Marking a significant milestone in strengthening bilateral economic and strategic cooperation, India and the European Union (EU) have concluded negotiations on financial services in the Free Trade Agreement (FTA).
Among the key achievements of Financial Services Annex, India and EU have committed to collaborate on enabling greater interoperability and 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.
According to the ministry, this provision directly supports India’s growing digital payments ecosystem, facilitates enhanced remittance flows from Indian diaspora in the EU region, creates market access opportunities for Indian payment service providers, and leverages India’s technological expertise in digital payment systems such as UPI.
Both sides have committed to strengthen collaborative efforts in fintech innovation. These commitments represent India’s most significant achievement in fintech cooperation.
They committed to strengthen cooperation efforts in the financial services sector and support the development of FinTech initiatives, with specific provisions for cooperating on innovative financial services and FinTech through exploration of new business opportunities, collaboration in FinTech areas like Sup Tech, Reg Tech and Central Bank Digital Currency (CBDC).
Indian financial institutions are cushioned from arbitrary or discriminatory credit assessment practices in the market.
“This provision ensures parity of treatment with EU’s domestic institutions, facilitates market access for Indian banks, insurance companies, and other financial service suppliers, and prevents discriminatory regulatory treatment that could restrict Indian financial service suppliers’ operational capabilities,” said the ministry.
Moreover, the schedules of specific commitments reflect progressive collaboration among both sides, with comprehensive commitments on Market Access and National Treatment in Banking, Insurance and other financial services sectors and subsectors.
India’s sectoral offers represent a forward-looking liberalisation approach, factoring in the recent liberalisation allowing 100 per cent FDI in Insurance sector and featuring enhanced Foreign Direct Investment (FDI) limits of 74 per cent in banking, alongside a liberalised bank branch licensing framework allowing up to 15 bank branches to be established over a four-year period — a significant expansion from the previously offered GATS limits of 12 branches.
Currently, three Indian banks—State Bank of India, Bank of Baroda and Bank of India — maintain branches in the EU, with a combined total of five branches while only one bank — State Bank of India maintains a Representative office in the EU.
From the EU, currently five banks, with a combined strength of 33 branches are operating in India, while 17 banks are maintaining their representative offices.
In 2024, total services trade between India and EU was around $83 billion. In 2024, India exported $700 million worth of financial services to EU and imported around $600 million worth of financial services from EU.
According to a Finance Ministry statement, both nations have worked collaboratively to develop a forward-looking, balanced, and mutually beneficial agreement that will unlock enhanced opportunities for their respective financial services sectors.