European Union (EU) companies operating in India express strong confidence in India’s economic growth, investment climate, and long-term partnership with the EU, according to the Business Sentiment Survey (BSS) 2026 released by the Federation of European Business in India (FEBI) at the EU-India Business Forum in New Delhi.

Released in the context of the upcoming EU-India Summit and the finalisation of the EU- India Free Trade Agreement (FTA), the survey highlights a decisive intent among EU companies to expand operations, deepen manufacturing and supply chains, and increase investments across India over the next five years.

Nearly 95% of EU companies surveyed plan to expand their India operations, reflecting strong confidence in India’s medium-term growth outlook. At the same time, almost 90% of respondents reported profitability in their India operations, reinforcing India’s position as a core market for EU businesses rather than merely a future opportunity.

The survey captures structured feedback from FEBI member companies representing a cross- section of major European investors with established and long-term operations across sectors and regions in India. The findings underline India’s growing role as both a major consumption market and a global manufacturing base, with EU companies increasingly investing in local production, export-oriented manufacturing, and deeper integration into global supply chains.

In his foreword, H.E. Hervé Delphin, Ambassador of the European Union to India and Bhutan and Honorary President of FEBI, underlined the strategic significance of EU-India economic ties. “Trade, investment, industrial partnerships, and economic cooperation are key components of the renewed EU-India partnership. First of all, the conclusion of the EU- India FTA represents a landmark achievement, one of the most consequential trade deals in the world. The ‘mother of all deals’ will provide a stable and long-term frame for two-way trade, tapping into a combined market of 2 billion people, representing almost a quarter of global GDP,” Delphin said in his statement.

The EU is India’s largest trading partner, with bilateral trade in goods and services reaching €190 billion in 2024–25, and it remains a leading source of investment, with €140 billion in FDI stock until 2025. Around 6,000 EU-based companies operate in India, directly employing millions and contributing across manufacturing, services, and innovation ecosystems.

Jürgen Westermeier, FEBI President and President, Airbus (India & South Asia), emphasised the importance of predictability and execution. “EU companies operating in India continue to demonstrate a strong long-term commitment to the market. These partnerships are built over time and anchored in mutual confidence- confidence in India’s growth trajectory and confidence in the value of deepening cooperation between the EU and India. At the same time, business decisions are shaped by day-to-day operating realities. Predictability in the policy environment, transparent regulatory processes, efficient logistics, and ease of compliance are essential for sustained investment and engagement.”

The survey represents a strong and encouraging overall sentiment, while also pointing to areas where targeted improvements can accelerate future growth. Improving the efficiency of regulatory approvals, compliance, Customs, and policy implementation would go a long way in making things easier, particularly for companies increasing their investments.

From a business perspective, the survey reflects how EU companies are translating strategic alignment into concrete action. Deepak Sharma, FEBI Vice President and President Greater India Zone, CEO & Managing Director of Schneider Electric India, noted in his comments that “India is becoming a critical anchor in global production and innovation networks. EU companies are responding by expanding manufacturing capacity, localising advanced technologies, and embedding sustainability into operations and supply chains. When combined with India’s scale, talent base, and accelerating infrastructure development, this creates a powerful platform for building sustainable value chains that serve both domestic and global markets.”

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The FEBI-BSS 2026 represents the second edition of FEBI’s flagship survey and serves as a structured, evidence-based input into policy dialogue. Manufacturing and supply chain collaboration emerged as priority areas for future EU-India cooperation, supported by interest in sustainability, talent development, and digital innovation.

In her comments, Sonia Prashar, FEBI Secretary General, highlighted FEBI’s growing role. “In just over a year since its launch, FEBI has emerged as a bridge for EU businesses operating in India. This survey goes beyond broad optimism to examine concrete business conditions ranging from ease of operations and regulatory predictability to investment planning, localisation strategies, and expectations from ongoing reforms.”

Gyanendra Tripathi, Partner & Leader - Indirect Tax : North & West, Tax & Regulatory Advisory, BDO India stated, "Under the FTA, the EU will eliminate tariffs on over 90% of tariff lines, and 91% in terms of value on exports made from India, while India would eliminate tariffs on 86% of tariff lines, and 93% in terms of value of exports from EU. Moreover, both sides will partially liberalise a significant additional number of tariff lines, thereby bringing the overall coverage of trade liberalisation to 96.6% for India and 99.3% for the EU."

According to him, the key sectors to benefit in India from customs duty elimination would be textiles, pharmaceuticals, footwear, chemicals, fisheries, gems and jewellery etc. whereas the exporters from The EU would benefit in terms of reduced rate of import duty on machinery, medical devices, avionics, automotive, chemicals etc. This would lead to exports from these sectors being more competitive in the respective jurisdictions. With regards to India, the enhanced affordability of machinery due to reduction in customs duty would encourage the technological upgradation of manufacturing facilities, improving the productivity of manufacturing units.

Further, removal of duty on various labour-intensive sectors such as textiles, gem and jewellery, leather etc would further enhance exports from India for these goods. The reduction of rate in import duty on automobiles (with a tariff quota) would aid the demand of these vehicles in India, potentially leading to local manufacturing of these vehicles. Also, in many cases, India is reducing duty in a staggered manner, giving adequate time for the domestic industry to gear up. All in all, enhanced trade due to removal of barriers between two of the world’s largest economies would significantly accelerate the economic activity in both economies, leading to higher growth of both economies.

Karthik Mani, Partner & Leader - Indirect Tax : South, Tax & Regulatory Advisory, BDO India, noted "The FTA secures strong commitments from the EU across key sectors, including IT and IT-enabled services, creating significant opportunities for Indian technology companies to expand their export footprint. In particular, provisions related to the movement of independent professionals in areas such as R&D, education services, and computer and computer related services will enable Indian specialists to access a broader range of clients across EU member states. This is expected to enhance cross border service delivery, deepen professional engagement, and strengthen India’s presence in high value knowledge sectors within the EU market."