“Mother of all Deals” – what does the free trade agreement between the EU and India mean for Swedish engineering companies?

After almost 20 years of negotiations, the EU and India have reached a political breakthrough described as the “Mother of all Deals”. The name is justified: the agreement affects around 25 per cent of the world’s GDP, nearly a third of world trade and over two billion consumers.

For Swedish engineering companies, the agreement marks a shift. India has long been seen as commercially attractive but practically inaccessible; now the playing field is changing fundamentally. For Sweden, this means that export-strong industries such as automation, automotive, process industry and the companies driving the green transition will gain real access to a whole new market.

The key word for the free trade agreement is significant tariff reductions. More than 90 per cent of tariffs between the EU and India will be abolished or reduced. This means that tariffs on, for example, machinery, industrial components, vehicles, electrical equipment and technical systems will gradually disappear. For Swedish exporters, this should mean a shorter payback period on investments in India and an improved price position in procurement. According to the European Commission’s calculations, the EU’s exports of goods to India could double by 2032, while European companies would save around four billion euros annually in customs costs.

Equally important is the removal of administrative barriers. Simplified customs procedures, clearer rules of origin, increased transparency in regulations and less need for local certification create a more predictable market. This particularly benefits Swedish small and medium-sized engineering companies that have previously faced administrative challenges.

The agreement also strengthens the protection of intellectual property rights. Improved IP protection creates conditions for increased technical presence – but requires correct registration, licensing and agreements.

The starting point is favourable. In 2025, Sweden’s exports to India amounted to just over 1.8 billion euros. At the same time, India’s demand for energy efficiency, automation and green investments is increasing, driven by urbanisation, major infrastructure investments and “Make in India”.

The agreement is mutual. India gains parallel access to the EU market for over 99 per cent of its export goods. For Swedish companies, this means both increased competition in the domestic market and, at the same time, opportunities for increased exports and greater risk diversification.

The geopolitical situation also makes the agreement strategic in a situation where the US, among others, is no longer considered the obvious trading partner. For Swedish industry, a deeper focus on India means concrete opportunities to diversify sales, sourcing and R&D – and thus reduce dependencies and spread risk.

When the agreement enters the implementation phase, assuming ratification and entry into force, the focus will shift from trade policy to implementation. For Swedish engineering companies, the next step is to adapt business models, structure supply chains, build service businesses and manage legal, regulatory and cultural differences without losing momentum. Swedish companies have access to EKN guarantees, SEK financing and support from the Sweden-India Business Council and Business Sweden to shorten lead times, lower thresholds and reduce risk.

The free trade agreement does not necessarily make India easy – but it does make it accessible in a whole new way. Swedish companies that act early, in a structured and long-term manner, will gain a clear advantage.

Three things Swedish engineering companies should do now – with legal support

• Conduct a structured analysis of India linked to your business strategy
  Study how the free trade agreement affects customs duties, rules of origin, agreements and regulatory requirements for your products and services. Ensure correct product classification, certificates of origin and processes, and identify obstacles that are being removed and new opportunities.

• Secure intellectual property rights and regulatory compliance.
  Secure rights, licences and agreements in good time. Conduct IP and compliance reviews before entering the Indian market and consider financing solutions via EKN/SEK for larger agreements.

• Build local market presence through the right partners and networks
  Identify strategic partners for manufacturing, distribution, service or joint development to reduce entry risk. The key to success in India is partnership – joint ventures with local players are common.

Setterwalls India Desk is the first specialised India Desk function at a commercial law firm in the Nordic region. India Desk is part of Setterwalls Advokatbyrå and offers legal advice aimed at facilitating and structuring business relationships between India and Sweden/the Nordic region.

The team consists of lawyers with an understanding of both the Indian and Swedish legal systems, combined with a good insight into the cultural and business aspects of cross-border cooperation. The advice covers, among other things, company law, M&A, banking and finance, labour law, intellectual property law, tax and environmental issues.

The aim is to provide practical and strategic support to Indian companies and investors who want to establish or expand in Sweden and the Nordic region, as well as to Swedish companies entering India – often through joint ventures, local partnerships or acquisitions.