EU banks will soon be able to expand their physical presence in India under the India-European Union Free Trade Agreement (FTA), marking a significant shift in the country’s approach to foreign bank access and financial services liberalisation.
Once the agreement comes into force, banks from the 27-nation EU bloc will be permitted to open up to 15 branches in India over a four-year period, reported Moneycontrol.
This represents an expansion from the earlier cap of 12 branches that India had offered under the General Agreement on Trade in Services (GATS), signalling a more open and forward-looking stance as New Delhi seeks deeper economic engagement with Europe.
What Has India Agreed To?
According to an official government release, the proposed FTA introduces a liberalised framework for bank branch licensing. The revised cap will allow EU banks to open a maximum of 15 branches in India over four years, subject to domestic regulatory approvals.
The government said India’s offer reflects recent reforms across the financial sector, including the decision to allow 100 per cent foreign direct investment (FDI) in the insurance sector and enhanced FDI limits of up to 74 per cent in banking.
Officials view the move as part of a calibrated liberalisation strategy rather than a sudden opening of the sector.
What Does The EU Get And What Does India Get Back?
In return for easing access to its banking market, India has secured reciprocal treatment for its own lenders. Indian banks will not face any numerical restrictions on opening branches in EU member states, though they will continue to be governed by local regulatory requirements.
At present, three Indian banks, State Bank of India, Bank of Baroda and Bank of India, operate in the EU, with a combined total of five branches. Additionally, State Bank of India maintains a representative office in the region.
From the European side, five EU banks currently operate 33 branches in India, while 17 banks maintain representative offices.
Financial Services: A Key Pillar Of The Deal
The European Union has described the agreement as offering its companies “privileged access” to India’s services market, particularly in sectors such as financial services and maritime transport.
“It has the most ambitious commitments on financial services by India in any trade agreement, going beyond what it has offered to other partners,” the EU said in a statement issued on January 27.
The two sides have also agreed to cooperate on fast payments and real-time remittances, leveraging digital platforms such as India’s Unified Payments Interface (UPI).
What Is Not On The Table
The report cited a government official and clarified that India has not offered market access in legal services under the proposed agreement, indicating that sensitive professional services remain outside the scope of liberalisation for now.
How Does This Compare With Other Trade Deals?
India has extended an identical cap on bank branch openings to New Zealand under their trade agreement. India and New Zealand concluded negotiations for their FTA on December 22, 2025, after talks that began in March of the same year.
Officials say this consistency reflects India’s intent to maintain a balanced approach to financial services access across trade partnerships.
India and the EU concluded negotiations on January 27 on what both sides described as a ‘historic, ambitious and commercially significant’ trade agreement, the largest such deal ever concluded by either party.
Negotiations were first launched in 2007, suspended in 2013, and revived in 2022. The final, 14th negotiating round took place in October 2025, followed by intensive technical and political discussions.
