New Delhi: Nearly 95 percent of European companies plan to expand their operations in India over the next five years, with 90 percent already reporting profits from their Indian business, according to a survey that underscores the impact of India-EU Free Trade Agreement on investor sentiment.
The Federation of European Business in India’s Business Sentiment Survey 2026, released Tuesday, reveals “highly optimistic views” among European firms about India’s growth trajectory after the two agreed to a free trade agreement, hailed as the “mother of all trade deals”.
The agreement has energised expansion plans across manufacturing, services and innovation sectors, with 75 percent of the survey’s respondents planning to ramp up investments specifically because of the deal.
The survey captures feedback from FEBI member companies that represent a cross-section of major European investors with long-term operations across various sectors and regions in India. According to FEBI, there are around 6,000 European Union-based companies currently operating in India.
The scale of planned reinvestment is substantial: nearly 35 percent of respondents said they intend to commit at least €50 million in India over the next five years. Domestic demand was the primary driver, cited by 70 percent of companies, followed by political stability (64 percent) and availability of skilled manpower (54 percent).
“This marks a major shift in the European mindset, which viewed India as a distant ‘future market’,” the survey noted, adding that India is now seen as a “core, high-performing geography” delivering real returns.
FEBI described the FTA as a “landmark achievement” that unlocks a long-term, rules-based framework for trade and investment across a shared market of about 2 billion people. Some 90 percent of EU businesses expect the agreement to positively impact their operations, the survey found.
About 69 percent of the firms surveyed plan to expand manufacturing in India, underscoring New Delhi’s push to position itself as a global factory floor. Reflecting growing interest in India as a services and innovation base, 37 percent of companies said they were looking at expanding Global Capability Centres. Nearly 35 percent said they were strengthening supply chain and sourcing operations, and around 28 percent were ramping up research and development.
The report argued that this mix of expansion activities positions India as a strategic anchor in EU firms’ global value chains—not just as a low-cost production site but as a hub for advanced technology and design.
But regulatory hurdles remain a concern. As many as 71 percent of respondents flagged regulatory approvals and compliance requirements as a major “drain” on doing business in India, while 54 percent report that Customs and import regulations remain cumbersome and unpredictable.
Despite improvements in ease-of-doing-business scores and infrastructure, the survey warned of a lingering “competitive gap” with other investment destinations, driven largely by procedural delays, complex paperwork and uneven implementation across states.
The survey also highlighted European firms’ alignment with social and sustainability goals. Nearly 80 percent of companies said they will focus CSR (corporate social responsibility) spending on education and skilling, directly tied to the need for trained workers to support expanding manufacturing, Global Capability Centres and R&D operations.
Separately, 51 percent of respondents identified sustainability and the green transition as a priority for future collaboration with India, spanning clean energy, energy efficiency, green technologies and climate-resilient infrastructure. The report suggested this creates an opportunity for policymakers on both sides to design joint programmes that marry investment with workforce development and climate objectives.
Ultimately, the report noted, enhancing regulatory transparency and logistics remains vital for sustained success if India wants to position itself as a manufacturing and innovation hub for long-term European capital.
(Edited by Prerna Madan)
Also Read: ‘Financing war against themselves’: US treasury secy Scott Bessent slams EU’s trade deal with India