Country intelligence • India
India: market-entry intelligence
Country profile · Maritime · CBAM · Graph
Three decisions an EU company faces with India, each as a dependency chain with a named binding constraint, plus the measured case for why the friction is worth paying. Not an encyclopedia: the page shows what the market pays, what gates the flow, and what breaks it. Every figure is sourced; every danger entry says what evidence would change the assessment.
How to read this page: ● measured sourced data · ◐ inferred analyst reading, basis linked · ○ projected anchored to a real starting point. Bracketed citations link to the sources at the foot of the page.
One country, 28 markets
● measured Net State Domestic Product per capita at current prices (FY 2023-24 advance estimates)[37]
The spread is the point: state selection moves per-capita demand by 5x and FDI depth by two orders of magnitude, which is why it is the binding constraint in the establishment chain below.
The opportunity
The dangers below are real, which is exactly why the upside is priced attractively. Four measured reasons India is worth the friction, each tied to a surface on this site.
Jamnagar refinery
1,400 kb/d
World's largest, on the refinery map
The FTA is signed, ratification is the clock
● measured The EU-India agreement concluded on 27 January 2026 covers goods, services and regulatory issues across a zone of roughly 2 billion people, and the EU's stated aim is to double exports to India by 2032. Companies that enter during ratification set terms before the phase-downs price everyone else in.[7,8]
Directed capital: PLI
● measured INR 1.97 lakh crore of production-linked incentives across 14 sectors, with electronics production up 2.5x since FY21. The caveat is part of the signal: thresholds effectively exclude SMEs, so the practical route for smaller entrants is supplying PLI-anchored manufacturers rather than claiming incentives directly.[13]
The demographic dividend is still open
● measured India sits on the open-dividend side of the divergence the demographics layer maps: its working-age share is still rising while China's and Thailand's contract. Labour supply is the one input an entrant cannot negotiate; here it runs the right direction for decades, with the state-level spread shown on the map above.
The energy junction
● measured India runs the world's largest refinery and pivoted its product exports within months when EU sanctions rules changed, the same system flexibility the 2026 Hormuz crisis is stress-testing. For energy-adjacent entrants, India is not a bystander market; it is one of the few systems large enough to absorb shocks and re-route.
1. Trade with India
◐ inferred The read: Tariffs are the dying story: the concluded FTA phases them down. What grows is the certification gate: 187 Quality Control Orders covering 679+ product categories, issued faster than audit capacity can follow, and none of it phases down with the FTA. Price the compliance calendar, not the duty.
● measured The EU is India's largest trading partner at EUR 120bn in goods (2024), 11.5% of total Indian trade. India's simple-average MFN tariff at 15.8% is roughly 2.5 times the EU's 5.2%, making the FTA economically significant for EU exporters.[9,7]
EU exports to India by sector
| SITC section | Latest month (EUR) |
|---|---|
| 7. Machinery and transport equipment | EUR 2.2bn |
| 5. Chemicals | EUR 746M |
| 6. Manufactured goods (by material) | EUR 481M |
| 8. Miscellaneous manufactured articles | EUR 360M |
| 2. Crude materials (excl. fuels) | EUR 320M |
| 4. Animal and vegetable oils/fats | EUR 47M |
| 0. Food and live animals | EUR 44M |
| 3. Mineral fuels and lubricants | EUR 40M |
| 1. Beverages and tobacco | EUR 9M |
| 9. Not classified elsewhere | EUR 4M |
Source: Eurostat COMEXT (ds-059331). [36]
The Nordic lens: Finland's position
Finland's largest export sections: Machinery and transport equipment (EUR 35M), Crude materials (excl. fuels) (EUR 8M), Manufactured goods (by material) (EUR 8M). Same COMEXT series, Finland as reporter.
Certification gate
● measured The Bureau of Indian Standards (BIS) enforces mandatory certification via Quality Control Orders (QCOs). As of mid-2026, 187 QCOs cover 679+ product categories. The scope is expanding rapidly, with staggered enforcement dates throughout 2026-2027.[10,11]
- Omnibus Technical Regulations (OTR) from Aug 2025: 400+ products across 90+ standards for machinery and electrical components now require BIS certification
- Electrical appliances QCO 2026: 90 categories of household/commercial appliances under IS 302
- Industrial chemicals QCO: ethylene dichloride, specific polymers, intermediates; enforcement staggered through 2026
- Furniture QCO 2025: everyday furniture now requires ISI mark
◐ inferred QCOs are a de facto non-tariff barrier for EU exporters. Compliance requires either ISI mark (factory inspection by BIS, 2-6 months) or Foreign Manufacturers Certification Scheme (FMCS, factory audit in the exporting country). Delays and factory-audit scheduling are the binding constraint.
Free Trade Agreement
● measured Goods, services, and regulatory issues. Excludes a standalone investment chapter and comprehensive GI agreement. Creates a free-trade zone covering ~2 billion people and ~25% of global GDP.[7,8] Ratification status: Pending: Council of the EU approval, European Parliament consent, Indian Union Council of Ministers approval. Not yet provisionally applied.
