FTA Agreement
India, EU to work on cross-border pay, CBDC under FTA, open fincl mkt access
This story was originally published at 22:53 IST on 28 January 2026
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NEW DELHI – Under the newly concluded free trade agreement, India and European Union have committed to collaborate in enabling greater interoperability, interlinkages and development of electronic payment infrastructure and convenience of cross-border payments to promote real-time cross-border remittances, merchant payments and other transfers.
"This FTA will provide the necessary institutional and regulatory framework to accelerate bilateral collaboration, facilitate market access, and catalyse deeper integration of the financial systems of both economies," the finance ministry said in a release Wednesday. "The agreement is forward-looking, balanced and designed to provide enhanced market access, regulatory clarity, and cooperative frameworks that will benefit financial institutions and service providers from both countries."
India and the EU concluded the free-trade agreement Monday, offering to cut tariffs on over 95% of export value for both sides. With these provisions, the India-EU agreement--termed "mother of all deals" by European Commission President Ursula von der Leyen--aims to double bilateral trade by 2032. The bilateral goods trade between India and the EU was $64 billion in 2024-25 (Apr-Mar). According to the fact sheet by European Commission, India committed to more-than-ever financial services under the trade agreement.
The finance ministry said India and the EU have also committed to collaborate in fintech innovation, with specific provisions for innovative financial services and exploration of new business opportunities in areas like Sup Tech (Supervisory Technology), Reg Tech (Regulatory Technology) and Central Bank Digital Currency. "These provisions position India as a fintech hub for the bilateral partnership, provide structured framework for cooperation with a developed country in fintech innovation, facilitate knowledge exchange and regulatory learning, create opportunities for Indian fintech companies to collaborate with EU counterparts," the ministry said.
The free trade agreement also includes a provision that ensures parity of treatment of Indian banks, insurance companies, and other financial service suppliers with EU's domestic institutions and facilitates their market access. It ensures Indian financial institutions are cushioned from arbitrary or discriminatory credit assessment practices in the market which can restrict Indian financial service suppliers' operational capabilities.
The two countries also agreed on market access and national treatment in banking, insurance and other financial services sectors and sub-sectors. This is to increase EU's financial sector's presence in the Indian economy and vice versa. "The agreement will serve as an important catalyst for broadening India's financial services presence in the EU and welcoming the EU financial service suppliers to India's growing and dynamic financial services markets," the ministry said.
In a separate release, the finance ministry also said the Reserve Bank of India and European Securities and Markets Authority signed a Memorandum of Understanding that enables formal recognition of the Clearing Corporation of India Ltd. and other RBI-regulated Central Counterparties by ESMA.
The MoU came after three years of standoff originating from differences between RBI and ESMA over granting supervisory access to Indian clearing houses. In October 2022, ESMA said it had planned to de-recognise six Indian clearing houses, including Clearing Corp of India, from Apr. 30, 2023. It confirmed this de-recognition on May 2, 2023.
In Europe, third-party central counterparties must be supervised by the markets regulator directly. This includes allowing audits and penalties on the counterparty or through "comparable compliance" in other jurisdictions. Since the RBI did not agree with this 'extra-territorial' supervision, recognition for the counterparties was withdrawn. India thought ESMA was being "extra jurisdictional".
The finance ministry said that under the MoU, "ESMA will rely as appropriate upon the regulatory framework and supervision of the RBI, recognising that the RBI remains accountable in India for the resilience of the Covered CCPs under its supervision."
"The MoU does not create any legally binding obligations, confer any rights or supersede any domestic laws," it added. "The MoU is effective from the date of signing by the Authorities and will remain operative for an unlimited period of time."
Overall, the conclusion of negotiations on the India-EU Financial Services Annex underscores both governments' commitment to deepening economic ties and harnessing mutual opportunities in the rapidly evolving financial services landscape, according to the ministry. End
US$1 = INR 91.78
Reported by Priyasmita Dutta
Edited by Deepshikha Bhardwaj
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