EU Firms Bet Big on India FTA, Survey Shows Investment Wave, Jobs Push

European companies in India are prepping for a fresh investment cycle and an overwhelming majority of these firms are planning to expand and deepen manufacturing in the country, and also embed India more firmly into global supply chains, according to the Federation of European Business in India's (FEBI) Business Sentiment Survey 2026 released Tuesday.

The findings were released on the day India and the EU sealed a long-awaited trade agreement, a deal Prime Minister Narendra Modi and European Commission President Ursula von der Leyen – the chief guest for Monday's Republic Day celebrations – called "the mother of all trade deals".

The headline findings include 95 per cent of EU companies surveyed confirming plans to expand operations in India over the next five years, while close to 90 per cent said their India ops are already profitable, an unusually strong endorsement for a large emerging market.

High levels of profitability area also a signal India is no longer viewed as a 'future opportunity' but as a core business destination. The survey – which drew responses from 120 European firms from diverse sectors, including automotive, energy, digital, and pharmaceuticals – pointed to a broad-based and maturing engagement.

The optimism is underpinned by scale and momentum in India-EU bilateral ties.

The EU is India's largest trading partner, with the two-way trade in goods and services reaching about 190 billion Euros in 2025, and EU foreign direct investment stock touching roughly 140 billion Euros. An estimated 6,000 European Union companies now operate in India, employing millions across manufacturing, services, and innovation ecosystems.

The deal is expected to provide a stable long-term framework for trade across a combined market of two billion people. The survey also showed that 90 per cent of EU businesses expect the FTA to have a positive impact, while 78 per cent anticipate higher employment in India, and 75 per cent plan to increase investments as a direct consequence.

What is striking is how this confidence is translating into plans.

Manufacturing and production expansion tops the agenda; nearly 69 per cent intend to scale up manufacturing in India, about 36 per cent are looking to strengthen supply chains and sourcing, and around 37 per cent plan to expand Global Capability Centres—signalling India's growing role in engineering, digital services, and analytics.

Investment commitments are also substantial. About 26 per cent of companies plan to invest more than 100 million Euros each over the next five years, with another quarter committing between 20 and 100 million.

Employment growth is set to follow. One in five companies expects to add more than 1,000 jobs, driven largely by new factories and the scaling up of capability centres, aligning hiring plans with the investment cycle now underway. On the revenue side, 93 per cent of firms expect turnover growth in FY26, with most forecasting moderate to significant gains.

Beyond the headline numbers, the survey paints a picture of a partnership that is becoming more strategic and integrated. Three-quarters of respondents identify manufacturing and supply-chain cooperation as the top area for future EU–India collaboration, followed by sustainability and the green transition, R&D and talent development, and technology and digital innovation.

This hierarchy reflects a shift from a purely market-seeking approach to one focused on building resilient, future-ready value chains.

India's macroeconomic backdrop is reinforcing these plans. The country is among the fastest-growing major economies, with GDP growth projected above 7 per cent in 2026 and a trajectory that could make it the world's third-largest economy by 2030. For European firms, this combines a vast domestic market with a competitive manufacturing base and a deep talent pool.

Yet, the survey is not uncritical. Regulatory approvals and compliance remain the single biggest pain point, cited by 71% of respondents, followed by customs and import regulations, policy uncertainty and taxation. At the state level, companies say their investment decisions hinge less on incentives and more on practical factors such as availability of skilled workers, quality infrastructure and the speed and predictability of approvals.

FEBI's leadership argues that addressing these frictions could unlock an even larger wave of European investment. The organisation is calling for stronger policy advocacy, closer engagement with central and state governments, and sustained dialogue with EU stakeholders to ensure that the promise of the FTA is matched by smooth execution on the ground.

Taken together, the survey suggests that the EU–India economic relationship is entering a new phase—less tentative, more structural and increasingly centred on India as a global production and innovation hub. If the FTA delivers on expectations and regulatory bottlenecks ease, European companies appear ready to place some of their biggest bets yet on India's growth story.