2. Establish in India
◐ inferred The read: Incorporation is a solved problem; the cost curve is set at state selection. The map above shows a 5x spread in per-capita demand and two orders of magnitude in FDI depth, and reform quality varies by BRAP tier. Choose the state before the entity form.
Entity forms
| Type | What it can do | Route / approval | Timeline |
|---|---|---|---|
| Private Limited Company (subsidiary) | Separate Indian legal entity, limited liability. Most common structure for foreign subsidiaries. Minimum 2 shareholders, 2 directors (1 Indian resident). | MCA (SPICe+ portal); RBI post-facto reporting within 30 days | 7-15 working days (incorporation); ongoing annual compliance (ROC filings, audit, GST returns) |
| Limited Liability Partnership (LLP) | Hybrid structure: limited liability like a company, pass-through taxation like a partnership. Minimum 2 designated partners (1 Indian resident). | MCA portal; no prior RBI approval if automatic route | 10-15 working days |
| Branch Office | Extension of the foreign parent, not a separate legal entity. May export goods/services, undertake consultancy, carry out R&D, represent the parent. May NOT engage in manufacturing or processing directly. | RBI via AD bank; DPIIT if in a restricted sector | 4-8 weeks (RBI processing) |
| Liaison Office (representative office) | Liaison and information-gathering only. May NOT carry out commercial activity or earn income in India. Suitable only for market assessment before committing. | RBI via AD bank; initial permission for 3 years, renewable | 4-8 weeks |
| Project Office | Established to execute a specific project in India under a contract. Scope and duration tied to the underlying project. May carry out commercial activities related to the project only. | AD bank (general permission); RBI specific approval if funding source does not meet automatic criteria | 2-4 weeks (general permission path) |
FDI sectors: automatic vs government route
| Sector | FDI cap | Route | Note |
|---|---|---|---|
| Manufacturing (general) | 100% | Automatic | Includes machinery, chemicals, food processing, automotive components. No prior approval needed. |
| Services / IT / consulting | 100% | Automatic | Software, BPO, engineering services, management consulting. |
| Renewable energy | 100% | Automatic | Solar, wind, hydrogen. PLI scheme for solar PV manufacturing targets 48 GW integrated capacity. |
| Telecom | 100% | Automatic | Raised to 100% automatic from prior 49% automatic + government route split. |
| Defence manufacturing | 74% (automatic) / 100% (government route) | Automatic up to 74% | 100% via government route requires access to modern technology. Offset obligations may apply. |
| Insurance | 100% | Automatic | Raised from 74% to 100% in Union Budget 2025, subject to the condition that the entire premium is invested in India. |
| Multi-brand retail | 51% | Government | Mandatory 30% local sourcing from MSMEs. Single-brand retail allows 100% FDI under automatic route (with 30% local sourcing above 51% FDI). |
| Print / digital media | 26% (news) / 100% (non-news) | Government (news) | News and current affairs: 26% FDI via government route. Non-news/non-current-affairs: 100% automatic. |
| From land-border countries (Press Note 3 + PN2 2026) | Varies by sector | Government (mandatory for beneficial owners who are citizens of China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar, Afghanistan) | PN2 (2026) narrowed the scope: non-controlling stakes up to 10% beneficial ownership from LBCs now allowed under automatic route. Beneficial ownership defined per PMLA Rules 2005. |
Corporate tax rates
| Scenario | Basic rate | Effective rate | Note |
|---|---|---|---|
| Standard (turnover > INR 400 crore) | 30% | 31.2%-34.9% | Plus surcharge (7-12%) and 4% health/education cess |
| Medium (turnover ≤ INR 400 crore) | 25% | 26%-29.1% | |
| Concessional (section 115BAA opt-in) | 22% | 25.17% | Must forgo tax holidays, accelerated depreciation, certain deductions |
| New manufacturing (section 115BAB) | 15% | 17.16% | For companies incorporated on/after 1 Oct 2019 that commenced production on/before 31 Mar 2024. Window now closed for new entrants. |
MAT: 14% MAT (effective 14.56-16.31%); companies on concessional/new-manufacturing rates are exempt from MAT. Foreign company PE rate: 40% basic rate (effective 41.6-43.68%); applies to branch offices and PEs.[4,5]
GST standard rate
18%[6]
Three-slab structure since 22 Sep 2025 (GST 2.0): 5% (merit/essentials), 18% (standard), 40% (luxury/sin goods). Replaced the earlier 5/12/18/28 + cess structure.
Transfer pricing
Indian transfer-pricing rules are among the most aggressive globally. Arms-lengt...
