Indian companies.

• The EU has established comprehensive frameworks to facilitate smoother digital trade, investment, and regulatory cooperation, ensuring greater market access and reduced barriers for Indian businesses.

• Digital trade, cloud services, software, and cross-border data-enabled services receive clearer regulatory treatment.

• Investment and regulatory cooperation frameworks reduce long-term friction for companies building sustained presence

The agreement also creates structured access for professional mobility across four categories in a new, streamlined framework:

• Business visitors

• Intra-company transferees (ICTs)

• Contractual service suppliers

• Independent professionals

This is what transforms the FTA from a trade agreement into a cross-border operating model agreement.

If there is one part of the India–EU FTA that companies should understand deeply, it is talent mobility. Tariffs change margins. Mobility changes operating models.

For the first time, the FTA creates a standardised, treaty-backed framework for moving professionals between India and Europe across four categories.

Business Visitors cover short-term trips for sales, meetings, negotiations, and client discussions. These existed earlier in fragmented form, but the FTA standardises and de-risks them across EU countries.

Intra-Corporate Transferees (ICTs) are the real breakthrough. Companies can transfer employees for long-term assignments of up to three years, often with family reunification rights. This finally makes multi-year deployments realistic for senior engineers, architects, managers, and delivery leaders.

Contractual Service Suppliers (CSS) allow companies to deploy professionals to deliver services under client contracts. This applies across dozens of subsectors including IT, engineering, consulting, R&D, and business services, enabling project-based team deployment with legal certainty.

Independent Professionals cover specialised self-employed experts and consultants who can now work cross-border under defined rules. This matters for niche specialists and senior advisors.

The scale of services access makes this even more powerful:

• India receives commitments across 144 service subsectors
• The EU receives commitments across 102 subsectors

This spans IT and IT-enabled services, engineering and R&D, consulting, professional services, design, and large parts of the digital and knowledge economy.

There is also a major cost unlock coming. Today, long-term international assignments are expensive because of double social security contributions. The FTA commits both sides to negotiate Social Security Agreements (SSAs), which can remove this duplication and materially improve the economics of 2–3 year deployments.

In practical terms, this changes:

• How long companies are willing to deploy people
• Which roles they are willing to move
• Whether they build stable regional teams or keep rotating short-term visitors

The operational impact is significant:

• Sales and GTM leaders can be stationed locally instead of flying in every month.
• Senior engineers and architects can stay embedded with customers for 18–36 months instead of short stints.
• Delivery and QA leaders can own regional operations.
• R&D and product leaders can build satellite teams with continuity.

FTAs do not become operational overnight.

The deal is expected to be fully operational by 2027, enabling businesses to expand and comply with new regulations as the agreement is implemented.

Companies that use 2026 to design and test their operating model will move far faster than those who start in 2027.

The India–EU FTA is not a single-market opportunity. It is a multi-engine growth story spanning goods, services, and two-way investment.

On the trade side, tariff reductions alone make several Indian export categories immediately more competitive in Europe. Textiles, engineering goods, gems and jewellery, and auto components stand to gain market share as pricing friction disappears. At the same time, European exports into India are also set to grow as market access improves and supply chains deepen.

But the larger, longer-term opportunity sits in services and operating presence, not just in shipping more goods.

As Indian companies sell more into Europe, they will need:

• Local sales and account management
• Local quality, compliance, and customer success
• Regional delivery and support leadership

Similarly, as European companies expand manufacturing, R&D, and services operations in India, they will need:

• Local engineering and product teams
• Operations, finance, and compliance leadership
• Distributed teams across multiple Indian states

This is why the FTA’s impact on how companies build teams is at least as important as its impact on trade volumes.

At a high level, the opportunity looks like this:

The services line is especially important. A 30–50% expansion in IT, digital, engineering, and professional services exports does not happen through exports alone. It requires people on the ground in Europe and in India, sales leaders, delivery heads, solution architects, and regional managers.

In other words, the FTA does not just expand trade. It expands the number of companies that must operate cross-border.

This is the context in which the next question becomes critical: what does this actually mean for different kinds of companies in practice?

If you are a SaaS, IT services, consulting, or digital engineering company in India, the FTA makes it meaningfully easier to build a real operating presence in Europe, not just sell into it remotely.

It improves access to European buyers, supports hybrid delivery models that combine offshore teams in India with on-site or near-shore leadership in key EU markets, and reduces regulatory uncertainty in enterprise deals. In practice, this means European expansion becomes more about execution capability than legal complexity.

But all of this only works if you can actually hire, place, and manage teams inside Europe.

Where PamGro fits in:

PamGro can act as your extended HR, legal, and payroll engine across Europe:

• Hire EU-based sales, customer success, and delivery leaders without setting up local entities in multiple countries

• Place Indian experts in key EU markets on compliant local contracts as mobility pathways go live

• Standardise contracts, benefits, and policies across multiple EU jurisdictions

This turns Europe from an “export region” into a true operating region.

For manufacturers and exporters, the FTA is not only about better pricing. As tariffs drop and volumes grow, the real requirement is to move closer to the customer.

That typically means building:

• Local quality and compliance teams

• On-ground sales and key account managers

• Local sourcing, logistics, and partner management roles

Where PamGro fits in:

• Test one or two EU markets by hiring local country or sales managers without opening subsidiaries

• Second Indian quality, production, or regulatory specialists into Europe on compliant assignments

• Scale teams up or down as you learn which markets respond best

This allows you to expand with control instead of overcommitting upfront.

