The EU-India trade agreement: an EU subsidiary before it applies?

The status of the agreement

The EU and India concluded the negotiations on 27 January 2026. The texts are published for information. On 11 September 2026 the Commission sent its proposals for signature and conclusion to the Council.

The next steps are the decision of the Council, the signature, the consent of the European Parliament, the conclusion by the Council, and entry into force after India ratifies. A separate investment protection agreement and an agreement on geographical indications are still being negotiated.

The commerce minister of India said on 21 June 2026 that he expects signature by December 2026 and entry into force between February and March 2027. That is the expectation of India; the EU has published the steps.

What changes for Indian goods

According to the European Commission, the EU will eliminate tariffs on over 90% of tariff lines, 91% in terms of trade value. The factsheet of the Government of India speaks of preferential access on 97% of tariff lines, covering 99.5% of trade value, with zero duty from the first day on 70.4% of the lines.

The sectors named are textiles, apparel, leather, footwear, marine products, gems and jewellery, chemicals, plastics and engineering goods. The two sets of figures come from the two parties; quote the source when you use them.

Origin decides the tariff

Proof of origin will be a statement on origin, a separate document that the exporter uploads on a portal. Verification starts with customs contacting the importer. Product-specific rules in the agreement decide whether a product counts as Indian.

Goods made in India keep their Indian origin when your EU subsidiary imports and sells them. The subsidiary claims the same lower tariff as an EU buyer would, on the statement on origin of your Indian exporter.

What an EU subsidiary adds, today

• Importer of record. The declarant for EU customs must be established in the EU (Union Customs Code, Article 170). Your EU subsidiary declares your goods in its own name.
• Import VAT. A Dutch company can apply for its own Article 23 licence. Once the Belastingdienst grants it, the import VAT is reported and deducted in the same VAT return.
• Carbon border levy (CBAM). Since 1 January 2026, an importer of more than 50 tonnes a year of steel, aluminium and other covered goods must be an authorised CBAM declarant established in the EU. Indian steel and aluminium are within scope.
• Product rules. Consumer products need an economic operator established in the EU (General Product Safety Regulation, Article 16). The EU importer is also liable for defective products, and the new EU rules for products placed on the market after 9 December 2026 add other liable companies.
• Stock and sales. Stock close to your EU buyers, in Rotterdam or near Schiphol, and sales across the EU from one company.

Indian rules for investing in a Dutch subsidiary

The Foreign Exchange Management (Overseas Investment) Rules and Regulations of 22 August 2022 apply. The Indian company files Form FC with its authorised dealer bank before the first investment, and the bank remits after it has obtained the unique identification number (UIN) for the investment.

The total financial commitment abroad may be up to 400% of the net worth in the last audited balance sheet. Commitments above US$1 billion in a financial year need prior approval of the Reserve Bank of India. Evidence of the investment is due within six months, and an Annual Performance Report every year.

The steps are set out in outbound investment from India (ODI) into a Dutch company.

Tax between the Netherlands and India

The tax treaty between the Netherlands and India caps the dividend tax at 10% (Article 10). The Supreme Court of India ruled on 19 October 2023, in the Nestlé case, that the most-favoured-nation clause needs an Indian notification before it applies. Dividends from India to the Netherlands therefore stay at 10%.

For dividends from a Dutch company to an Indian parent, Dutch law exempts dividends to a parent in a treaty country that meets the holding and anti-abuse conditions; the rate is then 0% (Dividend Tax Act 1965, Article 4(2)). Dutch corporate tax is 19% on the first €200,000 of profit and 25.8% above.

Sources: European Commission, EU trade relations with India, the EU-India trade agreement and the chapter summary; Government of India, Press Information Bureau factsheet; Reserve Bank of India, Overseas Investment Rules and Regulations 2022; European Commission, CBAM definitive regime; tax treaty between the Netherlands and India; Supreme Court of India, Nestlé judgment of 19 October 2023; Dutch Dividend Tax Act 1965, Article 4. Checked on 25 September 2026.

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