Withholding tax / TDS (key rates for EU parent)
| Type | Rate | Note |
|---|---|---|
| Dividends to foreign parent | 20% (may be reduced under DTAA) | India-Finland DTAA: 10% on dividends if beneficial owner holds ≥10% voting power; 15% otherwise. India-EU bilateral treaties vary by member state. |
| Royalties / fees for technical services | 10% (DTAA) or 20% (domestic) | Most India DTAAs cap at 10-15% |
| Interest on ECBs | 5% (concessional) or 20% | 5% on ECBs in foreign currency from a non-resident |
Payment and currency
● measured Managed float with partial capital-account convertibility. Current account fully convertible since 1994. Capital account remains partially regulated under FEMA.[18] Dividends, royalties, FTS, interest on ECBs, and branch profits are current-account transactions: freely repatriable without RBI approval. Capital-account exits (share buyback, capital reduction, liquidation proceeds) may require specific RBI/AD bank approval depending on the exit route.
◐ inferred Payment cycles in Indian B2B trade are long by European standards. 60-90 day terms are typical in manufacturing supply chains; 120+ days is common in government and infrastructure procurement. LCs are standard for large cross-border transactions but not universal.[17,14]
Production-Linked Incentives
● measured INR 1.97 lakh crore (approx. EUR 21bn) outlay across 14 sectors. 836 approved applications. Cumulative investment INR 2.16 lakh crore, sales INR 20.41 lakh crore, exports INR 8.3 lakh crore, 14.39 lakh jobs (as of 31 Dec 2025).[13]
| Sector | Status |
|---|---|
| Electronics and components | INR 1.15 lakh crore across 249 applications; electronics production rose from INR 2.13 lakh crore (FY21) to INR 5.25 lakh crore (FY25) |
| Auto components and EV | INR 29,500 crore; ~45,000 jobs by early 2025 |
| Telecom and networking | Sales increased 6x over FY20 base year; exports INR 21,033 crore |
| Solar PV manufacturing | INR 52,942 crore; targeting 48 GW integrated capacity |
| Food processing | INR 9,000+ crore (exceeding initial INR 7,000 crore commitment) |
| Advanced chemistry cell (battery) | Zero disbursement as of Apr 2026; no applicant has met production milestones |
PLI thresholds effectively exclude SMEs. Capital-intensive automated manufacturing generates fewer direct jobs than headline figures suggest.
Labour framework
● measured Four labour codes (Wages, Industrial Relations, Social Security, OSHWC) consolidating 29 legacy laws. All four notified 21 Nov 2025. Central Rules notified 8 May 2026. Gujarat, Arunachal Pradesh, Haryana, Madhya Pradesh, Karnataka, and Maharashtra have notified final state rules. Other states in draft or pending. No single common commencement date for state-dependent provisions.[12]
- 50% wage rule: at least 50% of CTC must be classified as basic wages, increasing statutory costs (PF, ESI, gratuity) by 3-15% depending on current salary structure
- Fixed-term employees now qualify for gratuity after 1 year (down from 5), changing the cost calculus for project-based hiring
- Simplified hire/fire thresholds: establishments with up to 300 workers can retrench without government permission (up from 100 under the old Industrial Disputes Act)
3. Dangers register
14 entries across 7 categories. Each states the mechanism (how it bites an EU company), the evidence (sourced), the mitigation, and what evidence would change the assessment.
◐ inferred The read: The pattern across the register is policy velocity, not hostility to foreign capital. Rules change fast and sometimes retroactively, but the corrections are real: the retrospective tax was repealed and refunds paid after India lost the arbitrations. Structure for rule changes, with treaty cover and an arbitration seat outside India, not for expropriation.
Retrospective taxation
The government changes tax rules retroactively, creating liabilities on completed transactions. An EU company that structured an investment based on the law at the time faces a demand years later.
● measured The 2012 Income Tax Act amendment targeted the Vodafone-Hutchison offshore deal (INR 22,500 crore demand) and the Cairn Energy indirect transfer (USD 1.4bn arbitration award). India lost BIT arbitrations in both cases. The retrospective provision was repealed in August 2021.[21,22,23]
Sudden FDI rule changes (e-commerce precedent)
DPIIT issues a press note redefining permitted activities for foreign-owned entities in a sector, effective within weeks, forcing operational restructuring. An EU company operating in the sector may need to restructure its Indian operations at short notice.
● measured Press Note 2 (2018) restricted e-commerce marketplace FDI effective 1 Feb 2019 (5 weeks notice). Amazon and Walmart/Flipkart lost USD 50bn combined market cap. Amazon India wholesale revenue fell 70% in FY20. Similar sudden restrictions have affected pharma, food retail, and digital media.[24,2]
Contract enforcement delay (judiciary backlog)
Commercial disputes resolved through Indian courts face extreme delays. An EU company pursuing a contractual claim may wait years for resolution, effectively making court enforcement a non-viable remedy for time-sensitive commercial disputes.