More than 6,000 European companies already operate in India. The FTA strengthens the business case for using India as:

• A manufacturing base

• An R&D and engineering hub

• A GCC location

• A large end market

The real operational challenge in India is not hiring, but running compliant, multi-state operations at scale.

Where PamGro fits in:

• Hire and employ your Indian team compliantly (from 1 person to 200+) while testing and building your India strategy

• Operate without triggering Permanent Establishment risk until you are ready for your own entities

• Manage multi-state labour and tax complexity under one unified layer

The deal has been announced on Tuesday. Legal scrubbing, ratification, and implementation will run through 2026, with entry into force likely around early 2027.

That gives you a 12–18 month window where:

• Most competitors are still watching news headlines, not redesigning their hiring and expansion strategies.

• Early movers can:

  • Secure the best partners

  • Lock in talent in key EU markets

  • Learn the new mobility and compliance rules before everyone else

By the time the FTA is fully operational, the companies that used 2026 to plan, pilot, and partner will move much faster than those who start from zero in 2027.

In theory, you could wait for the FTA to be fully implemented and then spend months setting up legal entities, bank accounts, HR infrastructure, and compliance processes across multiple EU countries or Indian states.

In practice, that approach is slow, capital-intensive, and risky, especially when the regulatory environment itself is still evolving.

An Employer of Record (EOR) model offers a more pragmatic path. It allows companies to:

• Hire full-time employees in new countries without setting up local entities

• Validate market demand and operating models before making irreversible investments

• Reduce employment, tax, and Permanent Establishment risk while scaling

• Adjust geography, team structure, and deployment models as FTA rules and mobility frameworks mature

In an environment where rules, costs, and mobility pathways will evolve over the next 12–24 months, flexibility and speed matter more than perfect long-term structures. EOR gives companies that flexibility while keeping them compliant.

PamGro is built specifically for India-centric global expansion and cross-border team building, which makes this FTA exactly the kind of shift we are designed to support. With the FTA between India and the EU, PamGro enables businesses to leverage new opportunities by facilitating seamless partnerships and compliance across both regions.

Rather than treating Europe or India as one-off markets, we help companies design phased, multi-country operating models that start small, scale intelligently, and transition to entities only when the business case is proven.

Typical use cases:

• Hiring your first 1–10 people in Europe (sales, country leads, delivery managers, pre-sales, customer success)

• Structuring compliant, long-term placement of Indian experts for delivery or transformation programs

• Building a distributed European presence without creating multiple subsidiaries

What PamGro does:

• Acts as the legal employer in target EU countries while you retain full control over day-to-day work, performance, and org structure

• Manages local employment contracts, payroll, taxes, social contributions, and statutory benefits

• Advises on:

• Which countries to start with based on your sector and pricing model

• How to structure roles with upcoming mobility and social security rules in mind

• When and how to transition from EOR to your own entity

Typical use cases:

• Testing a GCC, engineering, or operations team in India without immediate entity setup

• Expanding beyond metros into tier-2 cities for better cost and talent leverage

• Hiring specialist roles for India or global responsibilities

What PamGro does:

• Employs your Indian team under one unified, compliant structure across multiple states

• Provides clear visibility into cost of employment, benefits, and total compensation by location

• Helps you scale without triggering premature Permanent Establishment risk

Beyond execution, PamGro is building FTA-specific operating playbooks, including:

• Tracking implementation milestones and country-level changes

• Helping design phased expansion plans aligned to when mobility and social security provisions actually go live

• Sharing benchmarks and patterns from similar expansion journeys (anonymised)

• Highlighting key future steps where the deal is expected to unlock new opportunities for clients as provisions are implemented

For most leadership teams, the real question is not whether this FTA matters, but how to act on it without overcommitting too early.

A sensible, low-risk approach looks like this:

• Decide your direction: Are you expanding India → EU, EU → India, or both? Is your priority sales, delivery, manufacturing, or R&D?

• Pick 1–2 beachhead markets: Start where customer demand, talent availability, and regulatory simplicity align best.

• Define a 12–18 month team plan: Identify the 3–10 roles that must be on the ground versus those that can stay remote.

• Use an EOR-led entry model: Build and test your initial team through PamGro while mobility and social security rules continue to mature.

• Ensure collaboration and compliance with the EU: Work closely with the EU to align your operations, compliance, and strategic goals for smoother market entry.

• Commit only after validation: Move to your own entity structure once scale and stability justify it.

The India–EU FTA is not just about trade volumes or tariff reductions. It is about who you can hire, where they can work from, and how fast you can build real cross-border teams.

For companies that move early, this agreement is a chance to reset their global operating model. For those that wait, it will simply raise the competitive bar.

PamGro exists to make this transition practical, compliant, and low-risk.

If you are:

• An Indian founder or CXO planning Europe

• A European leader building in India

• Or an HR / Talent leader tasked with making this work in the real world

Now is the right time to design your India–EU expansion and hiring strategy.

Talk to PamGro about building your first cross-border team under the India–EU FTA.

P.S. About the agreement and leaders involved
This historic agreement, signed in New Delhi, reflects the strong partnership between der leyen and European leaders, with president ursula von der playing a pivotal role in driving negotiations forward. European commission president ursula demonstrated exceptional leadership, ensuring the agreement supports both economic growth and workforce mobility. Commission president ursula von’s contribution was instrumental in aligning the interests of both regions. Von der leyen and other key leaders, including and European commission president and European council president, worked collaboratively to secure a robust framework. European council president antonio was also actively involved, emphasizing the council’s commitment to global economic stability.

For official details on the India–EU Trade Agreement, see the European Commission resource:
https://commission.europa.eu/topics/trade/eu-india-trade-agreement_en