● measured 56 million pending cases across all Indian courts as of June 2026. 180,000+ cases pending for more than 30 years. District courts (85% of backlog) are the first-instance forum for most commercial disputes. WJP Rule of Law Index 2025: India ranks 107/142 on civil justice (down from 79/142 in 2024 overall).[27,28]
Retrospective taxation
Mechanism: The government changes tax rules retroactively, creating liabilities on completed transactions. An EU company that structured an investment based on the law at the time faces a demand years later.
Evidence: The 2012 Income Tax Act amendment targeted the Vodafone-Hutchison offshore deal (INR 22,500 crore demand) and the Cairn Energy indirect transfer (USD 1.4bn arbitration award). India lost BIT arbitrations in both cases. The retrospective provision was repealed in August 2021.[21,22,23]
Current status: Repealed. The episode is the canonical case for Indian policy-volatility risk, but the policy correction was real and costly for the government (refunds, reputational damage, arbitration losses).
Mitigation: Structure investments under a BIT-covered jurisdiction. The 2021 repeal and refunds demonstrate that arbitration enforcement works against India, but India's post-2017 BIT model narrows investor protections significantly.
What would change the assessment: A new retrospective measure of comparable scale. Unlikely in the current political cycle but the legal power to legislate retroactively was not removed, only the specific provision.
Sudden FDI rule changes (e-commerce precedent)
Mechanism: DPIIT issues a press note redefining permitted activities for foreign-owned entities in a sector, effective within weeks, forcing operational restructuring. An EU company operating in the sector may need to restructure its Indian operations at short notice.
Evidence: Press Note 2 (2018) restricted e-commerce marketplace FDI effective 1 Feb 2019 (5 weeks notice). Amazon and Walmart/Flipkart lost USD 50bn combined market cap. Amazon India wholesale revenue fell 70% in FY20. Similar sudden restrictions have affected pharma, food retail, and digital media.[24,2]
Current status: The press-note mechanism remains the primary tool for FDI policy changes. Changes can be sector-specific and take effect rapidly.
Mitigation: Monitor DPIIT press notes and draft amendments. Structure investments to preserve optionality across entity types. Maintain relationships with sector ministries.
What would change the assessment: An FDI code with parliamentary approval and notice periods, replacing the administrative press-note mechanism. Not currently under consideration.
BIS certification gate (QCO surge)
Mechanism: Mandatory BIS certification (Quality Control Orders) is expanding rapidly across product categories. An EU exporter shipping to India may find that a product previously requiring no Indian certification now needs an ISI mark or FMCS, with a 2-6 month compliance timeline and factory-audit bottleneck.
Evidence: 187 QCOs covering 679+ product categories as of mid-2026. The Omnibus Technical Regulations (Aug 2025) brought 400+ machinery and electrical products under BIS. The pace of QCO issuance is accelerating, with staggered enforcement dates creating rolling compliance deadlines.[10]
Current status: Active and expanding. The QCO mechanism is India's primary non-tariff barrier tool.
Mitigation: Monitor BIS QCO pipeline (published on bis.gov.in). Apply for FMCS proactively for product categories likely to be covered. Budget for factory audits and 6+ month lead times.
What would change the assessment: Mutual recognition agreements under the EU-India FTA (the Jan 2026 FTA text covers regulatory cooperation but does not include automatic MRA for BIS). India agreeing to accept EU CE/UKCA marks for covered categories.
Contract enforcement delay (judiciary backlog)
Mechanism: Commercial disputes resolved through Indian courts face extreme delays. An EU company pursuing a contractual claim may wait years for resolution, effectively making court enforcement a non-viable remedy for time-sensitive commercial disputes.
Evidence: 56 million pending cases across all Indian courts as of June 2026. 180,000+ cases pending for more than 30 years. District courts (85% of backlog) are the first-instance forum for most commercial disputes. WJP Rule of Law Index 2025: India ranks 107/142 on civil justice (down from 79/142 in 2024 overall).[27,28]
Current status: Structural, long-standing. E-courts digitisation and commercial courts (established 2015) improve the position for designated commercial disputes above INR 3 lakh, but aggregate pendency continues to rise.
Mitigation: Arbitration clauses (SIAC, ICC, or LCIA) with Indian seat for enforceability under the Arbitration Act 1996 (2015/2019 amendments improved pro-arbitration posture). For smaller disputes, mediation and the Commercial Courts Act 2015 forum.
What would change the assessment: Sustained reduction in aggregate pendency (currently rising). Adoption of dedicated commercial benches across all high courts. Online dispute resolution for international commercial claims.
Intellectual property enforcement gap
Mechanism: Patent protection is weakened by broad compulsory-licensing provisions (Section 3(d) patentability threshold for pharmaceuticals, Section 84 compulsory licensing). Trade-secret protection lacks a standalone statute. Copyright enforcement against digital piracy is slow.
Evidence: India has been on the USTR Special 301 Priority Watch List continuously. The 2026 report cites persistent challenges in patent protection, copyright enforcement, and trade-secret protection. The Section 3(d) threshold (requiring enhanced efficacy for pharmaceutical patents) has been used to deny patents to several multinational pharma companies.[25]
Current status: India's IP regime is functional for registration but weak on enforcement, particularly for trade secrets and against counterfeiting. The patent office has improved processing times but the substantive thresholds remain.
Mitigation: Register IP proactively (patents, trademarks, designs) in India. Use contractual protections (NDAs with Indian-seat arbitration clauses). For pharma, structure around the Section 3(d) threshold.
What would change the assessment: A standalone trade-secret statute. Removal from the USTR Priority Watch List. IP chapter in the EU-India FTA (excluded from the Jan 2026 text).
Corruption and opaque procurement
Mechanism: Corruption increases transaction costs and creates legal risk for EU companies subject to anti-bribery laws (EU Anti-Corruption Directive, UK Bribery Act, US FCPA). State-level procurement and land acquisition are the highest-risk touchpoints.
Evidence: TI CPI 2025: India scores 39/100 (rank 91/182), below the global average of 42. The score has been broadly stagnant over the past decade (range 36-41).[26,31]
Current status: Structural. India's anti-corruption framework (Prevention of Corruption Act 1988, Lokpal) exists but enforcement is uneven, particularly at state and local levels.
Mitigation: Robust anti-corruption compliance programme. Third-party due diligence on local partners and agents. Avoid state-level procurement unless the compliance infrastructure is in place.
What would change the assessment: CPI score sustained above 50 (roughly the level of EU accession candidates). Effective Lokpal enforcement record.
Supply-chain labour risk (child/forced labour)
Mechanism: EU companies sourcing from India face CSDDD and EUDR due-diligence obligations. Goods in several Indian sectors are flagged for child labour or forced labour, creating supply-chain compliance risk that requires active verification.
Evidence: DOL ILAB TVPRA List (2024): India is listed for bricks, carpets, cotton, cottonseed, embellished textiles, fireworks, footwear, garments, gems, glass bangles, incense, locks, matches, mica, rice, sandstone, silk, stones, sugarcane, and thread. This is one of the longest country-specific lists globally.[32]
Current status: Active risk. India has strengthened child-labour laws (Child Labour Amendment Act 2016) but enforcement varies sharply by state. The TVPRA list is updated biennially (next: 2026).
Mitigation: Map supply chains to the sub-tier level for TVPRA-listed goods. Third-party social audits (SA8000, SMETA). Structure contracts with termination rights for verified violations. For EU importers, align with CSDDD due-diligence requirements.
What would change the assessment: Removal of specific goods from the TVPRA list (requires demonstrated sustained reduction). India ratifying ILO Convention 87 (freedom of association, not yet ratified).
INR structural depreciation
Mechanism: The rupee has a long-term depreciation trend against the euro (~35% over 10 years). An EU company with INR-denominated receivables or an Indian subsidiary retaining INR profits faces currency erosion on repatriation.
Evidence: INR/EUR moved from approximately 68 (2016) to approximately 93 (mid-2026). RBI actively manages volatility but does not target a level. India's current-account deficit and inflation differential with the eurozone drive the structural trend.[35]
Current status: Ongoing structural trend. Managed float means episodes of sharp depreciation are possible during global risk-off events or oil-price shocks.
Mitigation: Hedge INR exposure through forward contracts (liquid market for 1-year tenors; less liquid beyond). Structure contracts in EUR or USD where the Indian counterparty accepts it. For subsidiaries, dividend frequently rather than accumulating INR profits.
What would change the assessment: India achieving sustained current-account surplus. Full capital-account convertibility (not on the current policy horizon).
Capital-account restrictions
Mechanism: India's partial capital-account convertibility means that certain exit routes for capital require RBI approval. An EU company liquidating an Indian subsidiary or reducing capital may face procedural delays.
Evidence: Current-account transactions (dividends, royalties, branch profits) are freely repatriable. Capital-account exits (share buyback, capital reduction, voluntary liquidation) require AD bank/RBI processing. NRO-account repatriation is capped at USD 1m per financial year.[31]
Current status: The regime is well-understood and predictable for standard exit routes (share sale, dividend). Non-standard exits are slower but not blocked.
Mitigation: Structure the investment on a repatriation basis from the outset (NRE/FCNR path). Use standard exit routes (share sale to a third party is the most common). Plan capital exits 3-6 months in advance to allow for AD bank processing.
What would change the assessment: Full capital-account convertibility. Currently not on the RBI's stated policy path.
Data localization (payment data and evolving DPDP regime)
Mechanism: RBI's 2018 directive mandates that all payment system data for Indian transactions be stored exclusively in India. The DPDP Act 2023 broadly permits cross-border data transfers but the government can restrict transfers to specific countries by notification. Sector-specific localization (RBI, SEBI, IRDAI) overrides the DPDP Act's general permissiveness.
Evidence: RBI 2018 circular requires Indian payment data stored only in India (foreign processing within 24 hours, then deletion). DPDP Act notified Nov 2025, full compliance by May 2027. No restricted-country list notified yet under DPDP Section 16. 83% of organisations have not begun comprehensive DPDP implementation (IAPP, 2026).[29,30]
Current status: RBI payment-data localization is in force and enforced. DPDP cross-border transfer framework is permissive but incomplete (Significant Data Fiduciary designations and restricted-country notifications pending).
Mitigation: For payment data: Indian data centre or Indian cloud region (AWS Mumbai, Azure Central India, GCP Mumbai). For general personal data: monitor government notifications on restricted countries and SDF designations. Build consent infrastructure ahead of the May 2027 deadline.
What would change the assessment: An EU adequacy decision under DPDP (not currently under discussion). India joining APEC CBPR or a bilateral data-flow agreement with the EU.
Russia-India economic ties and EU sanctions friction
Mechanism: India significantly increased Russian crude oil purchases after February 2022 and became a major re-exporter of refined products. EU sanctions on Russian-origin refined products (Jan 2026) create compliance risk for EU companies sourcing from Indian refineries or trading in Indian-refined products.
Evidence: India's diesel exports to the EU surged 137% before the Jan 2026 ban, then collapsed: Reliance stopped processing Russian crude at its SEZ refinery (Nov 2025). EU diesel imports from India fell 94% YoY by March 2026 (18,000 bpd vs 286,000 bpd in Mar 2025). The Jamnagar complex (1.24m bpd, world's largest refinery) is globally pivotal.[34,33]
Current status: The sanctions framework is in force. India's policy of discounted Russian crude purchases continues but the re-export channel to the EU is largely closed.
Mitigation: For energy traders: verify crude-oil origin through the entire refining chain if sourcing from Indian refineries. For other sectors: low direct exposure, but monitor secondary-sanctions risk if India deepens defence/technology ties with Russia.
What would change the assessment: India reducing Russian crude dependency. EU recognising Indian refineries' segregated processing as compliant. Broader Russia settlement reducing sanctions pressure.
Energy-supply chokepoint (Hormuz)
Mechanism: India imports approximately 85% of its crude oil, with a significant share transiting the Strait of Hormuz. A Hormuz disruption would spike India's energy costs, feeding through to industrial costs, inflation, INR depreciation, and fiscal stress (fuel subsidies).
Evidence: India's crude import dependence is measured (MoPNG data). The Hormuz transit share and transmission mechanism are analysed on the A1AYN maritime and price-transmission surfaces.[33]
Current status: Structural exposure. India has built strategic petroleum reserves (39 days of import cover as of 2025) but this covers only a short disruption.
Mitigation: For an EU company with Indian manufacturing: factor energy-cost volatility into capex models. Hedge energy inputs where possible. Monitor the A1AYN price-transmission and maritime dashboards for early warning.
What would change the assessment: India diversifying crude sources away from Gulf producers. Significant renewable-energy substitution in industrial energy (currently negligible for heavy industry).
State-level regulatory and infrastructure variance
Mechanism: India's federal structure means that land acquisition, labour inspection, power supply reliability, environmental clearances, and business-reform implementation vary sharply by state. An EU company's experience in Gujarat will differ fundamentally from Jharkhand or West Bengal.
Evidence: Labour code adoption: only 6 states (Gujarat, Haryana, MP, Karnataka, Maharashtra, Arunachal Pradesh) have notified final rules as of Jul 2026. DPIIT Business Reform Action Plan rankings show a wide spread. Power supply position (peak deficit) varies from surplus (Gujarat, Tamil Nadu) to chronic deficit (UP, Bihar). GSDP per capita ranges from ~INR 50,000 (Bihar) to ~INR 400,000 (Goa, Delhi).[12,31]
Current status: Structural feature of Indian federalism. The variance is the reason the states-layer choropleth exists on this page.
Mitigation: Shortlist states based on the relevant binding constraint (power reliability for manufacturing, port access for export-oriented, reform rank for regulatory predictability). Use the states layer on this page to compare.
What would change the assessment: Uniform implementation of the four labour codes and GST compliance across all states. Convergence of power-supply reliability. Neither is imminent.
High logistics costs and port congestion
Mechanism: India's logistics cost as a share of GDP (~13-14%) is roughly double the OECD average. Port dwell times, inland transport bottlenecks (rail capacity, highway quality outside the golden quadrilateral), and multi-modal friction increase landed costs for imports and reduce competitiveness of Indian-origin exports.
Evidence: The National Logistics Policy (2022) targets reducing logistics cost to single digits. India's World Bank Logistics Performance Index rank improved to 38/139 (2023) from 44/160 (2018) but remains below China (19) and the EU average. Port congestion at JNPT (India's largest container port) and Chennai are documented bottlenecks.[31]
Current status: Improving (dedicated freight corridors, Sagarmala port modernisation, NLP implementation) but the gap with advanced economies remains large.
Mitigation: Site selection near dedicated freight corridor nodes or major ports with adequate capacity. Use the India states layer to compare port access and infrastructure density.
What would change the assessment: Completion of the dedicated freight corridor network (eastern and western corridors). Sustained reduction in port dwell times. Private container-terminal concessions reducing JNPT congestion.
Dependency structure
Decision this page informs
Enter India (trade, establish, or source), pick the state, or route around it
Primary dependencies
- FTA ratification (tariff phase-downs)● measured
- BIS QCO certification scope● measured
- State selection (power, land, reform tier)● measured
- INR regime and payment practice◐ inferred
- Hormuz crude dependence (energy cost base)● measured
Binding constraint
Substitutes available
Evidence health
States: key metrics
Major states with available data. Per-capita NSDP from RBI Handbook 2024-25; FDI from DPIIT factsheet (Oct 2019-Jun 2025); BRAP tier from DPIIT 2024.
| State | NSDP/cap (INR) | FDI (USD bn) | BRAP 2024 | Notes |
|---|---|---|---|---|
| Delhi | INR 4.9L | $38.91 | Highest per-capita NSDP. Hub for services, consulting, finance, and digital companies. | |
| Telangana | INR 3.9L | Top Achiever | Second highest per-capita NSDP (after Delhi). Hyderabad tech hub. BRAP Top Achiever across 4 reform areas. | |
| Karnataka | INR 3.8L | $63.35 | Second largest FDI destination. Home to Bangalore tech hub, GCCs. Labour codes: final state rules notified. | |
| Tamil Nadu | INR 3.6L | $17.3 | Top Achiever | Second largest state economy. Automobiles, electronics, hardware manufacturing hub. BRAP Top Achiever across 4 reform areas. |
| Maharashtra | INR 3.1L | $94.04 | Largest state economy and largest FDI destination. Mumbai financial hub. Labour codes: final state rules notified. | |
| Kerala | INR 3.1L | Top Performer | BRAP Top Performer. | |
| Andhra Pradesh | INR 2.7L | Top Achiever | BRAP Top Performer and Top Achiever across 4 reform areas | |
| Madhya Pradesh | INR 1.5L | Top Achiever | BRAP Top Achiever across 4 reform areas. Labour codes: final state rules notified. | |
| Uttar Pradesh | INR 1.1L | India's most populous state (~230M). Low per-capita NSDP despite large aggregate economy. | ||
| Bihar | INR 69,321 | Lowest per-capita NSDP among major states | ||
| Chhattisgarh | Top Achiever | BRAP Top Achiever across 4 reform areas | ||
| Gujarat | $46.11 | Top Performer | BRAP Top Performer. Driven by ports, petrochemicals, manufacturing, renewable energy. Home to Jamnagar refinery complex (1.24m bpd). Labour codes: final state rules notified. | |
| Jammu and Kashmir | Top Achiever | BRAP Top Achiever across 4 reform areas. UT status since 2019. | ||
| Jharkhand | Top Achiever | BRAP Top Achiever across 4 reform areas. Rich mineral resources. | ||
| Punjab | Top Achiever | BRAP Top Achiever across 5 reform areas. | ||
| Rajasthan | Top Achiever | BRAP Top Achiever across 4 reform areas. Major solar/wind potential. | ||
| Uttarakhand | Top Achiever | BRAP Top Achiever across 5 reform areas (joint top with Punjab). | ||
| West Bengal | Top Achiever | BRAP Top Achiever across 4 reform areas. Kolkata port access. |
India across this site
40 primary sources spanning EU/Indian government publications, WTO tariff data, Eurostat trade data, and specialist legal/tax summaries.
- [1] DPIIT, Consolidated FDI Policy Circular 2020 (last updated 2023; sector lists current via subsequent press notes)
- [2] DPIIT, Press Note 3 (2020): FDI from land-border countries requires government approval
- [3] DPIIT, Press Note 2 (2026): narrowed PN3 scope, 10% automatic-route threshold for non-controlling LBC stakes, beneficial-ownership definition aligned with PMLA Rules 2005 (10 Mar 2026)
- [4] PwC, India Corporate Taxes on Corporate Income (tax year 2025/26)
- [5] Income-tax Act 2025 (effective 1 Apr 2026, replacing the 1961 Act); CBDT, Income-tax Rules 2025
- [6] GST Council / CBIC, GST 2.0 rate rationalisation (22 Sep 2025): three-slab structure 5%/18%/40% replacing five-slab + cess
- [7] European Commission, EU and India conclude landmark Free Trade Agreement (27 Jan 2026)
- [8] ECIPE, A New Era in Global Trade: The EU-India Free Trade Agreement (2026)
- [9] WTO, World Tariff Profiles 2025: India simple average MFN applied tariff 15.8%, non-agricultural 12.8%, agricultural 36.4%
- [10] BIS, Upcoming QCOs notified and due for implementation (as of Jul 2026); 187 QCOs covering 679+ product categories
- [11] BIS / DPIIT, Omnibus Technical Regulations (OTR) covering 400+ products across 90+ Indian Standards for machinery and electrical components (enforcement from Aug 2025)
- [12] Government of India, four labour codes (Wages/IR/SS/OSHWC) notified 21 Nov 2025; Central Rules notified 8 May 2026; state-level rules rolling out unevenly (6 states with final rules as of Jul 2026)
- [13] PIB, PLI scheme: 836 applications across 14 sectors, cumulative investment INR 2.16 lakh crore, sales INR 20.41 lakh crore, INR 28,748 crore disbursed (as of 31 Dec 2025)
- [14] India Briefing (Dezan Shira), How India's FDI Rules, FTAs, and Key Sectors Shape Investment in 2026
- [15] India Briefing, Representative Office, Branch Office, Project Office vs LLPs and Subsidiary in India
- [16] White & Case, Foreign Direct Investment Reviews 2026: India
- [17] US Department of State, 2025 Investment Climate Statement: India
- [18] RBI / FEMA: current-account transactions (dividends, royalties, FTS, branch profits) freely repatriable; capital-account partially convertible; NRE/FCNR investments fully repatriable; NRO limited to USD 1m/FY
- [19] Union Budget 2025: insurance FDI cap raised from 74% to 100% for companies investing entire premium in India
- [20] DPIIT: defence FDI automatic route raised to 74% (from 49%); 100% via government route for access to modern technology
- [21] Vodafone International Holdings BV v. Union of India: 2012 retrospective tax amendment, 2020 BIT arbitration loss, 2021 repeal (Taxation Laws Amendment Bill 2021)
- [22] Cairn Energy PLC v. Republic of India: USD 1.4bn PCA arbitration award (Dec 2020); India contested enforcement in multiple jurisdictions; settled after 2021 repeal, refund of USD 1.06bn
- [23] Taxation Laws (Amendment) Act 2021: repealed retrospective tax on indirect transfers pre-28 May 2012; refunds conditional on dropping litigation/arbitration
- [24] DPIIT Press Note 2 (2018): e-commerce FDI restrictions effective 1 Feb 2019; Amazon and Walmart/Flipkart lost USD 50bn combined market cap; Amazon India wholesale revenue fell 70% in FY20
- [25] USTR, 2026 Special 301 Report: India remains on Priority Watch List for IP protection (patent, copyright, trade secret enforcement)
- [26] Transparency International, Corruption Perceptions Index 2025: India score 39/100, rank 91/182 (below global average of 42)
- [27] World Justice Project, Rule of Law Index 2025: India rank 86/143 overall; civil justice rank 107/142; declined from 79/142 in 2024
- [28] NJDG (National Judicial Data Grid): 56 million pending cases across all courts as of Jun 2026; 180,000+ cases pending >30 years; district courts hold 85% of backlog
- [29] Digital Personal Data Protection Act 2023: notified Nov 2025, phased to May 2027 full compliance; cross-border transfers broadly allowed (no restricted-country list yet notified); RBI 2018 payment-data localization directive continues to override for payment data
- [30] RBI, Storage of Payment System Data (2018): all Indian payment transaction data must be stored exclusively in India; foreign processing permitted within 24 hours before deletion
- [31] US Department of State, 2025 Investment Climate Statement: India
- [32] US DOL ILAB, List of Goods Produced by Child Labor or Forced Labor (2024 TVPRA List): India listed for bricks, carpets, cotton, cottonseed, embellished textiles, fireworks, footwear, garments, gems, glass bangles, incense, locks, matches, mica, rice, sandstone, silk, stones, sugarcane, thread
- [33] India imports ~85% of its crude oil; significant share transits the Strait of Hormuz. See A1AYN /data/maritime/ and /data/price-transmission/
- [34] EU sanctions on Russian-origin refined products (effective Jan 2026): India's refinery exports to EU collapsed (Reliance stopped processing Russian crude at SEZ refinery Nov 2025; EU diesel imports from India fell 94% YoY by Mar 2026)
- [35] INR has depreciated ~35% against EUR over 10 years (from ~68 to ~93 per EUR). RBI actively manages volatility but structural depreciation trend persists.
- [36] Eurostat COMEXT (ds-059331): EU27 and Finland trade with India by SITC section, monthly, 2015-present
- [37] RBI, Handbook of Statistics on Indian States 2024-25 (released 11 Dec 2025): per capita NSDP at current prices, GSDP at current prices
- [38] CEA, Load Generation Balance Report 2025-26: all-India energy surplus 0.9%, peak deficit 1.2% (269,277 MW demand vs 266,006 MW availability)
- [39] DPIIT, Business Reform Action Plan (BRAP) 2024: 434 reform points, 70% user-feedback + 30% evidence; announced Nov 2025
- [40] Natural Earth, Admin-1 States/Provinces 50m v5.1.1 (public domain)
As of July 2026. Statutory facts verified against primary sources; practice claims cite the basis.